Paradeep Phosphates Limited (PARADEEP) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Paradeep Phosphates Limited Q4 FY '25 Earnings Con Call hosted by Antique Stock Broking Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Manish Mahawar from Antique Stock Broking Limited. Thank you, and over to you, sir.

Thank you, Navya. On behalf of Antique Stock Broking, warm welcome to all the participants on the call of Paradeep Phosphates. Today, we have Mr. Rajeev Nambiar, Chief Operating Officer; Mr. Harshdeep Singh, Chief Commercial Officer; Mr. Bijoy Kumar Biswal, CFO; Mr. Alok Saxena, Head, Corporate Finance; and Mr. Susnato Lahiri, DGM Strategy, IR and ESG on the call. Without further ado, I would like to hand over the call to Mr. Nambiar for opening remarks, post which we will open the floor for Q&A. Thank you, and over to Mr. Nambiar.

Good morning, Manish. Thank you for the call, and good morning, everyone, and warmly welcome you to the Paradeep Phosphates Q4 as well as financial year 2025 earnings conference call. We have shared our earnings presentation and press release, both available on our website and stock exchanges and I hope you had a chance to go through them. FY '25 has been a truly transformational year for the company, marked by healthy profitability, improved operational efficiency and significant strategic progress. On the financial front for FY '25, the company posted a very healthy 452% year-on-year surge in profit after tax, powered by highest ever fertilizer sale of 3.03 million tonnes. Revenue from operations stood at INR 13,820 crores, registering a 19% growth over the previous year. EBITDA rose sharply to INR 1,367 crores, up by 91% year-on-year, while the profit before tax increased by 434% to INR 752 crores. In Q4 alone, revenue grew by 56% to INR 3,494 crores with EBITDA doubling to INR 389 crores and PBT rising nearly eightfold to INR 223 crores. In line with our dividend policy, the Board has recommended a dividend of INR 1 per equity share on the face value of INR 10 for the financial year 2025. Over the past 4 years, PPL has demonstrated industry-leading growth across the fertilizer production, sales volume, market share and key financial metrics, including revenue, EBITDA and PAT. The successful execution of key CapEx proposals is now yielding the visible cash flow benefits. On the operational front, the company reported production volume of 2.63 million tonnes and primarily the sale of -- primary sale of 3.03 million tonnes for the full year, reflecting year-on-year growth of 14% and 20% respectively. PPL served over 9.5 million farmers across 15 Indian states through a wide network of more than 95,000 retail points. Our product basket includes 9 diverse crop and soil-specific NPK grades with N-20 sales crossing a record 1.06 million tonnes for the first time. Our share of NPK in the product mix has steadily increased over the last 2 years, reinforcing our resource of balanced fertilization for the soil. We produced 4.86 lakh tonnes of phosphoric acid during the year, making a 30% year-on-year increase, while the sulfuric acid production stood nearly 1.3 million tonnes. PPL also achieved record POS sales, maintaining high sales velocity, which led to improved receivables and better working capital efficiency. We continued our innovation-led offerings, selling 1.66 million bottles of nano fertilizers and receiving a strong market response for our recently introduced TSP product with sales of nearly 1.5 lakh tonnes during the year. We maintained a sharp focus on strategic sourcing and supply chain agility, leveraging a long-term supplier relationship and robust on-site storage infrastructure to navigate raw material price volatility during the year. The company ended FY '25 with a net debt-to-equity ratio of 0.78, marking a 28% reduction over the previous year, along with improved net debt per tonne of sales. These operational efficiencies translated into healthy free cash flow generation post working capital and CapEx. On the ESG front, PPL achieved a significant milestone by being ranked among the top 2% globally in the chemical sector by S&P Global as a part of the 2024 Corporate Sustainability Assessment, which forms the basis of the Dow Jones Sustainability Index. This recognition underscores our growing leadership in sustainability and our continued focus on embedding ESG into every layer of strategy and operations. Our strategic road map anchored in 3 core pillars. They are scale in operations, backward integration and product innovation. The ongoing merger with MCFL is expected to enhance our overall sales volume by approximately 23%, taking them to 3.7 million tonnes. This will also enable deeper penetration into key southern markets and provide opportunities to sell and upsell as well as cross-sell. In parallel, we have been investing in backward integration with an aim of enhancing our margins. The expansion of sulfuric acid capability to 1.9 million tonnes at our Paradeep site is progressing well and is expected to be commissioned by Q3 of this year. Additionally, our plans to augment phosphoric acid capacity to 0.7 million tonnes from the current 0.5 million have commenced and we expect completion within 2 years. These expansions will help us achieve greater self-reliance and long-term sustainability in operations. On the product innovation front, we were the first to introduce a triple superphosphate TSP and biogenic nano-fertilizer in the country, both of which saw healthy sales in FY '25. Our focus going forward remains on developing differentiated low-carbon products tailored to soil- and crop-specific needs, aligning with both farmer expectations and the environmental goals. Overall, FY '25 has been a defining year for the Paradeep Phosphates. We have strengthened our market position, delivered strong financials and built a resilient and agile operating model. I want to thank our employees, channel partners, customers and all stakeholders for their continued trust and support. We look forward to building on this momentum and delivering a greater value in the years to come. Thank you, and I now look forward to your questions. Thank you.

[Operator Instructions] The first question is from the line of Rishi Kothari from Pi Square Investments.

Congratulations on a good set of numbers. I have a couple of questions. First, regarding the product margins that we are sustaining. So of course, it was the effect of backward integration that we are eventually incorporating in the company. So these margins will be sustainable for the next 2 to 3 years, how exactly are we looking at? And will it be in similar range or will it decrease eventually?

Related to the margin, -- regarding this backward integration and the impact on the margin, this is what on account of this [indiscernible] integration from 5 lakh -- 3 lakh to 5 lakh tonnes. So that will be continued and it will be sustained. Apart from that, whatever the things we are doing, which is in pipeline, this new sulfuric acid, which is going to stream by quarter 3, that will also add to the -- that will also impact the margin positively.

Okay. So whatever premium margins that we have for EBIT as well as PAT that will be sustainable or rather increase as and when the backward integration process is completed by Q3 FY '25, right?

Yes. We expect it to improve.

Okay, okay. Okay. So in terms of demand front, if I say, what exactly is the scenario -- I mean, I know that we are more focused towards the rural part of India. [indiscernible].

So the demand outlook remains very, very strong. If you see the current forecast for the monsoon, it's expected to be around 103% to 104% of the long period average, which augurs well for the Indian economy and Indian farmers. The farmers are getting good price for their produce, which also augurs well for a strong demand in the year ahead. Yes. Thank you.

Okay. So in terms of growth rate for top line for the next 2, 3 years, what exactly do we have target for next 2, 3 years?

Yes. So in terms of top line, we actually did a record sales of 3 million tonnes for the first time. We're looking at organically having a 5% increment this particular year. Plus MCFL when it gets added on, that will kind of add on another 23%, 24%. So net-net, we're looking at north of 3.7 million tonnes this year.

Okay. Sir, in terms of growth in terms of numbers, if I say, that would be what 20% -- 15% to 20%, more than that?

About 23%, a little more than that.

Okay, next 2 to 3 years. It's all because of the increase in back verification of the production that we are looking at because of it.

Yes, if we're talking about FY '26 -- if we are talking about FY '26, about 20%.

[Operator Instructions] Next question is from the line of Jignesh Kamani from Nippon AMC.

Congratulations for a good set of numbers. Just on the DAP side, I think government announced additional subsidy of around INR 3,500 last year. And we booked I think INR 3,000 out of INR 3,500 for the 9 months. I just want to check in the fourth quarter, have we booked additional amount for the entire year? And what is the quantum?

See, the policy says that INR 3,500, but whatever has been paid that has been booked at this INR 500 has not been booked. So that will be as far as and when this will be declared, then it will be booked.

So in fourth quarter, there was no incremental benefit which you have booked. It was a pure you can say profitability, which was there?

Yes.

Yes, yes, Jignesh, yes.

Understood. And with the revised subsidiary, on the DAP import trading, is there any margin now? Because earlier, there was no much margin left and hence, there was a shortage of DAP.

See, currently, the government policy, the way they have announced, it's going to be a positive margin on the trading. So they have given a indication for that in the subsidy policy. So that's very, very positive actually.

So what happened last year, you said that there was a shortage of DAP. So that's why adoption of the NPK was pretty good with now easily availability of DOP, are you seeing some moderation in the NPK growth rate or some of the farmers who has compulsory shifted from DAP to NPK might reverse?

So there are 2 factors. See, one is the NPK growth, which is driven by a fundamental awareness for the balanced nutrition, which is what is actually helping us to grow the NPK portfolio and the industry also to grow that. Of course, there was a constraint of a DAP and which limited the DAP sales as far as the current year is concerned. We see basically a steady growth for NPK still continuing, but there's still room for balanced nutrition as we move forward. However, DAP availability, if it's better, we can expect a marginal growth there also. And we are trying to position innovative offering, which is TSP, which is 46% P. And that basically creates value for the farmers because you prevent overuse of nitrogen basically through TSP.

So despite healthy availability of DAP, TSP and NPK growth will remain reasonably good, right, for this year?

Yes, yes, yes.

And last one, have you finalized the fund rate of INR 4,000 crore CapEx MAU with Odisha government?

On the course of a few years, that will be done in a phased manner. So right now we are taking this expansion of phosphoric acid and the sulfuric acid and this [indiscernible], all those things that into pipeline. So once that will get completed, then we'll go to the next level of expansion. So that is pretty much in the pipeline.

Next question is from the line of Ahmed Madha from Unifi Capital.

Congratulations on a good set of numbers. Just to understand Q4 number, with the change in subsidy rates for Kharif, is there any change in the major inventory gains for us in Q4? And if yes, can you please quantify it?

No, there is -- yes, this Q4, just whatever the subsidy is there now from the Kharif, the new subsidy has been notified, NBS rate has been notified. Due to that, the stock is there, that also has been properly taken care. That has been accounted for.

Can you quantify that number?

No, that -- whatever as per the stock available and this thing is taken care, I think.

Yes. Okay. Okay. Got it. And in terms of working capital, are you seeing any challenges in terms of receivables from government? That's my first question. And second part of the question is, if I compare our receivable days compared with other peers of us, be it in urea business or NPK business, our relative receivable days look higher. So is there any sort of technical reason which I'm missing, which explains the higher receivable days relatively?

Just to kind of clarify, see, basically, we are trying to look at how we can drive improvement. So if you look at our performance vis-a-vis last year, the receivable days, both from the market and the sub receivables, there is a significant improvement, which has happened. And that's a direction which has been enabled well by a good market demand and good cash flow from the government as well as the market. If you look at the trend, it's very strongly positive for the current year.

Okay. Got it. And in terms of inventory in the channel, can you give any comments? How is the inventory in the channel by the end of March? And how do you see the placements for the next Kharif panning out?

So just to kind of tell you the channel inventories are at a very optimal level. If you look at the POS sales, also the farmer sales, like while our primary sales was 3 million tonne plus, the farmer sales also was 3 million tonne plus. So we maintain a consistent inventory level, which is a steady state around 4 lakh metric ton, 3.5 to 4 lakh metric ton.

Next question is from the line of Riju Dalui from Antique Stock Broking.

Congrats for a good set of numbers. Just a bookkeeping question, like how is the capacity addition at the Goa non-urea plant for the full year?

Can you repeat the question? We couldn't understand.

Like, if you could tell us the Goa non-urea plant utilization for the full year?

That is actually an outstanding year. Actually last year, we almost touched the fullest capacity utilization. So that's a good news for the growth in the last year, yes.

Okay. So it's 100% utilization is there for the non-urea plant?

Yes, it's almost like the fullest utilization, one of the best utilization in the recent years.

Understood. And the other question is that like in FY '25 for the full year, we have seen strong volume growth in the manufacturing fertilizer side, right? So probably you are utilizing roughly around 85% of our total installed capacity in the non-urea side. So if you could highlight like with the current capacity, how much we can -- incremental volumes we can sell into the market for -- over the next 2 years?

This year, we have sold about 3 million tonnes. Out of that, this product manufactured is around 2.6 million. So we plan to grow around 5% to 7% on a overall basis.

So we are saying that we might be utilized 95% of our total capacity in terms of manufacturing fertilizer?

Yes, we are aiming for that actually, yes.

So with that run rate, I think we might exhaust our 100% [indiscernible] level by FY '28. So is there any plan to debottleneck our existing facility to improve the capacity?

Yes, that is actually an ongoing project of a smaller nature. It always goes along with the normal production. If you look at it all the trains actually after this year shutdown, which is almost over, we expect actually to come to the next level. So that debottlenecking is an ongoing job for us and that will definitely realize much better utilization for the equipment and overall equipment effectiveness.

Understood. And in terms of profitable products, so in Q4, like we have registered one of the great EBITDA per tonne. And in terms of EBITDA margin, the margins were on the -- like highest ever in the last few quarters. So like was there any kind of inventory gain in terms of your non-urea side business, especially in the manufacturing fertilizer or the NPK or DAP side?

Yes. This -- due to the NBS impact, we got a notification, whatever this upside that has been accounted for as a policy -- as a accounting policy.

Riju, it's basically a function of multiple things. Backward integration is one. The right product mix is one wherein we have had more of NPKs. And of course, there have been some inventory as part of our channel inventory and that's been accounted for as part of the NBS whatever was given out.

See, I just wanted to understand one thing is that like if we look at the RM prices, which are higher -- which are increasing for the last couple of months, right? So was there any kind of inventory gain for this quarter? And if you could quantify that gain?

No, we can't quantify what we said that whatever the stock is there, that will be utilized in the process. So -- and that will be accounted for in due course.

Okay. Okay. Understood. And in terms of your growth in the northern region or the northern market, so is there any kind of market share gain that we have witnessed during the quarter?

So just to kind of -- see, currently, market share are not in the public domain. But at an overall level, if you look at it, we almost gained more than 1.5% of NPK market share. Our growth of NPK portfolio as far as farmer sales were concerned was upwards of 50% vis-a-vis industry growth of 31%. And north remains to be a focus market for these are irrigated markets. And the way PPL portfolio is concerned, we are in a very balanced kind of volume contribution from north, east, west and south.

Okay. Okay. Understood. And one last question in terms of your Goa plant energy efficiency that you have mentioned in the PPT. So like how much you are going to spend there for the energy efficiency? And what is the expected benefit in the EBITDA level?

So this is a Phase 2 energy efficiency level what we are embarking. So that will be completed by Q4 this year. And the capital outlay is around INR 190 crores to INR 200 crores.

Okay. And expected gain out of this investment?

No, it will be the payback. In terms of payback, I can tell that it will be 4 to 5 years.

Next question is from the line of Vignesh Iyer from Sequent Investments.

Congratulations on excellent set of numbers. So my first question would be to understand, sir, how heading towards Kharif season, I mean, how has been the availability of DAP, especially if you have to comment for the month of April? And secondly, I wanted to understand, can we see the velocity when it comes to NPK sales similar to what we have seen in quarter 4 going ahead as well?

So like when we discuss for the Kharif season, there's 2, 3 fundamentals. One is, I think, first and foremost, which is a good monsoon. So the current forecast is very, very strong and positive, 103% to 104%. The reservoirs are carrying good water levels, which also augurs well for the agriculture. In terms of the stock inventories as a country, the DAP inventory currently is low and we maintain still a good stock of NPKs, basically, which is available with the trade. We see a good demand in the Kharif season. And the DAP availability is going to be mixed basically in view of limited availability from China. However, the government policy has been very favorable and it supports that the customer requirements are met. So you are going to see a good demand for NPKs because of fundamental kind of demand from the customers and also good demand for DAP and new products like TSP. So it's going to be a good season ahead. DAP availability is going to be limited.

Okay. Sir, can you quantify the inventory that we carry from March to April, I mean, total inventory in tonnes, if you could?

Basically, for us, we will be having approximately 3.5 million to 4 million tonnes -- 4 lakh tonnes of stocks.

Okay. So I mean, considering we have almost done sales more than, I mean, capacity for obvious reason that we would have carried forward some inventory last year as well. Can we expect, I mean, like 3.3 lakh, 3.4 lakh tonne type of volume number in FY '26?

So we don't give a forward-looking this thing. You should expect a good set of numbers. Like we have clarified, we are planning to augment our capacity. We also strategically do trading volumes based on driving profitable growth. And since we're carrying opening trade stocks, which is like a regular routine in nature, that augurs well for both Kharif season and the season ahead. So sales are going to be strong. That's how we look at it.

Okay. Just one last question before I get back in the queue. Wanted to understand how the prices of sulfur and sulfuric acid has panned out in quarter 4? And can you say if there is any meaningful change that we have seen in the month of April?

Yes. So basically, we are seeing some sort of an uptake in Kharif raw material commodities. Sulfur right now, as we're speaking, is about -- trending at about $300-odd. Sulfuric acid is about $125-ish. But given the fact we are -- we have about 1.4 million tonnes of sulfuric acid captive capacity, we kind of stand to benefit by kind of procuring sulfur and making acid in-house.

What were the prices in quarter 4, I mean, for sulfur and sulfuric?

Quarter 4 sulfur was about $190-odd. Sulfuric was about $102. These are published numbers, not specific to our company, but generic numbers.

Got it. Got it, sir. Just general trend of the pipeline. Understood.

Next question is from the line of Dhruv Muchhal from HDFC Asset Management.

Sir, it's a repetition of the earlier question on the manufacturing capacity almost fully utilized. So assuming you grow by 5% next year, you will be about 90% capacity utilized on your manufacturing volumes. So just trying to understand how much more can you do from debottlenecking? And I mean -- and when do you probably will have to go for the next phase of expansion? And how do you time it better?

Thank you, Dhruv. Actually, last year, witnessed actually one of the best capacity utilization of all the trains what we operate. This year, actually, like we said about debottlenecking is a ongoing activity for us, at least 5% to 8% of the capacity we expect to come out of the debottleneck. And accordingly, there are a lot of other things happening parallelly in terms of reliability improvement and the excellence in terms of manufacturing, in terms of improving capability of people. So this all should result actually if you look at it, actually 7% to 8% of the capacity should increase year-by-year by various means. And also once the backward integration projects are handy actually, definitely, we'll be on the drawing board, a lot of other actions plans are already lined up.

I'm just wondering, would we -- are we a bit late in terms of the announcement given that the demand is reasonably good? There is -- and also your capacities are fully utilized or there is a lot of scope from debottlenecking that you can drive for 1, 2 years? Because I'm just wondering if you announce a capacity expansion even today if a granulation, it would take about 1, 2 years probably for the phase to come up. So just trying to understand, would this capacity constraint become a bottleneck for growth?

So Dhruv, if I may add, actually, the growth for Paradeep Phosphates over the last 4 years has been a mix of both organic as well as inorganic. So although we are...

No, I understand. The inorganic part will drive just from the organic segment, I'm just...

So organic, in fact, let the merger kind of get complete. And then I think we should have very quick plans in terms of how to augment the capacity further. So you have to wait it out.

In Paradeep, we have got the spare capacity of 1.5 lakh tonnes, which can take care of this -- whatever growth you are talking. So we can easily have 1.5 lakh to 2 lakh tonne addition with doing little this -- whatever the debottlenecking we are doing. That is what we are right now doing it.

Yes. And just to add, we're also trying to augment the business growth through the traded volumes. However philosophy on trade volume is to drive profitable growth, but we will be augmenting the market requirement through full capacity utilization as well as through traded volumes also. And of course, the inorganic growth through MCFL integration.

Yes, Dhruv. Just to give you a number, if you look at the overall market growth, it's about 5%, 6%, whereas PPL for the last 4 years have grown at a compound rate of more than 15%, 16%. So I think that kind of really -- it's a good number for us and we'll announce further plans once the merger is complete.

Got it. Perfect. And is there also a scope from optimizing your portfolio further? For example, DAP this year, if I understand, is about 30% of your overall mix, manufacturing mix versus it was about 45% earlier. So can you trade more of DAP and produce more of NPK? Is that a possibility to also drive volumes, manufacturing volumes?

So the way we look at it is, see, the product mix is a function of the market requirement, profitability and as well as optimal use of the RM materials available. So our focused path is to drive the NPK growth. However, in order to meet the customer requirement, we offer DAP, which is partially through the manufactured volume. And we are also going in for traded DAP to augment that.

So if you look at it actually the last 2 years, it will be very clearly consolidated towards the NPK volumes. And that part is actually going to get strengthened in the coming years for sure.

Got it. The second question is on the CapEx. If you can guide for the CapEx for FY '26.

So the project what we are now undergoing, we have got around INR 500 crores all put together. So out of that, this -- why I'm talking the cash outflow, whatever we are going to invest. So in that energy efficiency, what I told just some time back, INR 200 crores. And for the P2O5 augment this one, the capacity around INR 100 crores and sulfuric acid, what we are increasing the capacity from 5 lakh tonnes. For that, this is around INR 100 crores what we'll be spending. So balance has been spent, but this will be spent during this year.

Got it. And sir, last question is on the DAP, the subsidy and the -- some of the under recoveries. I think in the last call, you had mentioned that at the end of the year, when the government looks at the audited accounts, if there is any loss on DAP sales, that would be adjusted for and would be given to the companies -- I mean, may go to the companies. So I'm just trying to verify, does that still hold? And assuming you were to go to the government and claim for that under recovery, how much that amount would be?

No, whatever has been notified by the government based on that, we have been -- we have claimed it. And that has all been accounted for. So nothing is there, which is not to be -- further to be claimed.

So except for the INR 500, which you have not provided for, the remaining everything else is claimed?

Yes, yes.

Next question is from the line of Aayush Jha from Sagun Capital.

My question is for the Goa plant, ammonia and urea. When the plant started in 2023, I have seen there is a frequently breakdown of the plant. And if I quote the number, it's around more than 6 and 7 times the plant has breakdown and I have read that. So what's the issue there? And when we can see the stable of that plant, sir?

It is unfortunate we had multiple stoppages in the ammonia urea last year. If you look at it, actually, we have recovered from that and majority has come from basically the ammonia compressor side. And to remove all these things once for all, actually, by end of this year, actually, we'll be replacing the critical ammonia compressors as a program address both reliability as well as the energy efficiency. And apart from that, there's a lot of other investment we have done in terms of maintainability and reliability improvement. So we expect this year is going to be much better than last year. And just to add that in spite of all these things, we have crossed our RAC.

Excess capacity, what has been allotted to us 4 lakh tonnes we [indiscernible].

Okay, sir. And sir, my second question is around the merger, which are recently going to take place. And is there any future guidance you want to give about that, sir?

We have received the SEBI approval. We are with NCLT bench. The shareholder meeting is being convened on 2nd of June. Once that is approved, then we'll go to NCLT for the second motion. So all in all, we expect that by -- within the next 3 to 4 months, we should be able to close the process.

Next question is from the line of Krishan Parwani from JM Financial.

Congratulations on a very strong set of numbers. A couple from my side. First, one clarification. I think on the -- you mentioned about capacity debottlenecking. So probably about 1.5 lakh to 2 lakh tonnes. So by when can we expect that?

This is ongoing actually. This will get realized this current year itself.

Okay. So basically, your overall capacity like phosphoric capacity could go from 2.6 million to 2.8 million by FY '26. Is that correct?

Yes, yes. Yes.

Okay. That's fine. And for that, what was the CapEx that you did?

Not a major CapEx impact, actually. There's a lot of debottleneck, which is taking both the revenue as well as smaller CapEx routes.

Got it. And secondly, on the overall volume, so we've seen that DAP volume has declined to 660 [ KTDA ] in FY '25, obviously, because NPKs volumes sold are higher. So what's your estimation for DAP sales in F '26?

So we don't give a forward guidance for a particular product. However, the intention is to overall grow the numbers. And like what we said, around 5% to 7% will come from the inorganic and the further growth will come from the merger basically. And we're also trying to drive traded volumes of DAP and TSP. So TSP is another product in the similar portfolio with 46% PE. That's how we're trying to meet the requirement. DAP will be done in line with the market requirement. However, the intention is to kind of offer farmers a balanced portfolio of NPKs because that is much better for agriculture.

Okay. And when you say 5% to 7%, I think that's basically ex of MCFL, correct?

Yes, yes. You're right.

Okay. Okay. Got it. And just the last bit, I know you don't indicate this, but can you give some understanding about what's your traded volume EBITDA like? I mean, what is your trading EBITDA like in FY '25, if you could just give some indicator?

So generally trade volume last year, we have done around 3.9 lakh tonnes, right, 4 lakh tonnes. So the EBITDA will be around INR 2,000 to INR 2,500 lower than the manufactured EBITDA level.

Okay. So that's more like INR 2,000, give or take?

Yes.

Okay. And last bit, what's your subsidy outstanding currently?

Around INR 1,900 crores.

Next question is from the line of Sophiya Masta from Elara Securities.

Congratulations on a good set of numbers. I just would like to know that what are the kind of trading volumes that we expect in FY '26, if you could give any guidance on that?

So like I think we clarified, we are not giving a forward guidance on the numbers ahead. We have indicated a growth of 5% to 7% on the overall portfolio and trading will be done to support the market requirement basically and as well as driving profitable growth. So it's going to be -- we're going to be looking at DAP and TFP. I would like -- not like to give stand-alone forward guidance.

Okay. And what are like a fixed CapEx plans for the coming year?

In terms of the decarbonization and carbon neutral part, there is a big investment, which is going to come in terms of energy improvement, especially in the Goa plant. And in Paradeep plant, actually it's going to be backward integration of sulfuric acid as well as phosphoric acid and some debottlenecking to increase the capacity of the current train.

So it will be around INR 500.

Next question is from the line of Sandeep Mukherjee from SKP Securities Limited.

Sir, I think that the NBS subsidies are revised. So any other products in Goa plant are you targeting like N-10 or something?

Just to kind of share with you, see, our Goa remains a dedicated site for making NPK portfolio. And one of our flagship products that we are trying to grow is triple 19. And of course, we've got a strong portfolio of other NPKs like N-10, N-12, N-28. So Goa is a dedicated NPK site.

Okay, sir. And the CapEx guidance of INR 5,500 by FY '27 remains intact? Sorry, your EBITDA per tonne guidance of INR 5,500 by FY '27 is intact?

No. No, no. We continue to give guidance of INR 4,500 to INR 5,000 as sustainable EBITDA. And whatever expansion in EBITDA will happen, it will happen because of the backward integration project that we are undertaking. So to that effect, the EBITDA per tonne increased, but the sustainable EBITDA per tonne guidance continues to be INR 4,500.

Next question is from the line of Vignesh Iyer from Sequent Investments.

Sir, my question is more on the other income side of it. Wanted to understand what is the income that we are deriving from -- I mean, on the other income side. I mean we have been doing INR 35 crores, INR 40 crores now consistently for the last 2 quarters. So earlier, the run rate used to be INR 15 crores, INR 20 crores. Is it mainly treasury income or how...

Yes. This is mainly on account of the treasury income. And during this year, the cash flow subsidy inflow and the trade collection is good. So whatever surplus we have put it in treasury manager treasury and that has yield this type of income.

Okay. And can we expect that the net debt to equity to improve and to see more probably near 0.6x, 0.5x in next 2 years?

Certainly, with this type of the backward integration and this EBITDA margin, we are talking and the growth in the volume with the free cash flow, we can expect that. We believe that we'll be able to do that, achieve that.

Next question is from the line of Manish Mahawar from Antique Stock Broking Limited.

Yes, sir, just in terms of market, right, I think we are gaining share in terms of a north market, right? I just wanted to understand, basically, it's -- and we are growing NPKs at a faster pace. So it's a market in the north, which is more of a DAP I think heavy, right? It's shifting towards the NPK at a much faster pace because our competitor is also highlighting the same thing. So I just wanted to understand from the market perspective.

Just to share with you, we've been pioneers in driving the northern market as the shift to NPKs is concerned, especially through our flagship grade 20:20:0:13, which is nitrogen, phosphorus and sulfur. And we are seeing a good acceptance for that product happening right across Punjab, Haryana, UP, Bihar. So which augurs well because the farmer instead of just putting 1 or 2 nutrients is getting a balanced attrition of nitrogen, phosphorous and sulfur. And we also see a good scope for NPKs like 12:32:16 to also grow in that geography.

Okay. And -- but the market side, it's more of a shift is happening towards DAP to NPK at a much faster pace in these markets?

It is definitely happening. Okay? And one of the key products which is going in the overall market is 20:20:0:13. So out of almost the 1.14 million tonnes of NPKs, almost 7 million is approximately N-20. So you can see a clear shift which is happening. And that is more dominant in the north because the south and west were already dominant NPK markets.

Right, right. Okay. And these markets are within the 1,400 kilometer range of which is subsidy -- freight subsidy, right? It's -- or it is over and above that in terms of a reach perspective?

Yes. So just to kind of give you kind of, see, the synergistic effect that we have that we've got Paradeep and Goa and we are able to serve the markets based on what is the most optimal thing from both the plants.

Okay. Understood. And in terms of second question, in terms of your EBITDA per tonne, right, I think Alok has said in one of the answer, right, INR 4,500 per metric ton will be a sustainable number. And how basically -- my sense is the next FY '27, right, your energy efficiency in Goa as well as all sulfuric acid plant will come, right? So this EBITDA per tonne has to improve in FY '27, right? '26 maybe will be the operating leverage will play out?

Yes. So what Alok has told, based on that, yes, on a steady-state basis, we can have INR 4,500. And due to this, all the backward integration and what are the cost saving project we are doing, it will have a definitely positive impact on this -- our product portfolio. But that also depends what is the international prices and all these things, depending on all these things. But it will have a definitely good impact and a positive impact on our EBITDA bottom line.

Actually, if we look at it in terms of 2, 3 actions, one is the scale in terms of the production improvement as well as the total selling and obviously, the backward integration and energy improvements. This is the key thing which are going to be playing out in the coming days against the risk involved in terms of the turbulence which happens. We are quite positive that actually we'll derive much higher numbers.

Okay. Understood. And 2 bookkeeping questions. One, in terms of subsidy, as you said, INR 1,900-odd crores of subsidy outstanding. Can you break it up into the due and non-due subsidy from the government?

Out of that, whatever is due is around INR 700 crores should be. And what is the pipeline that [indiscernible] around INR 1,200 crores.

INR 1,200 crores. Okay. Understood. And next one is interest cost. Basically, if you look at this year, right, we have closed at around INR 360-odd crores of interest cost. How do you see this number will be the next year? Or maybe you can share the rate of interest -- average rate of interest for us?

During this year, even though the MCLR rate and RBI rate, there is an increase, then subsequent decrease. But our rate has substantially reduced. Our interest rate, which was earlier last year around 8.5%. This year, it is around 6% to 7.7%. So this is on account of this portfolio of more this supply credit, bad credit and good management of working capital. And this year also because of this good subsidy and trade collection, the utilized on the fund-based limit also quite muted.

Okay. But do we think this overall interest outgo, which is last 2 years is in the same range of INR 360 crores, INR 370-odd crores, right, will come down from these levels now as we have good cash now?

Yes, we expect that.

Next question is from the line of Rohit Nagraj from B&K Securities.

Congrats on a good set of numbers. The first question is on the phosphoric acid. So currently, we have 0.5 million tonnes of capacity. Are we currently using the entire phosphor acid for our fertilizers? And the second question is the additional 0.2 million tonnes which we are adding, that will be sufficient for how many years in terms of the growth that we are targeting?

Yes. So Rohit, first of all, I think there was a bit of confusion. So in terms of phosphor acid, we have 0.5 million tonnes as we speak and that is sufficient for the Paradeep site. The incremental 0.2 million tonnes will be helping us to kind of support the other sites in addition to Paradeep. That's one. In terms of the other intermediary, which is sulfuric acid, we are augmenting the capacity to 2 million tonnes, which will kind of -- which is expected to complete in another 4, 5 months. That should kind of make Paradeep more than 100% backward integrated.

Sure. And second question in terms of the battery grade phos acid. So any comments on that from your side?

Rohit, as you would realize, we have quite a healthy level of free cash on the balance sheet at the moment. We wanted to kind of complete the couple of important items at hand, namely the merger, the phos acid and the sulfuric acid. Post that, we'll announce further plans in terms of utilization of the remaining free cash.

Next question is from the line of Shubro, an individual investor.

This INR 3,500 additional subsidy on DAP has been extended till the month of September, is that correct?

Yes, it has been extended up to September.

And regarding the balance INR 500 -- yes, sir, regarding the balance INR 500 subsidy, which is due, by when do you think it will be cleared?

No, that still not notified, the way it has to be claim and all things. So we are waiting for that notification. Once it comes, it's certain, then we'll do it.

So this would be the same for all the industry players on DAP, correct?

Yes, yes.

Because -- I asked this because government has extended this for another 6 months and previous deals are also not yet clear when it will be paid out. So that's the reason I was asking.

No, your question is valid. This is -- this INR 3,500 has been extended. But this last year, they -- whatever they have paid INR 3,000, we have accounted for this whenever they notify the balance INR 500, that will be accounted for.

We will take the last question from the line of Sophiya Masta from Elara Securities.

I just wanted to ask that how much CapEx have we already put into our sulfuric and phosphoric acid plants respectively?

The sulfuric acid plant, whatever we are talking that 0.5 million tonnes. On that, out of INR 480 crores, what is the capital outlay, we have already spent around INR 360-odd crores. So that balance will be spent during this year. Phosphoric acid that is 0.2 million what we are talking, out of that, we have just started, we have spent around INR 30 crores.

How much, sorry?

We have spent around INR 30 crores and the balance INR 100-odd crores will be spent during this year.

Thank you. I would now like to hand the conference over to the management for closing comments.

Thank you, everyone, for joining us today and for your continued trust and interest in our journey and the company. Should you have any further questions, please feel free to reach out to our Investor Relations team any time. Thank you. Thanking you all.

Thank you.

Thank you.

Thank you. Thank you.

On behalf of Antique Stock Broking Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.