Shree Pushkar Chemicals & Fertilisers Limited (SHREEPUSHK) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to Shree Pushkar Chemicals & Fertilisers Limited Q3 and 9 months FY 2024 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. Before we begin, I would like to remind all participants that some of the statements or comments made on today's call may be forward-looking in nature. These may include, but are not necessarily limited to financial projections or other statements of the company's plans, objectives, expectations or intentions. The company disclaims any obligation to update these forward-looking statements to reflect future events or developments. Kindly refer to Slide #17 of the earnings presentation for a detailed disclaimer. I now hand the conference over to Mr. Nitesh Pangle, Company Secretary and Compliance Officer of Shree Pushkar Chemicals & Fertilisers Limited. Thank you, and over to you, sir.

Good evening, everyone, and we welcome all the participants to Shree Pushkar Chemicals & Fertilisers Limited Q3 and 9 months FY 2024 earnings call. Joining us today from the management side, we have Mr. Punit Makharia, Chairman and Managing Director; Mr. Deepak Beriwala, Chief Financial Officer. Now I will hand over the call to Mr. Punit Makharia for his opening remarks. Over to you, sir.

Thank you, Nitesh. A very good evening, and a very warm welcome to everyone for Q3 and 9 months FY '24 earnings call of Shree Pushkar Chemicals & Fertilisers Limited. I hope you all have got an opportunity to go through the financial results as well as investor presentation, which has been uploaded on the stock exchange as well as on the company's website. Friends, now I'll take you through the financial and operational performance of our company for Q3 and 9 months FY '24. During the year, our company objective remains the efficient operation of our manufacturing plants with a strong emphasis on maintaining sound cash flow throughout the business cycle. Rather than pursuing the rapid top line growth and without the long-term prospective we have adopted a measured approach, prioritizing stability over short-term gains, which have resulted very well. Our commitment to this to avoid accumulate cost inventories and maintaining and managing high debt that would negatively impact our financial wellbeings. All while retaining our valued customers, we have also been attentive to monitoring commodity pricing and market trends to steer through the challenges and maintaining our financial stability. I'm pleased to share significant development in our operations, particularly in Ratnagiri region of Maharashtra. Our efforts had resulted in a remarkable increase in the total sale, and we are progressing in site development for the Unit 6. This strategic initiative in Ratnagiri enhances not just our capacity within fertilizer segment, but also contributes significantly to overall growth of our organization. Friends, furthermore, we are satisfied with our ongoing projects to establish 3.8 megawatt DC solar power plant in Ahmednagar district of Maharashtra. The project complements our previous strategic investment of 5.2 megawatt DC solar power plant in the same region and making the total to 9-megawatt DC referring our commitment to sustainable energy solutions and broader environmental goals. In our Chemical segment, we saw strong growth this quarter in spite of global demand softening due to economic challenges and energy crisis. Our efforts and initiatives have enabled us to maintain stability and growth, even amidst challenges such as climate change and geopolitical tensions. Currently, we are operating our plants at almost full capacity. The signs of recovering indicating further production and demand of chemicals gradually increasing. Lastly, I'm delighted to report that our company maintains a robust balance sheet and non-lien deposits of INR 95 crores, providing a strong cash position for long-term stability and sustainability. Despite the challenging circumstances of geopolitical tensions, demand pressures, global supply chain disturbances, economic downturns and high inflationary pressures, we have achieved remarkable growth. Our steadfast commitment to sustainable growth in the face of adversity has been core to our business. Looking ahead, we are optimistic about our future and anticipating significant profitability and revenue growth improvements in the coming quarters. We remain dedicated to our goals and confident that our steadfast efforts and strategic planning will continue to yield positive outcomes. Friends, we are excited to face the challenges that lie ahead, building on the success so far. With this, I would like to pass on the baton to Mr. Deepak, our CFO, who will provide you the operational and financial highlights of Q3 and 9 months FY '24. Deepak?

Thank you, sir. Good evening, and thank you all for joining us today. I would like to provide an overview of our operational and financial performance of the Q3 and 9 months FY '24. In Q3 FY '24, our consolidated volume in the chemical sector saw a remarkable 45% surge reaching 15,875 metric tons compared to 10,969 metric tons in the same period of FY '23. Similarly, the fertilizer sector observed a significant 10% increase with the volume totaling 46,713 metric tons in Q3 FY '24 up from 42,537 metric tons in Q3 FY '23. This contributed to a net 17% year-on-year growth in our consolidated total volume, which amounted to 62,588 metric tons compared to 53,506 metric tons in Q3 FY '23. For the first 9 months of FY '24, the chemical sector continued its upward trajectory with a 31% increase in volume, reaching 45,889 metric tons compared to 35,115 metric tons in the corresponding period of FY '23. However, the fertilizer sector showed a slight decline of 2% with volume totaling 152,415 metric tons in 9 months FY '24, down from 155,796 metric ton in 9 months FY '23. Nevertheless, our consolidated total volume grew up by significant 4% year-on-year basis, amounting to 198,304 metric tons compared to 190,951 metric tons in 9 months FY '23. Now turning to our financial performance. In Q3 FY '24, our consolidated revenue amounting to INR 174.60 crores, marking a significant 14% increase from INR 153.7 crores in Q3 FY '23. Our consolidated EBITDA for the same period was INR 14 crores, reflecting a 6% growth from INR 13.1 crores in Q3 FY '23 with a robust margin of 8% in Q3 FY '24. The PAT for Q3 FY '24 was INR 7.6 crores representing a significant 49% growth from INR 5.1 crores in Q3 FY '23 with a PAT margin of 4.3%. Moving on to the 9 months, our consolidated revenue for 9 months FY '24 amounting to INR 535.4 crores, indicating a considerable 6% growth from INR 503.7 crores in 9 months FY '23. However, our consolidated EBITDA for 9 months FY '24 decreased to INR 41.9 crores from INR 48 crores in 9 months FY '23, making a decline of 13% year-on-year versus the EBITDA margin for 9 months FY '24 was 7.8% with a PAT margin of 4.4%. The PAT for 9 months FY '24 was reported at INR 24 crores, reflecting a 2% decrease from INR 24.4 crores in 9 months FY '23. With this, I would like to open the floor for any questions and discussion. Thank you all of you.

[Operator Instructions] We take the first question from the line of Sanjeev Damani from SKD Consulting.

Hello, I am not getting the voice, what has happened, I don't know.

Yes, sir, please go ahead, we can hear you.

It is my turn only to ask question?

Yes, sir.

Okay. I am Sanjeev Damani. [Foreign Language]. Hello?

[Foreign Language].

[Foreign Language].

[Foreign Language]. Please, please. Please, go ahead. [Foreign Language].

Sir, if you can kindly help me in Chemical division we consider intermediate dyes and chemical and sulfuric acid and other chemicals that we make for making dyes only, or it is Chemical division means only dyes division?

Sir, Chemical division consists of Dyes, Intermediates, and Chemicals and like Acid division.

Acid division also.

As you know Intermediate we consume also, Intermediate we sell also as well as the acids we consume also and we sell also.

Right, sir. And this -- the sulfuric acid when it goes to the Fertilizer division, so that will be reduced from the sale of fertilizer...

Obviously, sir. We cannot capture the double sales.

Right, sir. So the effect would be like that.

Sir, see, whatever the acid we consume in our fertilizer business, whatever the intermediates we consume captively in our Dyes business, those quantities are never captured in the revenue figures.

Right, sir. And sir, coming to the Dyes Chemical market, so how is the scenario of the finished dye? And how is the scenario of Dye's Intermediates?

Sir, both are different. We must have a viewpoint on that. The customers whom we cater in Dyes Intermediates in terms you can call them our competitors also in dyes business because other companies who are buying intermediates from us, they are making dyes out of that, and we are competing in the international market as well as in domestic market in terms of dyes. The only benefit what we have is that we have our own intermediates, which we use captively as well we supply to the dyes manufacturers also.

Right, sir. And my only question, I mean, I wanted to understand whether the dyes market are better or intermediates are better in Indian conditions and international conditions, both, because earlier, we had a lot of problems, sir, of demand and all other things in international market also and in our local market also. So this quarter, performance has been better, but how is the realization? And how is the future view also sir, this I want to understand.

Sir let me tell you basically dyestuffs is in value addition of Dyes Intermediates. And since we make intermediates as well as downstream products like acids also, so this provides complete stable, sustainable strength to the company and keeps company away from the market volatilities. As far as this demand and supply condition of the dyestuffs is concerned, as I mentioned in our last con call, that markets are slowly and gradually improving. If you look at our -- in this Q2 con call, and you can easily visualize, yes, there is a growth into the chemical business, at least, in Q3, which we are significantly looking for the stabilization, price betterment and stability of the raw material prices as well as the demand into the finished product prices. I believe that this will continue and would be in a normal stage somewhere by the end of quarter 1 of next financial year. But now I don't see any prospectives or any chance of further more depression into the market. I'm quite positive on the market and which I mentioned in my last con call also. And we can see easily that the growth structure is visible in our Q3 results as far as the chemical vertical is concerned.

Right sir. Last question, about the outstanding of our subsidies, the amount, if you can tell me. And secondly, how much value of sales we get out of our cattle feed item that is di-ammonium phosphate or something like that, which we manufacture.

Sir, DCP in quarter 3 on consolidated basis, we have sold [Foreign Language] around INR 13 crores.

INR 13 crores in the last 9 months. That is our quantum of...

No, no, no. This I am only telling you for the Q3.

Q3. All alone the item we got for cattle feed is worth INR 13 crores.

INR 13 crores.

And subsidy amount, if you can reveal, outstanding subsidy to be received from government.

[Foreign Language]. Sir, we have to dig out the figure and -- but we'll give it to you through our IR. That's not a problem. We are not having that figure handy with us right now.

But it is -- we are getting it regularly, sir, not much a problem in realizing...

Regularly receiving, there's no issues into that.

So kind of you and I would also congratulate you for fine management and very good performance financially, operationally.

Thank you, sir.

[Operator Instructions] We take the next question from the line of [ Praveen Agarwal ], an individual investor.

My question is, could you -- first question is, could you give us the breakup of volume of the Chemicals segment. Earlier we used to bifurcate acid which is a low-value item, and dye and dyestuff separately because I can see that we are showing a lot of growth in volumes, but that is...

Praveenji, I am sorry, I couldn't understand your question. Can you please repeat?

Sir, I'm saying, can you provide us the breakup of the chemicals into volumes of acid, dye and dyestuff?

Sir, dyes in quarter 3, Dyes & Dyes Intermediates in quarter 3 is 3,600 tons. Praveenji, are you listening to me?

Yes, I am listening. I am listening.

Okay. Dyestuffs and Intermediates is all put together is 3,600 tons in quarter 3.

Okay. And what would be for 9 months?

What, sir?

What would be it for 9 months?

Nine months is -- [Foreign Language] 9,900.

Okay, sir. So that's good.

Nine months, [Foreign Language] 9,900. And in the past 3 months, this quarter 3, it is 3,600. So this is the figure.

Sir, I have noted that one. Sir, my second question is I wanted to get your color on the utilization going forward for both Fertilizer division as well as the Chemical division. So we have a lot of capacity now, what is our current...

Hello, Praveenji, your line is not properly audible, sir. Either are you...

Mr. Praveen, are you connected on your headphone, sir?

Sorry, is this better now?

Yes, if you can switch to handset, sir.

Yes, yes, yes. Hello?

Yes, please.

Yes. So I am saying, I wanted to get your views on the utilization going forward, both...

In terms of fertilizer and chemicals?

Sir, I'm sorry, but the line from Mr. Praveen has got disconnected, sir. So we move on to the next question from the line of [ Saket Kapoor ] from Kapoor & Company.

[Foreign Language] Please complete that answer, utilization levels [Foreign Language].

[Foreign Language] Can you repeat the question because the line was not clearly audible.

Yes, sir. He was asking about the utilization levels going ahead also, what I could make sense from his line. What kind of utilization levels for both the segments can we look forward?

Sir, as of now, what I believe is, yes, there is an improvement scope in this Chemical segment. Further, I believe that there is at least improvement scope of around 12% to 15% in Chemical segment. But if you talk about the Fertilizer segment, particularly in the Fertilizer segment, I think in the next season, starting from May, June to September, things will improve, Mr. Kapoor.

[Foreign Language] So that will aid to the margins going ahead?

I believe [Foreign Language] the reason being is this majority of raw material in fertilizer is being imported. And due to the nature of the raw material is that majorly we are depending on the imports and due to the logistic cost and tensions in the Red Sea, what we read in the various newspapers on day-to-day basis, logistic cost has gone up tremendously. So we have to balance out, not keeping high cost inventories, and balancing out looking at the market potentials, we have to be very cautious. Recently, government has reduced the subsidy also in terms of fertilizers. So honestly speaking, looking at the environmental issues, specifically, if I talk to you in this Northern India, if you remember, initially, in May, June, July, this entire Punjab and Haryana was under the flood, if you remember so. [Foreign Language] So this is providing -- this is putting a lot of issues. And we are closely watching that situation. I believe that in coming few weeks, fertilizer business should be improved. And accordingly, the pricing should be also stabilized. Logistic cost should be also stabilized.

[Foreign Language] 2/3 of the quarter [Foreign Language] half of the quarter [Foreign Language] already we have done. So what we exited December [Foreign Language] environment in terms of pricing and margins [Foreign Language].

[Foreign Language].

[Foreign Language].

It is not a problem, sir. Chemical has already come to improvement stage, which is visible in our last results also. [Foreign Language] I see that there is a good amount of demand and growth and as well as prices have also started improving. Demand has started coming in. The same phase will come for even the fertilizers also, probably not in this quarter, maybe in the first quarter of next year.

[Foreign Language] what capacity would be augmented? And what kind of turnover ratio the chemical mix going to be, sir? And how long will it take for us to complete the CapEx?

[Foreign Language] And these both the CapEx's will be improving; a, in part of the backward integration for which we already have 6 stages that were forward integrated. This would be the seventh stage of the backward/forward integration. Another is towards the fertilizers. And this new fertilizer expansion will totally turnaround the face of the company, will totally turnaround the image of the company. [Foreign Language] on the basis of almost 65%, 70% utilization in the first year.

[Foreign Language].

[Foreign Language] But let's see, the time will tell, sir. Because see, immediately after completing our first phase of CapEx of INR 175 crores from internal accrual, now we have taken up a new CapEx that too also [Foreign Language] company would be really -- should be able to generate sufficient amount of money plus promoter has also placed INR 15 crores warrant also towards the same expansion. [Foreign Language].

[Foreign Language].

[Foreign Language].

[Foreign Language].

[Foreign Language] Plus company would be generating additional cash also during this operation in next year.

[Foreign Language] it will be a game-changing aspect for the company. [Foreign Language] overall because of the market conditions [Foreign Language].

[Foreign Language], I'm sure that we will come back to our old times. Wherein [Foreign Language] EBITDA levels and in a range of around 10% [Foreign Language] PAT level, I clearly has a vision to see in the next financial year.

[Foreign Language].

[Foreign Language]. I believe in a conservative approach [Foreign Language].

[Foreign Language] we are reporting a consistent set of numbers, not good, not bad, but we are...

[Foreign Language] I believer in one strategy that one wrong decision in business may keep you out of the business forever. [Foreign Language].

[Foreign Language] for the year as a whole?

[Foreign Language] somewhere we should be 725 plus.

On consolidated level?

On consolidated level.

[Foreign Language].

[Foreign Language] But I don't see slipping it down for us.

[Foreign Language].

[Foreign Language].

[Foreign Language].

[Foreign Language] I'm sure we will be able to do as per the expectations, at least in the next quarter. [Foreign Language].

[Foreign Language].

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

[Foreign Language] current capacity utilization both in the Chemicals division as well as Fertilizer division [Foreign Language].

[Foreign Language] almost around 40%.

[Foreign Language].

[Foreign Language] almost 20%, 25% growth [Foreign Language].

[Foreign Language] or over 2 years?

[Foreign Language].

[Foreign Language].

[Foreign Language] the backward integration that will support our existing business, which we will be producing our own raw materials for that. [Foreign Language] that will be catering to the -- in the market.

[Foreign Language].

[Foreign Language].

Ladies and gentlemen, that was the last question for the day. I would now like to hand the conference over to Mr. Punit Makharia for closing comments.

Thank you, everyone, for joining our Q3 and 9 months FY '24 earnings call. If you have any further questions, please feel free to connect with our Investor Relations adviser, Churchgate Partners, and we'll be happy to address all your queries. Thank you very much. Have a safe day.

Thank you. On behalf of Shree Pushkar Chemicals & Fertilisers Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.