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

Ladies and gentlemen, welcome to Shree Pushkar Chemicals & Fertilisers Limited's Q4 and FY 2024 Earnings 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 #21 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 Q4 and FY 2024 earnings call. Joining us today from the management side, we have Mr. Punit Makharia, Chairman and Managing Director; and 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 attending the Q4 and FY '24 earnings call of Shree Pushkar Chemicals & Fertilisers Limited. I trust you all had the chance to review the financial results and the investor presentation available on the both stock exchange and our company website. Trends reflecting on our Q4 performance, amidst a dynamic economical landscape, I'm pleased to present our financial and operational achievements. Our commitment to sustainable expansion and strategic investments has yielded commendable results. During Q4 FY '24, our stand-alone revenue grew by 13%, reaching to INR 135 crores, underscoring our efforts to enhance operational efficiencies and expand our product portfolio. Stand-alone EBITDA surged by 36% to INR 16 crores, achieving an EBITDA margin of 11.6%. Furthermore, our stand-alone PAT saw a significant increase of 329%, reaching to INR 11 crores with a PAT margin of 7.9%. For the entire fiscal year, stand-alone revenue increased by 16% to INR 487 crores, supported by a 4% increase in stand-alone EBITDA to INR 44 crores and a PAT growth of 91% to INR 27 crores. On a consolidated basis, revenue increased by 6% to INR 726 crores, although we experienced an 11% decline in EBITDA to INR 61 crores. Our PAT remained stable at INR 37.1 crores, reflecting our alliances in the face of the market fluctuations. Our product segment exhibited varied performance in terms of volume and revenues. Dyes and Chemicals saw a significant volume growth of 82% and actually grew by 19%. While fertilizer and animal feed experienced marginal declines. Revenue from the dyes intermediate grew by 64%, whereas acid revenue declined by 26%. Despite these fluctuations, we remain focused on capitalizing on growth opportunities and proactively addressing the challenges. We have initiated several strategic projects aimed at enhancing on our production capabilities and achieving greater sustainability. The initiation of Unit 6 in our fertilizer division along with a setup of 3.8-megawatt solar power plant and the new water soluble plant at Unit 4 reflecting our commitment to forward and backward integration, the combined solar capacity will be 9-megawatt on a DC basis, supporting our units in Ratnagiri, Maharashtra. Our planned CapEx of INR 215 crores, primarily funded through internal accruals and the preferential issue to the promoter will facilitate the expansion of our existing capabilities, the widening of our product portfolio and further integration within our operations. During the financial year, we successfully completed the consolidated CapEx of INR 50 crores, out of which INR 16.12 crores was allotted for the further establishment of 3.8-megawatt DC solar power plant and INR 33.46 crores were directly towards investment in our chemical and fertilizer verticals. Looking ahead, we are committed to fostering sustainable growth through prudent financial management, operational efficiency achievements and strategic investments in innovation and technology. With a forward-looking approach and the dedicated team, we are confident of our ability to deliver long-term value to our shareholders. Friends, with this, I would like to hand over the call to Mr. Deepak Beriwala, who is our CFO, who will provide more details on the operational and financial highlights of Q4 and FY '24. Over to you, Deepak.

Thank you, sir. Good evening, and thank you all of you joining today. I would like to provide an overview of our operational and financial performance for Q4 and FY '24. Starting with our stand-alone results for Q4 FY '24, I'm pleased to report a 13% revenue growth, reaching INR 135 crores. Our EBITDA for the quarter grew significantly by 36% to INR 16 crores, resulting in an EBITDA margin of 11.6%. Additionally, our PAT increased by 329% amounting to INR 11 crores with a PAT margin of 7.9%. On a consolidated basis, our Q4 FY '24 revenue grew by 6%, totaling to INR 191 crores. However, we experienced an 8% decline in EBITDA amounting to INR 19 crores with an EBITDA margin of 9.8%. Our PAT has increased by 2%, amounting to INR 13 crores with a PAT margin of 6.9%. For the full fiscal year FY '24 on a stand-alone basis, we achieved a revenue growth of 16%, reaching INR 487 crores. Our EBITDA increased by 4% to INR 44 crores with an EBITDA margin of 9.1%. Our PAT grew by 91%, reaching INR 27 crores with a PAT margin of 5.5%. On a consolidated basis for FY '24 show a 6% revenue growth amounting to INR 726 crores. We experienced an 11% decline in EBITDA totaling INR 61 crores with an EBITDA margin of 8.4%. PAT remains net at INR 37.1 crores with a PAT margin of 5.1%. Moving on to our volume metrics for FY '24. We saw a 5% increase in the volume of dyes and 22% increase in dyes intermediate. The volume for acid increased by 19%, while fertilizers remained flat and animal feed decreased by 10%. Overall, our total volume increased by 4%. In terms of revenue for FY '24, dyes decreased by 3%, while dye intermediate saw a substantial increase of 64%. Revenue from acid decreased by 26%, fertilizers by 12% and animal feed by 21%. Despite these mixed results, our total revenue increased by 6%. For Q4 FY '24, the volume of chemical was 11,381 metric tonne, reflecting a 9% year-on-year growth, while fertilizers showed a 4% growth, totaling of 57,000 metric tonnes. For the entire financial year, the volume of chemical was 57,270 metric tonnes, a significant 26% year-over-year growth. Fertilizer, however, saw a slight decline of 1%, totaling of 209,500 metric tonnes. Segmental revenue for Q4 FY '24 show a 25% year-over-year increase in chemicals, whereas fertilizer experience 11% decrease. For FY '24, segmental revenue for chemicals increased by 30%, while fertilizers decreased by 13%. Regarding our financial position, we have a non-lien deposit facility available INR 117 crores. Our return on capital employed for FY '24 stands at 9.7%, and our return on equity is 4.1%. We maintained a strong cash position with cash and cash investments totaling around INR 118.5 crores. In conclusion, despite the challenges in certain segments, we have demonstrated [indiscernible] and achieved significant growth in key areas. Our focus remains on driving operational efficiency, expanding our market presence and delivering sustainable value to our shareholders. With this, we can now open the floor for questions and answers. Thank you, sir.

[Operator Instructions] The first question is from the line of Harshil Solanki from Equitree Capital.

Sir, if you can give you our outlook on both the segments and the volume and realization, how are you seeing things on the ground? Are you seeing any improvement in the volumes and realization?

Sir, to be honestly, in my view, definitely volumes and revenue both have started improving. If you see Q4 '23, '24, the volumes have also increased and the revenue has also increased. I personally feel that the whole industry and the market now has started going towards the stabilization phase. If in my last con call, you'll see that I've always maintained one positive thought and one positive trust and faith into the whole industry that we are end of dark funnel, and we see a good light of hope and way in this whole dark tunnel. I personally believe that the situation has started improving. Now if I talk about the dyestuffs and intermediaries, though we have started our Unit 5 also, we have done the entire capitalization of INR 175 crores. The revenue increase into the Pushkar on a stand-alone basis, specifically into the Chemical segment is mainly out of the Unit 5 production. We are able to sell a good amount of quantities. We have achieved almost this desired level of productions. And Unit 5 has established completely. In terms of fertilizers also, if you'll see that the government has improved the subsidy levels also by around INR 1,200-some-odd per tonne, which was decreased in September, but now in April the government has increased the subsidy also. And looking at the monsoon season of this year, in this particular season, we believe that the good news we are expecting. And we think after the stabilization of the government, after the election results, things will improve betterly, sir, because the whole sentiment of the people will improve, the whole sentiment of the industry will improve.

Okay. Sir, in the Chemicals segment, if you see quarter-on-quarter, there is a 20% volume drop, but we are expecting that things have bottomed out and expected to improve. So what led to this drop in this quarter. Can you explain?

Hold on, let me see the figures. If I talk about the Chemicals -- Solanki ji, growth or degrowth?

Quarter-on-quarter basis, it's a degrowth of 28% from 15,800 to 11,300.

Right now, the figures of last Q4 -- last year Q4 is in front of me. In the last year Q4, we sold around 10,453 tonnes of chemicals. And this quarter for FY '24, the volume went up to 11,381 metric tonnes. And if you are talking about quarter-on-quarter, this is also growth. Because see, on quarter 4 also, if I say about the intermediates, we sold 2,067 tonnes. This is Q4 FY '23. And Q4 FY '24, we sold 2,909 tonnes. So it is a growth. I fail to understand which figures you are looking at, which shows the degrowth.

Quarter on quarter, but no issues we can discuss this separately.

You're comparing '23, '24 or this quarter-on-quarter basis?

Yes, Q3 FY '24 versus Q4 FY '23.

Sir, right now, we are not having the Q3 data in front of us. .

No issues.

Mr. Solanki, let me go through the data and then come back to you. You will hear about this information through our office and through our IR also.

Sure. Sir, next question is on the chemical side. Last time, you said that you have some visibility on the order book. So now is there any further improvement on that?

What last time?

Do you have some visibility on the order book from the earlier levels? Now is there any improvement on this side? And are you seeing any restocking happening on the chemical side?

Basically, whatever I had said my first level has proved in Q4 levels. And in coming quarters of this financial year, I also have the same kind of a feeling that the things will improve much better on what we could not do in the last quarters. So things have started improving, sir. That is what -- even it is visible in the results also.

Got it. Got it. Sir, on the fertilizer side, how is -- how are the things happening on the ground? Is there any increase in exports or is there is any...

If you're going to ask me, as far as the Fertilizer segment is concerned, Fertilizer segment has been completely flat in '23, '24 with comparison to '22, '23. If you look at in deep, right, you will see that the Kisan Phosphates, our unit at Hisar, right. That unit at Hisar, the volumes and the revenue has been decreased by almost 30%. In spite of decreasing to the revenue of 30% also, there is a growth in the overall business. And I believe that in this particular financial year, even the Fertilizer segment is also going to support us. And one more reply to your colleague, what you are saying is that it is degrowth, that is mainly due to the acid business because acid whatever we produced, since we started the new unit of 5 also wherein we produced dyes intermediate, so most of the acid has consumed in Unit 5 also. So there is a less amount -- less these quantities of acid available for sale because we have started our another plant at Unit 5, because of this, the volumes have gone up. So we are having internal consumption of our acid. And whatever is left for selling is only goes for the marketing and sales. Therefore, you see it's the degrowth due to the acid business.

Got it. Got it. Sir, last question on the working capital side. Working capital cycle has -- sorry, the absolute amount has increased by INR 40 crores, and we have taken a short-term borrowing also of INR 40 crores. So is that...

Overall consolidated basis, I would just like to draw your attention on three major points. A, creditors of the company has gone down by almost INR 25 crores.

Yes.

Because of MSME regulation this government came out recently.

Yes.

Because of the company has gone by INR 25 crores, close to INR 25 crores, company has increased its investment by INR 18 crores. Company has put almost INR 50 crores on the CWIP. Debtors the company has gone up because of the increase into the business. So the main question, Mr. Solanki and the main concern should be that money is flowing into the systems. The reason for increase into the bank borrowing is because of all these issues, mainly that the investment has gone up, creditors has gone down substantially. And this -- we have invested CWIP of almost INR 50 crores.

Got it. Got it. We have INR 117 crores of deposits. So why not use that and rather we have taken a debt of INR 40 crores.

[Foreign Language] INR 107 crores [Foreign Language] out of that debt of INR 107 crores, almost INR 85 crores is in the form of non-funded limits. What are your points, Mr. Solanki?

Sir, I'm saying INR 117 crores of deposits we have and we have taken a debt, short-term borrowing...

Sir, what? I'm asking you debt of what, which debt we have taken?

Short-term borrowing.

What kind of short-term borrowings? Funded or non-funded? That's what I'm saying that out of INR 107 crores, almost INR 80 crores, INR 85 crores is the non-funded limits we have utilized in form of LCs and bank guarantees. How can I replace the LC and bank guarantees with my investments.

Okay. Understood. Got it.

[Foreign Language] bank borrowing, [Foreign Language] your question is that why you're having a bank borrowing of INR 107 crores when you having an investment of INR 117 crores. This was your question. Sir, out of INR 107 crores, INR 85 crores is a form of a non-funded utilization in which the bank guaranty is also frozen, in which the LC is also frozen. LCs and bank guarantees cannot be replaced with the cash. Am I clear Mr. Solanki?

Yes. This information was not available sir, that's why.

[Foreign Language] bank borrowings. [Foreign Language] Okay. So I think now it is clear to you?

Yes, sir, it's clear, yes.

INR 107 crores is not the amount on this company is paying interest, please understand. You see drawn -- cash credit drawn is not INR 107 crores. I again reiterate, again repeat, out of INR 107 crores, INR 85 crores almost is in the form of non-funded utilization. But when it comes in the presentation, it comes as a consolidated figure of funded and non-funded both. If you go through the schedules of the balance sheet, you will get to know out of that. Okay, then?

Yes, sir.

The next question is from the line of at from Vaibhav Badjatya from Honesty and Integrity Investment.

Sir, first of all, I have a long list of questions, which is obviously not suitable on this call. And I will ask just the important ones. But I would request if it's possible to give a separate time to discuss all the questions because I tried approaching you directly on your e-mail and also Churchgate Partners, but maybe something was wrong and I never received any reply.

I think you can talk to Mr. Rajiv, who handles our company in IR portfolio. And he will coordinate with you with the management and get you a suitable appointment or suitable replies to all of your questions. Not a problem.

Yes. So sir, I tried approaching Mr. Rajiv, but unfortunately, mobile number and nothing is mentioned, and I tried calling on the landline, but received no reply. So it's great if Mr. Rajiv can give me his mobile number or something or could call me so that I can coordinate based on suitable time?

That's not a problem, sir. Mr. Nitesh share you his contact details, the compliance officer. You can talk to Mr. Nitesh in our company. He will share all the details of Mr. Rajiv.

Sir, I will just ask two or three important ones here. So as far as -- if I see your focus on backward integration and everything, in a lot of places you have done backward integration. But specifically in Meghnagar, you have not done backward integration into sulphuric acid. So I just want to know is there any big reason for that?

That is not required in Meghnagar because honestly speaking, Meghnagar is very closely situated in Gujarat. And now we knew that Adani is coming out with the copper smelter and this sulphuric will be a byproduct. [Foreign Language] regular supplies, constant supply either from Birla Copper, also copper smelter, Adani also coming out in June or July with a copper smelter. We knew this market intelligence for a long time. So we thought that since there is a plenty of material available, there will be no transport cost also. And then a few smelters are there, why to put up a merchant plant. Because the scene, we decided not to go into backward integration at Meghnagar as well as in Madhya Bharat because their acid is plentily available. And if you talk about our Haryana's unit, that is at a distance of almost [Foreign Language] kilometers. Taking the material to [Foreign Language] kilometer and paying such a huge amount of transport doesn't make any sense. The totality putting up a backward integrated sulphuric plant in Meghnagar is not a viable decision.

Okay. And sir, on fertilizer business again, so GOI has issued this guideline of maximum -- reasonable profit margins. So just want to understand how this will impact our business and whether -- I mean, which plants of ours will be classified as integrated and which will be non-integrated...

Government of India has already given you a decent reasonable of profit margins for fertilizer business, that is, I think, 12% to 10%, something like that on the PAT level. And I think that that's a decent profit or margin. Let us not expect that on a long-term stability basis, you will make more than 10% PAT margins, being that these products are mainly for the farmers and these things. So it has to be reasonable for both the...

Sir, so will we be classified an integrated because while a lot of places we have sulphuric asset...

It depends on unit to unit, like Meghnagar will not be classified as integrated, but other sites will be classified as integrated.

Okay. Got it. Understood. And on the NPK side, sir, I mean for the new capacity that we are planning to put on NPK side, are we going to manufacture phosphoric acid in-house? Or we don't have -- as of now, phosphoric acid we don't have plan to manufacture phosphoric acid?

I would not like to discuss on our business strategies and business plannings and our product selection on this platform. If you want to understand, you can take prior appointment and meet us. See, we never discuss our products, our business plans on this platform. And we fear that the strategy should not be known to outside our market competitors, honestly speaking. Please don't mind it. I apologize I could not answer this question to you, but you can take in a separate meeting with us and ask further questions on this.

Yes. No problem. I completely understand. I mean some of the sensitive things should not go to our competitors.

I'd like to discuss [indiscernible]. Please understand.

I understand. Yes, I understand. And sir, coming on to the dyes business, so you have mentioned many times earlier that probably China is no more a competitor, and there's no export that is going from China to India. But in terms of global market and thereby impact on pricing, will you still consider China as a force, which can impact global pricing and thereby pricing in India?

[Foreign Language]. I would not say that the China will not impact the prices completely basis. But it depends the level of impact. It depends on the level of impact, the level of volumes what comes in from China and what comes in from India. It depends on the level of volume also. The whole thought of giving this statement is that slowly and gradually China is losing its color. China is coming out of this business, market share -- the global market share of China is going down year by year. So what 5 years before we used to see the pressure from China, now I believe that the China feels the pressure from India. And in future also, I believe that the situation and position of the India will keep on improving as far as the dye intermediates and dyestuffs sectors are concerned. And for your knowledge, let me tell you, as of now to the globe, India is one of the major supplier to the globe. And because the reason mainly is that China has got their in-house consumption very large. Wherein in comparison with India, Indian consumption of the dyestuffs is hardly 12% to 15% of what they produce. But China consumption is almost 80%, 85% of the dyestuffs production what they produce in China. So in a long-term basis, if you see that the China position is going to be a bit slow. And India will be consolidating its situation on the global market.

Okay. Yes, I understand. And sir, lastly, in terms of -- again, this point has come in earlier con calls at different points of time that how we manage our waste and how we consume waste in-house to make newer products. But in terms of -- if I look at Kiri and Bodal, they also use their spend asset in-house. That's what the claim in their presentation. So I just want to understand how -- in this waste management thing, how we are different because it seems like others are also using it in-house?

Vaibhav ji, I would not like to comment on any other company that what they are doing, first of all. It is between you and them to figure out. As far as our business decision is concerned, I will still again request you that this was something business strategy what we follow, to give more focused detail on the -- your question is not correct on this platform, sir. [Foreign Language] right, I will give you an appointment and we'll answer all your queries. [Foreign Language] business strategy or business decision [Foreign Language].

Okay. Sir, no problem. So I think probably we'll connect it separately.

You can talk to Nitesh in our company, right? Mr. Nitesh will share you Rajiv's number and you please fix this appointment.

We will take the next question from the line of Sanjeev Damani from SKD Consultancy.

[Foreign Language] am I audible?

[Foreign Language].

[Foreign Language] in light of the fact that very difficult times are going on. [Foreign Language] exports front [Foreign Language] performance [Foreign Language]? Can I know? Did we did any export in the last year? And if yes, how much export?

Export [Foreign Language].

And all dyes intermediates -- final product has gone to export.

[Foreign Language] We produce another product called SOP, sulphate of potash.

Sulphate of potash [Foreign Language].

[Foreign Language] Just to give you an idea [Foreign Language].

[Foreign Language] It is still going on?

[Foreign Language].

Second question is regarding the expansion that we are doing in our chemical operations where management has used the word that chemical other than acid chemicals. So can I know these products which we are going to...

[Foreign Language].

okay, no problems. Acceptable to me. No problem. Then sir, one more question is regarding one fact that on Page #14, in the dyestuffs verticals, we have put products at sulphuric acid. So I mean, is it correct to put sulphuric acid in dyestuffs product in the presentation?

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[Foreign Language] now coming to next question about our expansion at fertilizer unit that is Madhya Bharat Fertilizer. In that section, it is written as open access steel. Our expansion of INR 18.5 crores. So this INR 18.5 crores expansion is for fertilizer only mainly or some...

[Foreign Language] mainly Madhya Bharat.

[Foreign Language]

[Foreign Language], it is only we are expanding our Deewanganj site.

Deewanganj site, but sir, [Foreign Language] solar may be open access word [Foreign Language] Page #18, [Foreign Language].

Hold on, let me see. Ahmednagar [Foreign Language], Madhya Bharat [Foreign Language].

So sorry. My mistake.

Ahmednagar [Foreign Language] Meghnagar [Foreign Language].

[Foreign Language] open access word [Foreign Language].

But that is coming in Ahmednagar for our Pushkar company.

[Foreign Language] Ahmednagar we have already dyestuff unit.

[Foreign Language] Ahmednagar [Foreign Language] Nashik [Foreign Language] Existing solar 5.2 [Foreign Language] total [Foreign Language] 9 megawatt solar [Foreign Language] open access [Foreign Language] for our unit in Maharashtra of Shree Pushkar.

I am satisfied. Animal feed [Foreign Language].

[Foreign Language]

[Foreign Language]

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[Foreign Language] '23 to '24 [Foreign Language] overall tonnage sales [Foreign Language] 21% [Foreign Language] revenue.

[Foreign Language] FY '22, '23, we have sold animal feed [Foreign Language] at 11.81 crores, and FY '23, '24 we have sold 3,176 metric tonnes of animal feed at a value of [Foreign Language].

We will take the next question from the line Aditya Sen from RoboCapital.

So our understanding is that rock phosphate prices fall in the recent past 3, 4 months.

Can you please come again with your question, Mr. Aditya?