Coromandel International Limited (COROMANDEL) Q4 2026 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to Codomundal International Limited's Q4FY26 Earnings Conference Call hosted by Ilara Securities. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Prashant Biyani from Ilara Securities. Thank you and over to you, Mr. Biyani.

Hi. Thank you all for joining the call today. We would request Mr. Shankar Subramaniam to start the session with his opening remarks and then we will follow it up with Q&A. Over to you, sir.

Good afternoon, everyone, and thank you, Prashant, for organizing this call. I will begin with a brief overview of the business environment during the year, followed by detailed comment on operations, and thereafter, I will request Deepak to talk on financial performance. The Indian agriculture sector in last year witnessed moderate growth with agri-GDP expanding by 2.4 percent, reflecting the impact of uneven climatic conditions and softening agri-commodity prices. The southwest monsoon was above normal at 108% of the long-period average. However, its erratic distribution delayed with oil, affected crop cycles and rural consumption, particularly during the rubbing season. Increasingly, the reservoir levels were quite strong, supporting the improved sowing activity. As you all know, Karib acreage increased to 112 million hectares, and rubby sowing rose to 68 million hectares. Good morning, everyone, and welcome to the call. Key update in certain markets are likely to experience largely normal rainfall. IMD is expected to issue the updated forecast providing region-wise view in the last week of May. I think this can provide better clarity for all of us. Summer showings have started on a positive note. As on April, end crop showings stood at 8 million hectares, marginally better than last year. As you are aware, government has announced the MBS trade for Karib 2026. Thank you. Last year has been tough year for the sector, as the supply disruption from Middle East has resulted in elevated prices, especially in the past end of the year. We have seen sudden spurt in key raw materials like ammonia and sulfur, and availability of finished fitless has become a challenge. As you are aware, Middle East contributes significantly to raw materials, feedstuffs, and finished products. Our India dependence on ammonia and sulfur is upwards of 80%. And most of the shipments cross the state of Omos, and thereby this disruption in the region has led to sharp rise in commodity prices. While China and industry stocks remain balanced at this point, industry is making concerted efforts to maximize supplies in Q1. An empowered committee compressing of government and industry officials have been working in close coordination for fertilizer production, planning, and raw materials sourcing. The domestic phosphatidic industry increased its production to 16 million tons. Industry also resulted to a higher level of imports, both DAP and NPK, which added up to 10 million tons against previous year of 10 million tons. Consumption for the year was close to 24 million tons, more or less same as the previous year, and the mix is favoring NPK, despite relatively Thank you. Currently, having a share of 60%. During the year, industry players signed off off-take agreement towards 7,10 lakhs of green ammonia. These efforts are expected to play a crucial role in reducing the carbon footprint of fertilizer production while alienating with India's long-term climate commitments. After the share, the government has also taken a lead in this government initiative and agreed for the coverage of 20% of the total ammonia requirement to be made through green ammonia rule. On the agrochemical industry side, the situation presented broadly a constructive operating environment for the global industry. After two years of de-stocking and demand suppression driven by inflated post-pandemic inventory, channel entry levels show signs of normalizing across major geographies. Indian agrochemical market experienced a recovery period in the first half. The near-Nagal monsoon healthy calypsoe, which translated into stronger feed-level demand compared to the previous year. However, the rugby demand was muted due to late withdrawal of monsoon leading to lower liquidation than expected. Having covered the industry, I will specifically now talk about companies' performance. During the year, companies' manufacturing plant registered record fertilizer production of 3.5 million tons with the highest level of safety and environmental management. In fact, it is heartening to note that one of the largest fertilizer plants has been given the British Safety Council's five-star rating and also got the British Safety Council's Soda Honor Awards. And all the plants undertook annual maintenance in March, April, and they have now resumed normal operations. Possible seed production for the year was up by 3% to 4.5 lakh tens. Thank you. The company successfully commissioned, as we communicated in the past meetings, commissioned the 2,000 tons per day sulfuric acid plant and 650 tons per day phosphoric acid plant at Carcineta, centering its backward integration capabilities. Thank you. It's capable of producing annually 200,000 tons of phosphoric acid, and we have also synchronized the receipt of rock from Senegal, which will be used in this new plant. Currently, this plant is going through dry events, and sulfuric acid volumes have scaled up. Our generation has also been met through captive hog plants. Operations are getting overall stabilized, and And we expect to operate at a desired capacity from... April, May, and onwards. Our project to expand our granulation capacity is gaining momentum. We are on our way to commission this plant by December of this financial year. Our off-cosmic project at Senegal has stabilized very well, and we have reached the output of more than 3.5 lakh times last year, and we are planning to increase the volume further by 30-40 percent in the current year. The company also has enhanced its state in Senegalese entity and currently holding 71.5% in the mining company. We have been digesting our raw material sources through long-term contracts with various countries beyond Saudi and Qatar, like Southeast Asian countries, African countries, and Canada, and sometimes from Asia and China as well. So, sadly, we are reasonably covered in terms of the raw material for the first quarter. We do hope that there can be a yearly resolution to the vegetation crisis, and we'll be able to secure raw materials for Q2. I would like to point out here that the challenge is not only the availability but also the price, and we are closely working with the government for suitable support to handle the current price volatility. I do hope when the supply side improves, price should get normalized. Currently, it is quite abnormal and beyond affordability of any industry player to secure and produce and convert them into fortresses. On the marketing front, we delivered record sales of 4.3 million tons of BAP in NPT, a growth of 7% over last year. Our consumption has reached the peak of 4.1 million tons, making it the largest player with the highest market share of 17.5% in the phosphorus sector in the country. Our share of unique rates remains at 35%. We continue to expand our footprint across North and Central India markets by active channel engagement and former connect initiatives. And we registered a growth of more than 24% in these markets. Our single super-profit business registered highest ever sale volume of 8.4 at times, with differentiated rates like Grow Plus and Grow Alpha, contributing to more than 50% of the volume. And we continue to be the market leader in the SSP sector. Paramount has grown strain service delivering to Grow More Drive initiative. And also through our own retail centers, we have covered close to three lakh acres and is witnessing strong adoption by the farming community. Our specialty nutrient business delivered strong performance, supported by focused market development and farmer engagement activities. We introduced different products across organic and specialty segments, offering cross-specific and performance enhancing solutions. Business is centering its manufacturing capability. and is setting up a MAP plant and also seaweed granulation capacity. These investments will generate revenue in the coming years. Our nano business had a strong year emerging as a leader in the nano TAP segment with around 50% market share, while also expanding its presence in the international market through ongoing trials and registrations. For all volumes expanded by 60% company marketed close to 42 lakh nano bottles. By demonstrating product efficacy through extensive field trials, scientific studies, and farmer outreach programs, we strongly believe during this period of challenge and crisis, alternate solutions like nanotechnology can make a huge impact and can save the country from the huge foreign exchange outgo as well as shelter farmers to have the right nutrient application for the crop. Companies retail business reported strong performance, growing over 30% in 2526. Business expanded its footprint with the addition of over 300 new stores in Andhra Pradesh, Telangana, and Karnataka, while also entering new markets such as Maharashtra and Tamil Nadu. We continue to leverage technology-driven solutions, including precision-attacity e-commerce, drone-screening services, and last-minute delivery. Moving on to one of our significant business segments, which we have been growing consistently over the last two, three years, And I was glad we made a significant investment through our quitting. The crop protection business of Coromandel achieved a healthy growth, both in terms of revenue and profitability. Performance was supported by strong domestic demand, recovery in export volume, a new product introduction, and disciplined cost management. Our standalone crop protection systems are coromandals. The revenue moved up by 15% to go up to 3,054 pros, led by higher sales across segments, formulations, exports, B2B. and bio volumes have shown significant growth, and margins have improved significantly, and profitability of crop protection business has grown by 55% to reach 516 in crores, benefiting from favorable demand for its key molecule across exports and domestic market. On a combined basis, our environmental crop protection business, as well as Nagarjuna Agrikam has reported a combined revenue of 4,000 crores, which could have been better, but for the late withdrawal of monsoon in the Ravi season. But structurally, the business has been going good, and we are soon to reach the milestone of what we have been indicating in the past. In the domestic market, we expanded our presence by introducing new territories, onboarding over new dealers close to 1,000, and also introducing new formulations. We have introduced 10 new products during this year, which represent 21% of our total revenue. Our export business registered strong volume growth, reflecting both the global inventory rebalancing cycle and targeted business development efforts by Coromandel in key geographies. During this year, Coromandel commissioned a technical plant at The Hedge and is further expanding our technical capacity at Sarigam. Biobusiness, well, we are the last player in need is biobusiness. The demand for neem-based azar gives good traction during the year. Expanding beyond plant extracts, the company has built a fomentation and microbial processing capabilities to diversify its biological portfolio. The launch of five bioprocessives and three biophotileses has strengthened its innovation pipeline, with new products gaining good traction in the domestic market. We have completed the acquisition of 50% stake in NACL and also followed on with the rights issue of 250 crores to reduce the high cost debt. So the borrowing cost has come down significantly from NACL, and we have brought in the best practice of Coromandel, and we are now exploring the synergy opportunities between the two companies. NACL has made a significant progress with revenue moving up by 28% to register 1,585 crores of top line and APTA of 103 crores. Against last year loss, AL is working closely with the NHL team on leveraging synergies across product development, manufacturing, and sourcing. Talking about our another subsidiary, DAKSHA, a drone subsidiary, which is currently in the Nathan phase with substantial headroom for growth. Focused efforts are being made to streamline operations and address ALH stage challenges. There are clear emphasis on driving improved performance in the periods ahead. The company is working towards building strategic collaboration and sharpening execution capabilities to fast-track product introduction, improve business development, and service experts. Dextra and Permanent Health Agri business have been working very closely to develop Agri-Tone specifically, address the need, and provide comprehensive solutions to the farming community of India. Overall, Parliament has reported strong operational performance in fourth quarter with revenue growing by 19%, reaching 6,058 crores, and EBITDA growing by 16% and reached 4,94 crores. It's pertinent to note that last year Q4 had exceptional income of 3,47 crores relating to land sales against the current year position of 71 crores which have taken towards the investment, impairment of investment. Hence, the report of profit is modest at 150 in close due to this variation of almost 48 in close between the corresponding periods. Operationally, we have done very well, including the fourth quarter, we took annual turnaround, we operated the plant full. Despite the challenging situations, industry is facing due to certain spots in global prices. Not adequately covered by subsidy rates, governmental has turned around the resilient performance. There has been a compression in fertilizer margins. However, all other business segments like speciality, nutrients, or crop protection retail business have reported healthy growth in revenue and profitability. On a full-year basis, Coromandel has reported highest-over revenue of 31,827 crores and EBITDA of 3,232 crores. Recently, acquired MSGL, as I mentioned, has turned profitable and registered EBITDA of 103 crores. Coromandel has invested significant investment of over 3,000 crores in the last two years across business segments.

Thank you, Shankar. Good afternoon, everyone. The company recorded a consolidated total income of 6,068 crores during the quarter and 31,827 crores during the financial year FI 25-26. This is the corresponding period of 5,114 crores and 24,444 crores, registering a growth of 19% for the quarter and 30% for the full year. The subsidy business share in the revenue stands at about 75% for the quarter and 85% for the full year. From a profitability point of view, the consolidated EBITDA for the quarter stands at 494 crores against 426 crores due On a full year basis, we can... Consolidated EBITDA stands at 3,232 crores against 2,628 crores last year. The subsidy business share in EBITDA stands at 57% for the quarter and 66% for the quarter. Correspondingly, last year it was 67% and 70%. The net profit after tax... Thank you very much.

Sir, should we open the floor for the Q&A? Yeah, please. Thank you very much, sir. Ladies and gentlemen, we will now begin with the question and answer session. Anyone who wishes to ask questions may please press star and one on the touchstone phone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use only hands-on while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Ahmed Madha from Unify Capital. Please go ahead.

Yeah, thanks for the opportunity. I have a few questions. Firstly, if I compare the consolidated P&L and standalone P&L, there is a gap. Obviously, NACL doesn't have incremental loss. I'm assuming that is coming from the mining entity, BMCC, and even the depreciation numbers are. Much higher compared to last year. So if we can expand on how is BMCC as an entity placed in terms of financials, and also explain how the depreciation amortization of the mining asset moves forward in next year and thereafter, and how do you see the profitability trends of the BMCC entity.

On the mining side, you are absolutely right. The amortization expenses, depreciation is more of an accounting where the mining costs are also getting amortized and it is showing there. Basically, it is a basic cost what we incur before we reach the world. That gets amortized over a period of 10. As for the accounting requirement, that needs to be accounted under the amortization. So that's the reason when the volume of operation goes up, that amortization cost increases and we... Charge the entire initial mining cost over the volume of ore, which we can extract in the pit. We do our mining accounting, and accordingly, that gets reflected in the consolidated financial. Your observations, right? In terms of the financial health and performance of BMCC, BMCC has turned profitable now. The increased volume of operations, better absorption of its cost, improved efficiencies. And that price is linked to the market price because it's an inter-company transfer, and capturing that market price for raw phosphate, it turns profitable, and it will improve its margin going forward with the increased volume of production coming through, as far as BMCC is concerned. In terms of the overall and other amortizations that are happening, it's more of an accounting thing which you should get evened out. When you do the consolidation accounting involving subsidiaries, there is a certain amount of the intangibles which get amortized over the period, and that has gone into the accounts. While operationally, standalone Nagarjuna has turned profitable at EBITDA level, but on the consolidate level, we need to have some amortization of certain expenses. It's more of a consolidation accounting between the acquisition value versus the holding value that gets amount based over the period. So that is reflected there. That is why you see the change in the depreciation compared to standalone numbers.

Sure, makes sense. Secondly, on the... The margins of the fertilizer business for the upcoming season, how should one look at it considering the very nominal increase in the subsidy numbers, about 10%, while the raw material prices have gone up materially? So how do you see government response coming in? Whether there can be another sort of a price increase or other subsidy increase, which sort of happened in FY23. We were going through similar phase where raw material prices went up materially and government again revised the subsidies. So how do you see the current situation? And what is your broad sense of how you will be compensated for the higher raw material cost? Because I'm assuming current subsidy and the MRPs are.

So, you are right. It's two early stages after these raw materials are coming at the higher prices. Of course, industry has some benefit of the carryover inventory in the first two or two months. Farmers also will be able to have access to the opening stock or finished prices, but the replacement cost is very high. One is the availability, another one is the price, as I mentioned in my opening remarks. The prices of ammonia sulfur have gone up exorbitantly higher, and it apparently calls for additional compensation subsidies, which we have taken up with the government. It's on the discussion stage, and hopefully we should get some, they have positively looked at it, and hopefully we should get a pass-through on these costs. Basic objective is to see that how best we can secure first and produce finished fertilizers, and then try and see how best we can retain the price to the farmers. If that calls for additional specialty, it will happen as any gaps still remain. We may have to correct the prices because these are all two early stages and these extraordinary times and we don't want to put any number. We don't expect this scenario also to remain for a long time. Abnormal event has happened and we hope the normalcy gets restored. Once the supply side improves, we do expect things to be back to normal. Having said that, it's very critical for additional subsidies to come in beyond what has been notified, as these rates are based on ELA rates. We need to have additional subsidies, and some pass-on will also happen, which industry also has taken some corrections in the last one or two months. As far as BAP is concerned, government has been considered, and they have given a pass-through last year, and hopefully change should continue now.

My third question was on the crop protection business. If you look at the performance in terms of standalone has been pretty good in terms of margin improvement. So, can you just elaborate, how do you see overall opportunity with the NACL acquisition done now? I mean, the entry has been consolidated for about two and a half quarters. So, how do you see the opportunity in terms of export side, in terms of scale-up of your agrochemical business? And Nagarjuna's NACL's margins, how do you see the trend changing? And lastly, the standalone crop protection had low growth, about 2% to 1.5%. Were there any factors that led to that, and how do you see the growth moving forward?

The standalone has grown well. It's not 2%, 3%. No, we have grown now. Standalone crop protection, I meant.

Standalone crop protection.

I also was referring to crop protection only. 15.8% if I'm right. Remini has grown significantly. See, this year is getting over, I'll just have a look at the math, but...

No, I meant for Q4. I meant for Q4, sir.

Oh, Q4. Q4 is the RFCS in general, and... Yeah, yeah, yeah. I was talking about the overall number.

Yeah, yeah, fair, fair. Yeah, overall, as I said, the initial that you've done well. So, I meant just for Q4.

So, but in terms of the profitability that's gone up, also we... Overall, if you want to, just to give you a comment on the crop protection business, we have done extremely well on all segments, whether it is global exports of active ingredients, especially the key molecule mancosyl, we have got better volume growth as well as better realization, and our additional capacity which came up in the haze during the year was quite helpful to meet the additional demand. The domestic... B2C market, we added territories and we increased the volume. Our foundation business overall has grown by 15-20%, while the domestic sector as a whole had a degrowth. Coromandel, thanks to the new territories and the new products introduced during the year, we have done well. We could have done much better, but for the challenges we faced in therapy season, it is true for the entire industry. Domestic B2B segment that we To sell active ingredients to other institutional customers, we have broadened the portfolio beyond Mancoset, and we have scaled up well. Prices of most of the AAs also improved during the year, and that has resulted in improved margins. And the stand-alone basis crop protection business has reached the record turnover and record profitability, as you can see. It goes to 19% EBITDA margin on a revenue of 3,000 crores. This includes biobusiness as well, where the new-based biobusiness recorded good export volume, and we started our own channel in bios for domestic sale as well. And we have also expanded the product portfolio in biobusiness to go in for microbials and plant extract products. On the NACL side, as I mentioned in my opening remark, Overall turnover has grown by 28% and profitability has improved operationally, while it has not added significantly to the bottom line, mainly because of alignment of major accounting policies in line with Coromander, and that has resulted in provisioning, which has reduced the make-profit on a standalone basis. But capacity utilization of the technical plans have improved significantly. And we are also looking at additional intermediates and technical capacities in the Daesh plant, which is currently operating at low level. Kourmandel and NACL team working together for leveraging synergy benefits and cross-selling products across various markets, depending on the strength of each company. So, overall, on a consolidated basis, We have reached 4,000 crores, and margin of initials improved to 6% to 7%, that is what we indicated in the beginning, and going forward next year with a change in product portfolio, that should stabilize around 9% to 10%, and we need some time to introduce new products, register new products, introduce 9-3 formulations to significantly improve EBITDA. In line with coromandel, it would be difficult for NACL on a standalone basis to increase the margins unless new active ingredients and new formulations are introduced, which will take some time. So currently we can say we can restore the margins, what it was, 78%, beyond that it requires investment, which we will take a view at appropriate time.

Sure. Thank you so much.

Thank you. The next question is from the line of Ankur from Access Capital. Please go ahead.

Hi, sir. Good afternoon, and thanks for the opportunity. First, you know, if you can give the EBITDA break-up for, you know, for the full year in terms of subsidy, non-subsidy, and the review break-up for cost protection in terms of, you know, B2B, B2C, and export and domestic.

Sorry, come again. First one, what is this, EBITDA?

So, the non-subsidy, you know, EBITDA share for the full year. If you can share that, as well as, you know, the breakup for the crop protection business, breakup between export domestic as well as B2B, B2C revenues there for the food year.

The city business share for the community is 57%.

That is clear. In terms of...

I'm sorry, sir, you're not audible right now. Yes, sir.

The line is connected. Just give me a minute.

Just checking the... It's 66% for the year as a whole. What I said, 57% is for the quarter, and 66% for the year as a whole.

Sure, sir. And, you know, the break-up between export domestic and B2B-B2C for the production.

Hello. Hello. You need this for the full year or for the quarter?

Full year, sir.

Coromandel crop protection business, right? Exports will be 1450 crores. Exports. Domestic will be 700 crores.

And formulation will be. Shorter, that's simple.

Yeah, okay. So, you know, as you rightly highlighted in terms of the growth that we have seen for the non-subsidy business as well as the strong, you know, operating profit, the margin expansion as well for the full year. Given the macro, one, is there any concern from an RM availability perspective for the crop protection business or even from a pricing perspective? And second, how do you look at the growth going ahead? You did alluded towards NACL sort of, you know, cross-selling opportunity being there, but let's say on coromandel, you know, own portfolio basis, what sort of growth are you looking at and sustainable margins there?

As far as raw material supply chain is concerned on crop protection, we are quite comfortable, and we are fairly covered. I don't see any challenge. It continues to be available. And whatever input cost increase has happened because of global phenomenon, we are able to pass through. So we don't see any impact on margin due to input cost. So crop protection business is fairly comfortable. In terms of the growth opportunities, it is driven by active ingredient volumes. The bankrolls have additional capacity is coming up. That will be commissioned during the year. That will be the major volume kicker for active ingredient. On the domestic formulation business, we are planning to grow aggressively by another 20-25%. Because of the new registrations that are coming through this year, we'll be launching another six new products. And also, we are increasing our import of active ingredients in China and also increasing new products in India. So, overall, you can see a revenue growth of 20 to 25 percent, besides the capacity-driven growth in active ingredients, which were mainly for the export market.

Sure, sir. And on the margins, do we think we'll be sustaining, let's say, a 90-inch percent, you know, non-NACL EBITDA margin for our business? Absolutely.

I don't see any challenge. And also, we should note that with the currency deprivation terribly helping this business, that's a significant share of exports, I think.

Sure, sir. That's very helpful. And just lastly, you know, you did cover up, you know, in your opening comments on the raw material inflation on the fertilizer side, and our expectation that probably, you know, there could be another round of maybe an increase in subsidy from the government side. My question here was, you know, one, given that Q1 is fairly there, but Q2, there could be RM inflation, which could hit us. And what if the government is not increasing, or maybe there is a delay in terms of increase in subsidies from the government side? Are we looking to increase the finished good prices there as aggressively? Because that will have an implication on your overall margins as well. So how should one look at that part?

We have a very abnormal situation, very difficult to predict how long it will take, but it is very important both for the sector. Thank you. I have a comment I'm going to take you up, sir.

Sure, sir. Okay. That's helpful. I'll get back into Tugly if I have any more questions. Thank you.

Thank you, sir. The next question is from the line of Raju from Antic Stock Broking. Please go ahead.

Yeah, hi, sir. Thanks for the opportunity. Sir, the domestic and export revenue share that you have mentioned for the shipping business, that was the standalone business or including NACL?

That is for the standalone business. We asked for the standalone business.

So, if you could mention the NHL, like including NHL number for the Q4 for the export revenue, that will be helpful.

I need to get back to you on export revenue. Overall revenue is 1,584 for the full year, and 361 crores for Q4, but I need to just get back to you on domestic and export breakup. We'll pass this on later.

Understood. And in terms of the fertilizer business, so could it be elaborate in terms of the finished goods inventory that you have as on March 26?

We may be close to 5.5 lakh tens roughly finished fertilizers we may be having, and that's where first we take this point of time.

Is it entirely the manufacturing volume or including trading one?

Trading is not much, probably 60-70,000 will be trading.

Understood, sir. And if I look at it in terms of the Coromandel city business, standard-on city business Coromandel, so the growth was 2%. So that was mainly because of this poor growth in the domestic market or it is mainly on account of both the domestic and exports?

Sorry, come again, what do you say?

If I look at Kodamundal PP business for the standalone one, the growth was to 2.5% for the quarter. So, the primary reason was to, you know, because of the poor domestic business growth or it is a mix of domestic and export, both are performed, not performed well.

No, actually, it's off-season in domestic market, you know, so there also at least there's a volume increase. Its exports, we have moderated the sale in fourth quarter, as we have opportunities to sell during season time in April and May. We have consciously taken a call to have a moderate sale in fourth quarter, and there has been significant increase in price sales during that period. So we have to look for the right opportunity to sell. We didn't push for more volume of exports in fourth quarter. So it's a temporary slowdown in fourth quarter that will come back in first quarter. And formation business area has grown well by 14%, in spite of being an off-season. And domestic B2B is more of a function of demand requirement, and that can always be made up in first quarter. So I don't see any... The area where we have marginally de-grown compared to last year is in bio-product category, where we did exports in the fourth quarter of last year, and we have executed this export order earlier in December, hence it is showing a de-growth in the current year. That is why the overall crop protection CPC is looking marginal at 2%. Otherwise, overall 4-day-year growth is 16% and that sort of growth we do expect to sustain.

Understood, sir. And one last thing. So if I look at in terms of the global industry, specifically in the latter market, so latter market is struggling with the inventory. So how do you see that market for your growth? And second part is that if I look at Manco's prices for the last maybe one or two months, so the prices have gone up roughly by, you know, 30 to 40% in the range. So how do you assess that in terms of your Q1 performance? And second is that if you could, you know, share the unique grade contributor number in the partner business.

Our understanding is that this talking has already happened in Latin America markets. We are not facing any challenge. And the mankosik policy, our cost increase is getting passed down, and that is required in the current market situation. Also, our dependency is not only in Latin America. We have a widespread reach across various continents. So to the extent, we are very comfortable, and we are waiting for the new capacity to come up to increase our volumes and revenues in the coming quarters. I don't see any challenge in improving our margins of performance or sustaining the same in the first quarter.

Understood. And the unique rate continuing for this quarter?

More or less, it remains the same, because some of the unique rates, because of the price increase in inputs, are not that viable. So, it remains at 32% of the annualization.

And that's it. Thank you, sir. Thanks for answering your question.

Thank you. Thank you. The next question is from the line of Somaya V from Evendus Park. Please go ahead.

Yeah, thanks for the opportunity, sir. So, my first question is on FOS asset price for the quarter. Has it been decided? That's one. And in the international market, if you were to procure sulfur and ammonia, what is the current pricing?

PA price was fixed at 1360, when there was a short gap of C-spare, when it happened, at that time, around the time, we fixed the phosphoric acid site at 1360, as against the previous of 1290. 1290, 1360. The threat of ammonia gone up significantly. There are deals happening around $840, $850 range. And that's why last week we heard. And sulfur is also around the same level, eaten with all of this.

Sir, in terms of this, the backward integrated capacity that we have added last quarter, so for the first half of this year, do we see any challenges in terms of raw material availability to run this end of the list, and also in terms of margin contribution, do we see it to be accurate given by, let's say, self-reprice.

I think these are very extraordinary times, very

difficult to look at margins at this point of time. It doesn't make sense even to look at either product margin or phosphorus value gap. If you take current quarter phosphoric acid price and try to project next quarter value gap, obviously it will be negative because this price increase of sulfur and other input prices will come in in the next quarter. These may be one or two quarters of challenges and pressures, but it should get normalized, and structurally the value of what we originally envisaged will come through. I don't see any challenge in availability per se for running the plant because we have a good coverage of rock phosphate, and Senegal mines is operating at full stream, and we are getting rock phosphate from there. And sulfur, there is a challenge. We have taken a lot of efforts. There is a visibility up to first quarter, as I mentioned. And going forward, things ease out, we should be able to secure raw material for the second process. We have to wait and see how this...

In terms of between Q1 and Q2, I think we should be having a fair idea of at least how things stand today in terms of inventory that is there in the system, NPTA subsidy that is being given and pricing that has happened. So it would be fair to say Q1 is kind of still manageable and Q2 is where definitely the subsidy support should come in, or is it like in Q1 itself we need to implement it?

Every day is a new day. We are not able to predict anything. This time is still uncomfortable for us to put any number on the table. Let's wait for things to play out. It's a big challenge. Right now, we are focusing more on securing raw materials and having the production ensuring fertilizer availability for the system. We have a lot of needs, and the government has secured, and we have to correct the prices, so many things are there. A big fluid at this stage, I would say.

I'm sorry to interrupt you, Sommaya, I would request you to kindly rejoin the queue for follow-up questions, please.

There are others who are waiting for their time.

Thank you so much. We'll take the next question from the line of Akash Mehta from Canara, Hsbc Live. Please go ahead.

Hi, sir. Thank you for having me come on. So my first question is on the sourcing bit only. You said on the sulfur front, it's slightly challenging as of now. I mean, obviously, we have visibility of Q1, but going into Q2, it's a bit distant. So can you just help us with the current sourcing? I mean, it was earlier with the Middle East, so from where you are kind of managing the sourcing for sulfur and the raw materials, if there is any change. So that's my first question.

Thank you. And hence, it comes handy to have our own sulfuric acid, which in turn can generate steam and produce power as well. So we have multiple sources we are working on. Whoever supplies sulfur to us, we are okay to take it. It's not, right now, it's more of a spot transaction which we are doing. Otherwise, the major source used to be Qatar Energy and Saudi.

Sure, sir. As of now, there is no shortfall assets. It's available at a higher price. That's about it, right?

We have visibility up to June.

We have to keep covering. So hopefully it should ease out. See, the major challenge is the bottleneck of the ships to cross. It is not, Telford is not available. Telford is available in plenty. It is a moment of ship to this port of almost. It's what making it difficult for us to predict a new. We are hoping things normalize, and sailing time is not much between Middle East to India. So for July, it is too early to predict whether it will happen or not. In a logical sense, it looks like it will happen.

Sure, sir. And my second question is, I mean, I need to just highlight any any on the subsidy front or again, you cannot give a clear timeline if it will and when it will come through. But basically, given the raw material price increase, any number you can just pass out with in terms of the implied increase in subsidiary price on the last number and on big percentage terms or other big terms.

See, we have to wait and see for the Rabi season NBS rate formula which we can and probably will get updated. What we are talking about is the intervening period of June to September, where the Rommetel price has gone up very sharply. So maybe a cost-to-cost reimbursement is what we are looking at, so that we can cushion the current support in prices to a great extent while we arrive at the final price to the formula. Very difficult to predict how much they will do. Like a pass-through in DAP, we are trying whether there can be a pass-through in NPKs as well. We need to wait and see how it's going to happen.

Thank you.

The next question is from the line of Darshita from DSP Asset Managers. Please go ahead. Hi, sir. Thank you for the opportunity. I just had one question.

Is there any key intermediate for BankoZep that we import from Middle East countries where we may be facing any constraint for importing it?

Absolutely not.

And we have been able to pass on the price increase even in the last two months, fourth quarter, of course, we can see that, but over the last two months also, we have been able to pass on the price increase.

Yes, and to some extent, the currency depreciation also has aided this, the absorption of stock.

Got it. Okay. And not facing any shortage for sourcing the intermediate.

Yeah, we had some small disruption in the month of April, but we have now looked at the alternate population. Unlike nutrients, the import of these raw materials from China is quite okay. So it takes time, but it comes. We have finally covered.

Okay, got it. Yeah, that's all. Thank you. Thank you.

We'll take the next question from the line of Whipple, Kumar Shah from Sumangal Investments. Please go ahead.

Hi, thanks for the opportunity. So, in view of the raw material inflation, what should be our margin guidance as far as EBITDA pattern is concerned for the whole year?

I prefer to pass this position.

It's very difficult to predict at this point of time. Let's see how it goes, because it's a function of what government is going to compensate and how much we are going to look at price directions. It's a function of many things. It's very fluid. I don't want to put any number now. So let's wait for things to get normalized. It has, actually nothing has changed, except for the blockade which has happened, which has resulted in shipments not going through. Once the supply situation improves, supply chain gets normalized, prices should come back. Putting any number for the next two, three months, how it's going to be, it's not going to help any of us.

Okay, sir. Thank you.

Thank you. The next question is from the line of Sheil Kumar Shah from Samiksha Capital. Please go ahead.

Yeah, hello. Am I audible?

Yes, sir.

Yeah, thank you for the opportunity. My first question is, what is our manufacturing EBITDA on fertilizer side, I mean, for 4Q and for the full year?

Last year, it was around 5,000 plus that we have mentioned, and fourth quarter was compressed. It was then 3,500, around that number. It was around 3,500 for fourth quarter.

Okay. And what about on a trading side, if you can share margins or EBITDA per turn?

It's too difficult to make. Depends on the grades, the timing of purchase, and there's a pass-through on GAP.

But on an average, what type of margin would we be making on a trading?

You can take roughly 4-5% sort of number.

Okay, and how do you see trading volume for FI27 on a high base of FI26?

We have a challenge in availability, especially on DAP, so we need to see how things improve. We love to do the same volume, and there can be a potential reduction in the first quarter because of non-availability, especially major imports coming through from Saudi may not happen. And we also want to be conscious and working up on liquidity, so we may not be switching unless it is absolutely essential to meet what is the demand. But second of it, I think it should get normalized, if things improve, the volume should come back. Okay. Available in the hotel and the hour is completed.

Understood. And my last question is on what would be the revenue for nanodep?

I can tell you what it is, I am not sure what the, I don't get the number now, it's part of the overall segment, I will come back to you on this, I don't have it, I don't have it, I don't have it, I'm not sure, thank you, thank you so much. Thank you.

Thank you. The next question is from the line of Bharat Seth from Quest Investment Advisors, Private Limited. Please go ahead.

Hi, thanks for the opportunity. My question is related to this age capacity that which we are expanding. So how much additional revenue or asset time do we expect and what kind of product portfolio diversification it will help?

We have a capacity by 10,000 pence of microwave. I will impact you on the revenue per day on the hedge, but the payback will be much faster, less than one year. So the investment what we have made in the facility, that gets paid off less than one year. In fact, we are expanding another 20,000 pence at Sarigam as well, and that project is underway that should come through by middle of this year. Hopefully, there also I think margins are pretty good and we should have a payback in a shorter time frame of less than two years.

Okay. Hello. Sorry. Earlier, we were evaluating in worrying into CRDMO. So, what stage we are in the CDMO? And how is the opportunity that we look forward? Any further progress?

The CDMO takes a very long time, two, three years, and MNCs have responded terribly. They looked at the facilities. They moved to the next stage. They take quite a long time. Two, three European entities have shown interest. And with the combined strength of Nagarjuna, we are able to fast track some of the intermediate manufacturing. We are looking at chlorination chemistry very seriously. While Nagarjuna has got the capability and we are going to invest on flow-nation chemistry in the coming quarters to showcase it to the potential genome of players, we are quite happy with this, and some of the Japanese collaborators also came to work with us. Things are progressing well. While it is not materially impacting the revenue in the current year, but I am sure two years down the line, we will have significant play in this space. We are trying to do it organically. And we will scale up. We are not looking for big-ticket investment immediately. We are looking at the current market situation. We wanted to focus on current investments, what we have made, release the value out of it before we make any fresh investments on a large scale on Syria. But we are doing well on the organic space. At this point of time, we are not able to put out the parties in, but things are progressing very well.

Could we see, I mean, revenue from FY28?

It may go into the year after that also, because once they get the proof of quantity and they start listing the product and then agree to the costing margin, it may happen. But we will start creating some capacities of smaller scale this year, and that will go into production next year. So some revenues will come in, but significant can come in in year after.

Now, taking, see with this price increase substantially in this fertilizer, how should we think that adoption of nanodap, I mean, going ahead, say, post, I mean, harvesting?

Many things have happened. I wish farmers' adoption increases. We are trying to do and promote balance nutrition, but as long as you have UREA and DAPA available at affordable price, this situation may be difficult. So unless there is a major policy correction happens and restrict the availability in terms of actual need for the marginal farmers, this adoption will be slow and steady, and we are also not in an area to push through. But the product It is working well, and it can be saved. Shortage situations can be a boom to the farmers. That's all it is. Okay.

And last question, sir, with your permission. Any update on Daksha?

Good question. I thank you. I raised this point because I've taken the diminution in the value of investment relating to Daksha. As you know, we have got a large order which is ready for execution, and we have fixed all the technical-related gaps, and we are waiting for the execution of orders. I am personally driving this initiative, and we have made significant progress on introducing new products. A lot of projects have been identified, a lot of partnerships have been identified, and we are seeing good traction coming on now. From the defense segment, after the usage of drones in various warfare, and besides that, Agri, Coromandel, and Daksha have been working very closely. They have come up with new products. They are going through tight certification, and we strongly believe there is one space in agriculture where drone response has been extremely good for the farming community, and they will be scaling up volume. They are participating in the institutional tenders. They are also looking at drones for various institutional applications, and they are trying to develop the complete ecosystem for Daksha. By tying up with the various component manufacturers, whether it is for batteries or cameras or various other electronics instruments and also for software development, that shall be moving to a larger place, more than 60,000 square feet, where they will build this facility, but the entire team will sit in Chennai. Hopefully, this facility should be ready by May. What a process is happening. Thank you.

Thank you very much, sir, and all the best.

Thank you.

Thank you. Ladies and gentlemen, we'll take that as the last question for today. I would now like to hand the conference over to the management for closing comments. Thank you, Anubhajiro, sir.

Thank you very much. Thank you for your insightful questions. And I know it's a challenging time, and definitely, I'm sure we'll do our best to solve the farming problem. Thank you for your continued support.

Thank you, members of the management. On behalf of Ilara Securities, that concludes this conference. We thank you for joining us, and you may now disconnect your lines. Thank you.