Ladies and gentlemen, good day, and welcome to Chambal Fertilisers and Chemicals Limited Q1 FY 2027 earnings conference call hosted by Valorem Advisors. As a reminder, all participant lines will be in 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 this conference is being recorded. I now hand the conference over to Ms. Purvangi Jain from Valorem Advisors. Thank you, and over to you, ma'am. Thank you. Good morning, everyone, and a warm welcome to you all. My name is Purvangi Jain from Valorem Advisors. We represent the investor relations of Chambal Fertilisers and Chemicals Limited. On behalf of the company, I would like to thank you all for participating in the company's earnings call for the first quarter of the financial year 2027. Before we begin, let me mention a short cautionary statement. Some of the statements made in today's earnings call may be forward-looking in nature. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ from those anticipated. Such statements are based on management's belief as well as assumptions made by and information currently available to the management. Audiences are cautioned not to place any undue reliance on these forward-looking statements in making any investment decisions. The purpose of today's earnings call is purely to educate and bring awareness about the company's fundamental business and financial quarter under review. Let me now introduce you to the management participating with us in today's earnings call and hand it over to them for their opening remarks. We have with us Mr. Abhay Baijal, Managing Director; Mr. Narinder Goyal, Business Head, Manufacturing Operations; Mr. Anuj Jain, Chief Financial Officer; Mr. Ashish Srivastava, Vice President, Sales and Marketing; Mr. Tridib Barat, Vice President, Legal and Company Secretary; and Mr. Vivek Misra, Business Head of TAN. Without any delay, I request Mr. Abhay Baijal to start with his opening remarks. Thank you, and over to you, sir. Thank you. Good morning, everyone, and thank you for joining us on the conference call to discuss Chambal Fertilisers performance for the first quarter of the financial year 2027. The Indian fertilizer industry continued to operate in a challenging environment during the first quarter, navigating geopolitical uncertainties, elevated raw material prices, and a delayed onset of the southwest monsoon. The geopolitical developments in West Asia continued to disrupt global fertilizer and energy supply chains during the early part of the quarter, resulting in sharp increases in the prices of key raw materials such as ammonia, sulfur, and phosphatic intermediates, along with higher freight costs and procurement challenges. While conditions began to improve towards the end of the quarter as geopolitical tensions eased, raw material prices remained well above historical levels. The Indian agricultural season began on a relatively subdued note, with emerging El Niño conditions contributing to an uneven onset of the southwest monsoon and below-normal rainfall across several regions during June. Consequently, kharif sowing and fertilizer offtake remained subdued during the early part of the season. As of the end of June, summer crop sowing stood at around 183 lakh hectares, approximately 23% lower year-on-year. Encouragingly, monsoon activity strengthened significantly during July, and sowing has since accelerated across major crop-growing states. According to the Ministry of Agriculture, acreage has broadly caught up with last year's levels, while the IMD continues to maintain its forecast of a normal monsoon. We believe these developments provide a favorable backdrop for agricultural activity and fertilizer demand during the balance of the year. The Government of India remained closely engaged with the fertilizer sector during the quarter, ensuring domestic gas availability for urea manufacturers and adequate DAP and NPK supplies ahead of the kharif season. While the nutrient-based subsidy rates for kharif were revised upwards by around 10%, these were announced prior to the sharp increase in global prices following the geopolitical developments in West Asia and therefore do not fully reflect the subsequent cost escalations. The industry continues to engage with the Department of Fertilizers on this matter while timely subsidy disbursements have supported industry liquidity and ensured uninterrupted fertilizer availability. A very key development during the quarter was the government's approval of the National Investment Policy for Urea 2026. We believe that the policy provides a very strong framework for future investments in domestic urea capacity while reinforcing India's long-term commitment to self-sufficiency and food security. Accordingly, we have continued to progress preparatory activities for a potential fourth urea plant, and any investment decision, however, will remain subject to the approval by our board. Turning to the operational and financial for the quarter under review, our urea business continued to operate despite the plant shutdown at Gadepan I and extended shutdown of Gadepan-II during the quarter, which got bunched due to the geopolitical situation. The bulk fertilizer business also delivered healthy performance, supported by timely procurement of phosphatic and potassic fertilizers ahead of the kharif season. During the quarter, we also expanded our portfolio with the introduction of Ammonium Sulphate grade, and continued to evaluate newer NPK grades to strengthen our balanced nutrition offering. Our crop protection chemicals and specialty business continued to strengthen its product portfolio with the launch of seven new products across herbicides, fungicides, and insecticides during the quarter. While demand was impacted by delayed sowing, the business delivered a meaningful improvement in profitability through quarter product mix, while our seeds business expanded its portfolio with two new maize and bajra varieties. Our biologicals business continued to witness growth in volumes and revenues, driven by increasing farmer acceptance of sustainable crop solutions. The business also recorded profitability supported by a better product mix and scale benefits. We partnered with TERI to establish the CFCL-TERI Centre of Excellence for Advanced and Sustainable Agriculture Solutions, which focuses on research and development of next-generation agriculture technologies. A dedicated lab is now operational, and products are expected to launch from FY 2028/2029 onwards. Based on our product efficacy, we will also explore the export market for these products. During the quarter, we expanded the portfolio with the launch of a biostimulant, Uttam Aris Gold. Our collaboration with TERI continued to strengthen our pipeline of patented crop protection and crop nutrition products. Our Seed to Harvest program continued to contribute towards improving farmer awareness and showcase product efficacy. We concluded over 1,400 farmer meetings, 500 demos, and have analyzed more than 38,000 soil samples. We also significantly expanded our use of social media to reach out to a large number of stakeholders with both Facebook, YouTube, and Instagram platforms, crossing INR 1.63 crore viewers. Our Technical Ammonium Nitrate project progressed well during the quarter, with production commencing of Weak Nitric Acid and Ammonium Nitrate Solution, while the High Density Ammonium Nitrate moves closer to commissioning. Our joint venture, IMACID, was impacted during the quarter due to sulfur shortages and elevated sulfur prices, which resulted in temporary production shutdown to avoid operating at negative margins. With market conditions improving and customers becoming receptive to higher prices, production resumed in July, and we expect performance to improve hereafter as market conditions continue to normalize. Finally, let me walk you through the details of the financial performance for the period under review. On a standalone basis, revenue from operations stood at INR 5,000 crore as compared to INR 5,700 crore, lower by about 12%. EBITDA, however, rose 12% to INR 851 crore, with margins expanding to 17%, roughly from 13%, an improvement of about 350 basis points. Profit after tax grew 10% to INR 703 crore, with PAT margins at around 14% as compared to 11% last quarter. On subsidy flows, we received a subsidy of around INR 2,480 crore during the quarter, as against INR 2,512 crore last year. As of June 30, total receivables stood at INR 3,300 crore, comprising of market debtors of INR 841 crore and subsidy receivables of INR 2,460 crore. Coming to segmental performance, our urea segment delivered a resilient result. Despite the bunched shutdown and an extended period of Gadepan I shutdown, we did deliver INR 2,860 crore against INR 3,109 crore, lower by 8% due to lower production and sales. Despite lower volumes, the business maintained a healthy profitability. On the complex fertilizer segment, revenues stood at INR 1,737 crore against INR 1,131 crore, lower by 18%, reflecting a measured approach to placement in a season where sowing was delayed. Segment EBIT rose 67% to around INR 239 crore. The crop protection chemicals, specialty nutrients and seed segment recorded revenues of about INR 430 crore as against INR 458 crore, lower by 6%, reflecting deferred farmer purchases. Segment EBIT, however, grew 13% to INR 108 crore, with margins improving to about 25%. However, despite a challenging operating environment, the quarter demonstrated the resilience of our diversified business model, supported by stable operations, prudent procurement, and improved profitability across key businesses. Looking ahead, while geopolitical development and raw material prices will continue to warrant close monitoring, the long-term outlook remains constructive. The recently announced National Investment Policy for Urea provides a supportive framework for future capacity expansion. While the ramp-up of our Technical Ammonium Nitrate project and continued growth in our value-added businesses strengthen our long-term growth prospects. Backed by a strong balance sheet and disciplined capital allocation, we remain well-positioned to create sustainable long-term value for our stakeholders. With this, I would like to hand it back to the moderator and open up for the question and answer session. Thank you. Thank you, sir. We will now begin the question- and- answer session. Anyone who wishes to ask a question may press star and one on your touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Our first question comes from the line of Prashant with Elara Capital. Please go ahead. Yeah, thank you for the opportunity. Sir, do we need to again seek approval for the new urea plant, or earlier application remains eligible and now the ball is in government's court to take the decision? I think it's a slight mixture of both. We will have to formally approach, as you know, that there is a process of getting bank guarantees and so on. That only happens once the government approves the project. That is part of the process. I believe we are a very strong contender for this. That is number one. Number two, in any case, all decisions of this type are subject to approval by the board. Certainly. Sir, any timelines of when will the application window be opened or closed? No, it is already open as far as I know. It is already open. And- You would understand that projects of this type, almost INR 10,000 crore, they go through several phases in terms of preparation. First, we will need our board to approve the expansion, for which you will have to present some financial figures and all that. As of now, we are waiting the financial bids which we had floated. We have the technical bids with us. The financial bids, after equalization of the technical requirements, should be available to us by maybe mid-October or so. Thereafter, once the analysis is done, the board approval is there, we definitely will go forth. Right. Sir, how much of WNA and ANS revenue and volume we have booked in Q1, if we have done it? Prashant, we have not shown it in the segment, which shows that we have not really booked, although we have made sales. Commercially, the product is accepted. We have made margins on it. Okay. The moderators, there's a lot of background noise coming from somewhere. Sir, actually, it's from Prashant's line. Okay. He could mute it if it is possible. Yes, sir. Sorry. We were talking about WNA and ANS. We have made the sales. Yes. The process is like this, that you have to commission the project in all its respects, Only then you can start booking it in your books. As of now, whatever sales we have made is not a part of the profit and loss account. Rather, it goes towards adjustment of our decapitalization in this case because we are making some profits on the sales that we are making. So it is actually decapitalizing the project. However, we're very soon going to put it into the P&L account. Okay. Sir, can I get the split of sales between G1, G2, and G3? I think I'll ask Mr. Anuj Jain to give an answer. Yeah. You're asking sale? Yes. G1 is about 96,000 tons. G2 is 1.85 lakh ton, and G3 is 3.29 lakh ton. Okay. Sir, would it be our endeavor to utilize full 1.27 million tons of G3 by November itself, and is that possible? No. I think the run rate of the plant, the maximum we can do is about 9.5 to 10, depending on how the circumstances pan out. It is not possible to complete that quantity within the time before the policy period ends. Okay. I have few more questions. I'll jump back in the queue. Thank you. Thank you. The next question comes from the line of Shivam Gupta with Trinetra Asset Managers. Please go ahead. Hello, sir. Good morning. Firstly, on the complex fertilizer business, margin were much better this quarter. Was it mainly because of the inventory purchase earlier at lower prices, or were there any other factors? No. In fact, last call when we had discussed, we said that we have adequate stock of inventories in the current season. There were some advanced purchases, which has helped us in this placement and all Hello? Hello, sir. Can you hear me? Yeah. I can hear. Sorry to interrupt. Shivam, the line for the management has been disconnected. Please wait while we reconnect them. Okay. Ladies and gentlemen, the line for the management has been reconnected. Yes, sir, please proceed. Yeah. The last sentence I made was our discussion was on the placement or the purchase of NPK fertilizers. My answer was that, yes, we did have an advance purchase. This was revealed in the last call previous quarter, that helped us to place, create the revenues necessary and also the margins. What margin are we expecting for the future? It will decline because as the averaging of the prices happen, as we can continue to that, we'll do that. We'll still maintain a certain number. Okay, thank you. Second, out of the TAN volumes you are targeting this year, how much is already tied up with customers? No. We are with vendors, yes. We don't really tie it up with the customers. The vendors, yes. I think till date we have tied up, Ashish, about 8.5 l akh tons. Eight and a half lakh ton? Complex fertilizers. Yeah. Eight and a half lakh tons is already tied up. Okay, sir. That's it from my side. Thank you. Thank you. The next question comes from the line of Viraj Kacharia with SiMPL. Please go ahead. Yeah, hi. Am I audible? Yes. Yes, sir. Yeah, hi. Just a couple of questions. First is for the existing urea policy which expires by December. Any update you can give in terms of will that be extended or what grouping it will now fall under? This is under the NIP 2012 policy. My understanding is that this is a group other than the NUP 2015. The treatment could likely be different. We are already in discussions with the government. They have asked for certain data. That data has been provided. The department is at the moment doing its internal workings. If hypothetically, if we were to say the 2015 last updated policy where you have various grouping, what we have, say, for our G1 and G2. If we assume that if we take that as a grouping, then what would be the impact we would see on the map with this? Just hypothetically. I didn't get your question. You are saying that they will put it into the new group, old group? Yeah. If at all they were to classify it under one of the older groups, then what kind of a financial impact we would probably see? This is a hypothetical question which no answer can be given. I've just told you that this group of the new plants is a plant which has not fully been depreciated, just about eight years into the production. Even as per the government's old policies, the timeline for a plant to be fully depreciated is 15 years. There is no way that you can mix the two policies. Okay. Second question is on the new NUP 2026, since we are now going ahead with it. If we compare it to the earlier policy, which is NUP 2012, the ROE profile seems dilutive relatively, right? Why is it still exciting for us to play, and what kind of spreads one should be looking at on an EBITDA per ton basis once it's fully commercialized? I think you have made a very pertinent point that it is, yes, it is dilutive from the last policy. Definitely it is. The advantages of scale at a single place have to be also factored in when you were to design the entire edifice of this policy. In brownfield, especially with Chambal having possibly four plants at the same site. You will understand that it will be almost like not only the largest in India, it will be the possibly second largest in Asia after Qatar's QAFCO and so on. Now, the benefits of scale are tremendous. You must understand in terms of the fixed cost, the manpower costs, and so on. Secondly, the optimization of various possibilities with the plants being at one place, not only in terms of capital expenditure, but also in terms of how the operating costs, et cetera, can be brought down. We have to take that all into the totality of the things. You must understand that there are very many other synergistic benefits that flow out of scale in terms of when we are having a large presence in urea and a growing market, as you know. We today have a consumption of close to 404, 405 lakh metric tons, while production is only 305, 306 lakh metric tons. That gap and the spread of our entire dealer network and the cross-sell opportunities that arise out of that, those are also benefits that cannot be ignored. We would like to believe that we have a good investment case. Of course, it is subject to approval of the board. The most important thing for us is to see how we can optimize on the capital cost expenditure. In terms of timeline, by when do you expect the plant indicatively to be commissioned, and what kind of spreads one would see on a steady basis once it's at a full capacity? The spreads, in what term are you talking about? Spread on what? EBITDA per ton basis. EBITDA per ton, I think is close to, if I'm not wrong, basis the policy, the one thing that is open in this is the dollar variable at which it will be converted into the revenue stream. That is something like, if I were to take today's number, it is almost INR 13,500 or something like that. If you were to take the cost below that and the other things, I would say we will be still around. Correct Around INR 12,000 a ton. Understood. In terms of timelines, sir, by when do we expect it to be? This depends on the effective date of the contract and when the entire process that I said preparatory to start and kick off the project construction. In my opinion, even with today's situation in terms of stress timelines for critical equipment, we should be able to deliver it within 2030. 2031. Sorry, 2030. Okay. Just one last question, I'll come back in queue. This is a sizable capital investment we will be going ahead. Obviously, we have a good amount of net cash balance sheet, and there's a steady flow of cash flow from existing business. Other than this, any other projects? In the last few calls, we talked about exploring a lot of other projects, be it on the chemical value chain, in the nitric acid. Any color you can give in terms of is there any other projects we- That is definitely the encouraging signs that we are seeing in our TAN business are definitely making us optimistic about going forward in that direction, what you just mentioned. Moreover, as I said, the effects of having these four plants in place also means that we have got additional raw material sourcing capabilities in terms of ammonia. That also feeds into this entire model. That is number two. Number three, I had mentioned last time, I think that we are having discussions on a JV abroad for phosphatics. On that lines, I would say that some progress has been made, and we are proceeding ahead with certain actions. As and when we come to that situation, we'll definitely inform you on that also. Okay, thank you. I'll come back in queue. Thank you. The next question comes from the line of Prashant with Elara Capital. Please go ahead. Yeah, thank you once again. Sir, how much could be the Gcal per metric ton for the new plant whenever we set it up? Similar to what we got in Gadepan III. There has been no tech improvement after that? There could be. I am not fully aware. There could be in terms of catalysts, or there could be in terms of reduction in some pressures here or there. That we will see once the technology suppliers come back to us with the specifications. Okay. Anuj sir, how much was the gas price for Q1, and how much is net cash on books? Cash price for Q1, because the government has only declared the provisional price. It is on [NCD] basis, it is $17.25 for the quarter. Okay. Net cash? We had net borrowing of about INR 200 crores. INR -200. Okay. That's it. Thank you. Thank you. Ladies and gentlemen, if you wish to ask a question, you may press star and one. The next question comes from the line of [Sanjay K.], an individual investor. Please go ahead. Hello, good morning. Am I audible? Yes, you are. sir, congratulations for the good operational performance. It's a good improvement in margins. There was a delay in this monsoon starting, and I think it started late in July. Are you saying that the impact which happened to the product sale in Q1 now and monsoon is getting better and better as we are progressing. Are we saying that in Q2, the demand is going to be better than what we expected maybe last quarter? Yes, definitely. I mentioned that in my opening remarks. That is visible from the way, for instance, fertilizers have been picked up. As we speak today, I see from what was happening by middle June and to now in July, for instance. This month itself, we have had almost 380,000 tons of farmer sales of urea and almost 92,000, 93,000 tons of NPK sales in this month alone. That means the pickup is close to 19,000, 20,000 tons a day, which is quite good in terms of how things are improving. Along with that, once you see that the sowing has proceeded to a certain level and the shortfall is being made up, the subsequent sales of various other specialty nutrients and crop protection chemicals shall follow. Sure. Overall, you are seeing that the Q2 will progress well than what we anticipated earlier. There are two parts. Yeah. We feel that Q2 will also progress well, and the liquidation from the channel is also happening, which will create the second round of demand. Sure. Thank you. Thank you for the update. Wish you all the best. Thank you. The next question comes from the line of Dhruv Muchhal with HDFC AMC. Please go ahead. Yes. Thank you so much. A few questions. Firstly, on the urea business, we see improvement in profitability despite the lower volumes. Is it because of probably the surplus ammonia sales and probably also the currency? If you can probably share what's the surplus ammonia benefit? No. Let me first lead you through. I think when Anuj mentioned the relative quantities of Gadepan I, II, and III. Gadepan III was a predominant factor in this quarter. That was the first instance. The second instance was the fact that we had a currency uptick, which directly impacts margins as far as Gadepan III is concerned. Thirdly, yes, some amount of ammonia sales also with better margins. These three factors have contributed to better margins. All right. We have seen that in the NPK, the subsidy rates are yet to be revised, and the costs are high. We also see the local production is running at a very low level. I'm just wondering, what's probably delaying the subsidy announcement, and if not, can it cause some challenges, probably even from import angle. I'll put it this way. Yes, subsidy announcements were delayed. Normally, it would happen twice in a year, once for Kharif and once for Rabi. The Kharif number is what it is. The industry, as I mentioned in my opening remarks, have been continuously engaged with the government to try and improve the terms. Otherwise, there will be demand destruction via much higher prices to the farmers. That is one issue which is there. The second issue is that there has been a low ebb in production because especially in sulfur availability has been an issue for most of the phosphoric acid manufacturing. That has fed into a lower production for the phosphatic fertilizer industry in India. Thirdly has been the logistical disruption from Saudi Arabia and so on, in terms of the importation of materials, especially finished fertilizers like DAP and so on. These three factors have combined. Nevertheless, there were opening stocks for much and due to which we are in some position of comfort, I think. The stocks will need replenishment going forward and quickly enough. The feeling is that, I don't know, the government might be feeling that, yes, they will definitely do something by October. There was an interim relief that was sought, but that has not yet come through. As far as Chambal is concerned, we took calculated positions in our purchases starting from January onwards. Although it was not thought of that way, but it somehow has panned out. We have, as you know, taken about 8.5 to 9 lakh tons of material. That will flow into the system. We are maintaining a good pace of sales, especially, as I said, even in terms of new grades such as Ammonium Sulphate and so on, which we feel is a grade which has a lot of promise going forward. All in all, I think Chambal has planned out its inventory and its sales, I would say more adroitly than possibly others. This advantage will flow. Basically, if I understand, the Kharif season is done, at least from the government side. Yeah. The next action probably will have to be in the Rabi. That will drive the further action, at least from you and the industry. Yes. Sir, in the earlier comment you mentioned an EBITDA for the new plant, as it goes, plant of about 12,000 odd tons. Is it the base earning or there can be upside from the Gcal savings or the ammonia savings? I'm a bit confused about the clause of 12%-16% variable cap on ROE. I'm not sure if it was there in the earlier policy also. What I'm trying to understand, say for example, because of any of the savings or efficiencies that you drive, if your reported ROE gets higher than 16%, does it get capped at 16% or there is a potential because of the efficiencies that you can get? No, I don't think there is a cap per se on your 16% because the government is not controlling your investment. Supposing you were to do it theoretically at INR 9,000 crore of brownfield project. You can also work the math that, yes, it could go up and depending on efficiency, the gas prices, the energy gain, etc., that is there in the system. That is one part. The other part is that, yes, what I said is the most important thing, variable in this product today is to get the capital cost at a level at which the numbers work for us and which have to be seen from a plethora of actions that we have to do. Managing the exchange, the taxes, and so on so forth, so that we get the absolutely right combination on this. That is the effort that is currently on in order to see that we get the best possible combination on this part. I hope I have answered your question on that side. As far as 12%-16% is concerned, that's only an indicative range of what the government thinks, that there is a floor and ceiling system. Ceiling. Ceiling system in this, which if you know, if in the old policy, it was also there, that you could earn a little bit more in case the IPP was beyond a certain number and some part of it flows into your profits. That is subject to the fact that your gas price should not be more than $14. As long as the gas price floats between $14 and $6.5 or $7, whatever the case is, you can get that benefit. That's a theoretical benefit. The other benefit that is really, say, supposing you will be able to get the project cost to a certain number and you are operating the plant more efficiently, those then are not capped. Okay. Sir, last question is about how does the plant get allocated? I am just trying to understand the process. You said you are in a good position, but what if there are multiple applicants for that? Because the quantum is restricted, if I am not wrong, 8 to 10 million tons. What if there are other applicants who want to also go ahead? How does that process happen? What gives you the confidence that you? I would say that, let's put it this way, they have to put up the plant in five years' time, number one. There are large number of greenfield applicants, there are large number of brownfield applicants. The question is who gets off the block first? You must understand that in this business, there are not too many vendors, so to speak, who are qualified to provide plants of this type. If they get booked early or if the shops get booked early, then whoever has got the first-mover advantage has a big advantage over there. Got it. It's the time limitation in which the plant has to be done, which gives you the comfort. Not only that, people who have to then put in INR 300 crores, INR 400 crores of bank guarantee have to think through whether they can actually deliver within that timeframe, because it's a financial aspect on that also that this is kind of an entry barrier. In case you are not confident, you might not go in. Got it. Sure. Great, sir. Thank you so much and all the best. Thanks. Welcome. Thank you. The next question comes from the line of Mayuresh with invest4Edu. Please go ahead. Hello, I am audible? Yes. Thank you for the opportunity, sir. My question is regarding to the TAN business. Basically, Indian TAN market is currently import dependent, but with upcoming capacities from Indian companies, domestic capacity could broadly match the demand by FY 2028. Do you see any risk of temporary oversupply if demand growth or import substitution is lower than expected? In such scenario, how do you see capacity utilization, pricing, and industry margin for the medium term, sir? Also, there have been reports of Reliance Industries evaluating and entering into a TAN business. How do you view the potential impact of large player entering in this market, sir? You have raised extremely pertinent points. To answer your first question first. Yes, we know that there is a capacity expansion taking place, so Indian supplies are going to go up. Although Indian demand is also going up. That's the good part. There is a continuous stress on infrastructure, roads, ports, bridges, so on so forth, which will all require and including, I would say, a very large demand projected, almost 86%. I mean, something like 3 lakh gigawatt or whatever that is being talked about in terms of expansion of thermal capacity and all that. Coal mining, also infrastructure in terms of blasting requirements for infrastructure and all that. That's all going up, which is quite encouraging. I would say my own assessment is that we will be short or slightly long in the market, maybe for not more than a year or so, and which we'll have to manage in the situation. Going forth, the market is again going to get short in terms of the demand exceeding supply. In that sense, we don't have a problem in capacity utilization. Number two, it also depends on the pricing structure that you have in your plant in terms of both fixed and variable costs. I believe we do have a good mix there. Third part is you rightly mentioned that Reliance are coming in, which means that they're going to bring a very large capacity should they plan to enter. Definitely, we'll see what happens then. Can't speculate right now. What is the kind of capacity coming in, what is the timeline for their execution, and so on and so forth. That is a little bit out into the future, a hypothetical question. As of now, I see no roadblocks. Okay. Thank you, sir. Additionally, with current TAN realization being elevated due to geopolitical factors, how should we consider- Should we consider? How should we see sustainable realization and margin over a medium term, sir? No, it is good. At the moment, I think what Mr. Mishra tells me is that we are better than budgeted margins as of now. Okay. Thank you, sir. That's all from my end. Thank you. The next question comes from the line of [Himani Negi] with [District B]. Please go ahead. Sir, hi. Thank you for taking up my question. We discussed some time back that the ROI in the New Investment Policy was a bit return dilutive as compared to the old policy. We'll still be able to make good savings in terms of benefit of single place advantage. I just wanted to understand, when we consider the benefit of single place advantage, will that take the benefit similar to the New Investment Policy or will it- [Himani], could you repeat? It got a little muffled in middle. I didn't get. You said something about the old policy and the new policy. Could you repeat? Correct. Sir, I was asking that if we compare the New Policy and the old policy, we discussed a few minutes back that ROI is a bit return dilutive. However, we have the advantages of setting up the CapEx in a single place that is going to give us a lot of operational advantages. I wanted to understand, will the benefit of operational advantage bridge the gap between the ROI? No, not really. There is a difference. There is still a difference. As I said, to be a scale player in any commodity business is a strategic advantage in itself. That is a very important advantage in terms of how the market is played through in terms of distribution and so on so forth, and the synergistic benefits that will come from it. Okay. Thank you, sir. Yeah. Thank you. The next follow-up question is from the line of Prashant with Elara Capital. Please go ahead. Abhay sir, on the phosphatic side globally, due to Middle East war, how are you seeing the supplies from North African market? Are they getting impacted due to ammonia or sulfur? Just wanted your views on the global phosphatic supplies. I'll put it this way from whatever little I have an understanding of in terms of phosphatic markets. The North African market, which I think you are talking mostly about Morocco. As I've reported in my opening remarks and what you would see in the results as well, we had a prolonged period of shutdown because of two reasons. One was non-availability of sulfur and the exceedingly high price of it. They are rich in phosphates, but short in sulfur and ammonia. Ammonia is something somewhat manageable. They have got supplies coming in from Trinidad and Tobago and so on. That is an alternate route for getting the ammonia. In any case, the ammonia is 22% or less in terms of certain grades. In case you are going for constants, they also export a lot of TSP, for instance, which is devoid of any ammonia. That takes care of the problem of ammonia. Sulfur is an essential element. Sulfur is what is needed for manufacture of phosphoric acid. There, my understanding is that of late, they have been able to source supplies from North America, and that has now started the production running. There were, I think, a few cargos which were available to them from the Gulf and Middle East during that period of lull. At the end of the day, I would say that they are still a very strong contender for supplies to the Indian market as well as to the world market. As long as they have lot of phosphatic reserves, as long as they keep on increasing their capacity and exploit the position, I'm sure they will be able to be capturing the markets in that sense. You know that China is more or less out of the phosphatic market for the last one and a half, two years. Saudi Arabia is stepping in with Ma'aden. However, they are now bottled up due to logistical issues. For the short period, I would say that it is more or less North Africa is a big supplier in the market today. Sir, Chambal is sourcing broadly from North Africa only its traded material? No. As I said that the grades that we have got, we have lot of Russian exposure. Most of the potash material comes from Russia. Some amount comes from North Africa. In terms of DAP or TSP. In this mix of this year particularly, we had a large amount Russian sourced. Because we did mostly the NPKs. Okay. Okay, sir. Thank you so much. Thank you. Our next follower is from the line of Viraj Kacharia with SiMPL. Please go ahead. Viraj, there is two questions. One is on the NUP 2026. I'm sorry to interrupt, Mr. Viraj. Could you please use your handset? Hello, Mr. Viraj, can you hear us? Hello? Yes, Mr. Viraj, could you please use your handset? Yeah. Am I audible now? Yeah, please go ahead. Thank you. My question is on the NUP 2026. You said that if we get the product cost right, and if we are able to derive better efficiency, then the gains are not capped in the 16% ROE. In the earlier policy, 2012, there was a certain sharing of that efficiency. Does that continue in 2026 policy? In the earlier policy, up to the eight years, as far as I know, there was no gain sharing in the efficiency gains. It is the same, I think, in this policy. Okay, understood. When you say we can get the project cost right, is it because it's largely brownfield in nature? Or what will drive a better lower project cost for us vis-à-vis other players? I will not compare it with other players because that is their business in the first instance, and their strategy in that. It depends on the type of contract funds, whether we are doing it ourselves through our own project team. Have we awarded in a LSTK mode, wherein we transfer some of the risk to the contractor who is doing it. These are one or two important structural decisions. Apart from that, the timing of placement, the type of tax structure you choose in terms of how you go about executing the project, the timeline to execute, the financing structure, which will define the interest during construction, and so on. There are many, many factors which add up to the project cost. All of them have to be hit right and in time. Most important is time to execution. We have a track record there, as you know. That is what gives us the confidence that, yes, we can definitely execute and get the required return on this. Okay. This second question was on the phosphatic. We already have a JV with IMACID for phosphoric acid. Just trying to understand, because we seem to have a good amount of projects or opportunities in hand, whether be it urea or the nitric acid value chain. What is the thought process behind exploring another JV in phosphate? Why not go solo model maybe in India vis-à-vis overseas? Any thoughts? Any color you can give? I can tell you this, that we have evaluated even a full scale granulation plant based on rock, starting from rock. The issue that always steers us in the fact is, number one, that the time for execution in India, and the second part is the cost of putting up a project, is not very dissimilar from what we would do if we were to go abroad and do it, number two. Number three, OCP has a certain structure in terms of priorities. They are already expanding their phosphoric acid capacity from 500,000 tons to 700,000 tons, which will be operational, I think, by the middle of next year, April to June 2027 or so. That gives us further capacities and scale. It is one of the largest phosphoric acid capacities in Morocco as we speak. One of the largest. That opens us with certain other opportunities in terms of exploiting the acid, not only for supply to India, but also for getting it into maybe some value-added segments and so on. Those are other issues which are also possible for OCP. This has a different kind of a structure with the thought process and the objectives of that particular JV. The other JV that we are talking about is linked solely to supply of material to India on the granulated or finished form, and where we will be both sides in terms of selling as well as purchasing or rather producing as a partner somewhere. That is the logic of doing that particular JV. My question was on the TAN and WNA project. I think when last few quarters, the expectation were that if you look at the year as a whole, we should be able to ramp up the utilization pretty high very quickly. FY 2027 as a whole, we could see more than 70%-80% utilization. Does that still hold even though the dynamics of the market have? I would put it this way, that whatever little I have seen in the last one and a half months, we started in earnest in Ammonium Nitrate Solution Melt around 15th of June, and we have almost completed a month in terms of volumes. I would say that the market has responded well to our product in terms of the quality, in terms of delivery schedules, in terms of pricing. That gives me the confidence that despite this being a lean season, we definitely can go forth and look forward to a better season coming from the third quarter, beginning sometime in first week of October and so on, as the market picks up. As you know, I spoke about the HDAN capacity nearing completion, almost going to start very soon. That itself gives us three products in the pipeline in terms of Weak Nitric Acid, Ammonium Nitrate Solution Melt as well as HDAN. We'll run the combination in the most profitable manner, and we have, as you know, also started putting up warehouses and so on. Two are nearing completion. One is already complete. That gives us the capacity to place our material advantageously with the users. All that marketing mix, I think, is coming together and which should be completed by somewhere end of December, all the marketing mix elements as well as product elements. That gives me the confidence that we would be able to generate the necessary numbers and the volumes. Okay. Thank you and good luck. Thank you. The next question comes from the line of Karan Gupta with CAVI Capital. Please go ahead. Yes, thank you. Appreciate the opportunity. Just one quick question now with this big potential CapEx coming up, what are your views on capital allocation with regards to dividends or buybacks going forward? I think dividend, whatever numbers I have done is we will definitely maintain the numbers that we have got. I don't see any difference. We have a policy in any case. There is a profit number. We have declared that there will be a 25% or so that we will pay for that. That I don't think that is an issue. As far as buyback is concerned, I think we have always said that buyback is subject to the fact that if we are not able to, we don't have a visibility in terms of projects and so on. In that case, we will definitely step in. Otherwise, I don't think a buyback is on the horizon. All right. Thank you. Thank you. The next question comes from the line of Darshita with DSP Asset Managers. Please go ahead. Yeah. Thank you, sir, for the opportunity. My first question was regarding the higher cost for setting up a granulation plant in India versus internationally. If you could just throw some light on what part of the entire process is higher cost in nature, and what would the cost differential be roughly? We did a theoretical exercise somewhere in the West Coast of India, and we add all the elements in terms of land and development and so on, port facilities and all that. What happens in this plant, Darshita, is that the main plant, which is the sulfuric acid plant, the phosphoric acid plant, and the granulation plant. Beyond that, there are many other costs in terms of storages, in terms of gypsum disposal, in terms of raw material storage, and so on. The outside battery limit, OSBL, that cost sort of overweighs even the cost of the ISBL, which is the inside battery limit cost. We have done these numbers a couple of times in terms of you have to put up infrastructure to transport the rock, to store the rock. If you are doing potash grade, you have to have a potash kind of a storage. You have to have a lot of stuff to store the ammonia because you don't have ammonia backups. You have to get ammonia tanks. They are very expensive items. All of these taken together, it is the outside battery limit that causes a lot of cost increases. Plus, of course, when we did that number and we had engaged some consultants for that. They gave us a number which was not once taken into account, and when you do the numbers, you take the higher limit + 20%, not the - 20% of the quote. It was coming out to be more costly doing that than a JV outside. Got it. Secondly, I think someone already asked as to what is causing the delay on announcing the subsidy by the government. We've been going round and round about it for a while now. Your best guess on why so much of a delay when we've already seen NPK production coming down significantly around the last quarter, and we are anyway facing issues with respect to procuring that. My assessment is that the government was watching or still watching two things. What is the stock? What is the progress of El Niño? What is the situation of depletion of stock? And do they have enough pipeline for the next or first month of the Rabi season and all that? I would guess if I were sitting in some position in the Department of Fertilizers, this would be a thought process. It's a balancing act. The government also has to look at its fiscal situation. They have already a policy, if you see, for urea, where there's a cost plus, all costs are absorbed. They have a policy for DAP, where all costs are absorbed. The question is only this, that what is their focus? Is this only their two grades and the other are sort of supplementary grades or maybe other grades with which they may not have that sensitivity? I don't know. My assessment is that possibly they are playing a balancing act on the NPK subsidy. DAP is open in terms of advantage, disadvantage, and so on. It's more or less like urea now. Sir, just one last question on the e-token that has been announced, I think in a few states so far, where there is a restriction on how much urea and DAP can be bought by the farmers. How are you seeing this? What is the government's thought process here according to you, firstly? Secondly, do you see the consumption for DAP urea coming down in any case if this is implemented pan-India? Darshita, as far as I know, there was an agitation two, three days back in Madhya Pradesh, the government has suspended the e-token system. Got it. Sir, thank you so much. That's all from my side. Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to the management for their closing comments. Dear friends, I would like to thank you all for joining the call today, and I hope we were able to address all your queries. If you have any other questions, you can reach out to our IR partners at Valorem Advisors. Thank you once again for participating in the call. Thank you. On behalf of Chambal Fertilisers and Chemicals Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.