Ladies and gentlemen, good day and welcome to the Coromandel International Q4 FY22 post-results conference call, hosted by Batlivala & Karani Securities India Private Limited. 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. Harmish Desai from Batlivala & Karani Securities India Private Limited. Thank you, and over to you, sir. Thank you. Good afternoon, and welcome to the fourth quarter and full year earnings call of Coromandel International Limited, hosted by Batlivala and Karani Securities. From the management, we have Mr. Sameer Goel, Managing Director, Mrs. Jayashree Satagopan, CFO, Mr. Mayur Gangwal, GM Finance. I would like to thank the management for giving us the opportunity to host this call. We will begin the call with opening remarks from the management, post which we will have a Q&A session. Thank you, and over to you, sir. Thank you, Harmish, for organizing the conference call. Can you hear me? Yes, sir. We can hear you. Okay. We will give an overview of the business environment experienced during the quarter, followed by the company performance, and then we'll have the Q&A session. Firstly, when we look at the global economy, the global economy experienced a swift recovery in 2021, with a robust demand revival upswing in investment and resumption in merchandise trade. The growth was supported by fiscal stimulus extended by the government, leading to a strong consumer demand. As per the World Bank estimates, the economy is expected to grow by 5.5% in 2021. Last year it had a growth of -3.4%. With the advanced economies growing at 5% and the emerging market and developing economies growing by 6.3%. As the world steps into the new year, the global economic recovery is facing significant headwinds amid the new waves of COVID-19 infection, labor market challenges, supply chain disruption, and rising inflationary pressures. The war in Ukraine and economic sanctions on Russia have put global energy supplies at risk. Russia supplies around 10% of the world energy, including 17% of natural gas and 12% of its oil. Further, Russia and Ukraine, which together account for 28 and 18% of wheat and corn global trades, poses significant risk on food security, especially in the low and middle income countries. Going forward, the geopolitical uncertainty, COVID-19 flare-up, rising commodity prices, physical threats, and likely monetary tightening can impact the speed of economic recovery. The World Bank has forecasted that the world GDP to grow at a modest 4.4% in 2022. Coming now to the Indian economy. India has posted a strong recovery during the year and is estimated to grow by 8.9% in 2021-22, subsequent to a contraction of 7.3% in 2021. The recovery has been broad-based at all levels, including aggregate demand, which includes private consumption, having recuperated and surpassed their respective pre-pandemic levels, and real GDP is expected to surpass the pre-pandemic level of 2019-20 by 1.8%. India started its vaccination program from January 2021, and in the course of the year has administered more than 180 crore vaccinations. With the vaccination program having covered the bulk of the population, the economic momentum is building up. As per the Reserve Bank of India forecast, economy is expected to grow at 7.2% in 2022-23. India is likely to remain one of the fastest growing large economies in the world. Coming now to agriculture. During the year, India experienced a normal southwest and northeast monsoon, which supported the higher kharif and rabi sowing. As per the second advance estimate, food grain output is expected to grow by 2% to 316 million tons. Horticulture sector is also picking up in the last few years, and during the year, the production is estimated at 333 million tons, similar to the level of last year. Indian agriculture export crossed $50 billion for the year 2021-22, a growth of 20% over last year, with major contribution coming from cereals, sugar, marine and cotton segments For raising the 18% export growth registered in FY 2021 and logistic challenges in the form of higher freight rates, container shortages encountered during the year, the trend is highly encouraging and signals competitiveness of Indian farm. With changing agri landscape, evolving consumer preference, digital accessibility, the Indian agriculture is swiftly getting transformed. The farm input segment can contribute significantly towards promoting integrated crop management, improve soil health through balanced nutrition, developing technology superior products, improving water efficiencies through micro irrigation, offering farm mechanization, and promoting sustainable farming practices. Agriculture GVA expected to grow at 3.9% in FY 2021/22 versus 3.6% last year. The reservoir levels in the country remains at 128% of long period average. The first consecutive year of good monsoon, agriculture continues to be the sweet spot in the Indian economy. Coming now to the fertilizer industry performance. I hope I'm still audible. Yes, sir, you are audible. Okay. Global supply shortage of key commodities continued in quarter four and resulted in higher prices and delay in receiving shipments. The industry has witnessed skyrocketing prices of key raw materials with the Russia-Ukraine war and emergence of COVID wave in China, apart from the protectionist policies. Shortage of containers continues through the quarter with rising prices and uncertainty in container availability. On the agriculture input side, there has been an increase in demand with record production and high price realization. For the quarter, DAP and complex industry primary sales volume were down by 26%. Last year it was 28 lakh metric tons vis-a-vis 38 lakh metric tons last year. Major raw material prices continued to remain high. Government has announced a special package for DAP and three generic grades for rabi season and has supported the industry by ensuring timely disbursement of subsidies. NBS rates for year 2022, 2023 are announced on twenty-seventh April 2022. Subsidy approved by the cabinet for the NBS kharif 2022 from 1 April 2022 to thirty September 2022 will be INR 60,938.923 crores, including support to indigenous fertilizer SSP through freight subsidy and additional support for indigenous manufacturing and imports of DAP. For the year, DAP and complex fertilizer industry primary sales volume were down by 15%. It was 161.86 lakh metric tons versus 2.9 lakh metric tons last year. I'll now hand over to Jayashree to talk about Coromandel performance. Thank you, Sameer, and good afternoon, everyone. I will now provide the update on the company's financials. Coromandel recorded a consolidated total income of INR 4,304 crore during the quarter and INR 19,255 crore during the full year vis-à-vis the same quarter. One minute please. Just one minute please. Before going on to the financials, let me also cover some of the business aspects. Coromandel displayed a resilient performance during the year, registering a strong growth across the business segments. This was despite the fact that, we had uncertain business environment, initially impacted by COVID-19 related interruptions, followed by geopolitical uncertainty, causing supply chain disruptions and also grim raw material scenario all through the year. Coromandel registered revenue growth of 50% during the quarter and 35% during the year, driven by both nutrient and crop protection business. Coromandel ensured that agri-inputs were made available to the farmers in its key operating markets and promoted the use of balanced nutrition, including organic fertilizers, to help rejuvenate the soil and improve farm productivity. Coming to the company's nutrient segment performance. The nutrient and allied business segment revenue increased by 57% during the quarter and 37% during the full year. Company's thrust to provide specialized fertilizers and greener solutions to the farmers has gained further momentum in our markets. We launched two new products in this segment during the year, and both the products have registered a good growth in SND and organic segment. On the sales front, in Q4, DAP plus complex volume was at 6 lakh tons, slightly higher than last year, which was about 5.9 lakh metric tons. For the year, for year-to-date, DAP and complex volume was at 30.2 lakh metric tons versus 33.5 lakh metric tons during the previous year. Manufactured DAP and complex volume was higher by 6% during the quarter and 2% for the full year. Imported product volumes were lower during the year. It was lower by almost 28% during the quarter and by 19% for the full year. Company's market share in Q4 was 22.1% and for the full year 17.9%. During the previous year for the corresponding period, the market share was 15.34 and 15.3% for the full year again. SSP quarter four sales was at 1.6 lakh metric tons, with a decline of about 11% over last year. However, for the full year, the sales was at a record 7.56 lakh metric tons, registering a growth of 13%. Our market share improved to 14% from 12% in the previous year for the same quarter. The commercial teams ensure timely availability of raw material to enable continuous production at all the manufacturing plants. During the quarter, our DAP and complex fertilizer plants operated at 73% capacity and 83% during the year. It produced 6.3 lakh metric ton of fertilizer during the quarter, and for the full year it was 28.9 lakh metric tons. The phosphorus production continued to remain high during the quarter. Progress on our key CapEx projects is as per schedule. Work on the major CapEx, which is sulfuric acid plant, has been started and is progressing well. To further enhance the SSP plants, Coromandel has upgraded granulation facilities at Udaipur and has also taken a new facility at Ennore on lease for manufacturing of SSP. Our technology teams are working on nano liquid and fortified fertilizers to further enhance the productivity of the nutrients. On the crop protection side, CPC business registered a growth of 11% in revenue terms for the quarter and 21% during the full year. This is being supported by a good performance across all its segments, exports, B2B, domestic, and formulation. The increase in raw material cost and the lag in cost and pricing has resulted in certain levels of stress in the margins. During this period, the business received 6 new registrations, the highest ever in any single year. The business also received 10 me-too registrations, several endorsements, including label expansions, and has submitted dossiers for novel combinations. The new products launched by the company this year have gained good traction in the market. The business has built a very rich product pipeline backed by strong R&D capabilities and is also innovating to further strengthen its product offering in the market. On the manufacturing plants, CPC plants operated at a capacity of around 70% for the full year, vis-à-vis 63% during the previous year. Work is in progress, setting up new plants for manufacturing of herbicides at Sarigam. We are awaiting approvals from the regulatory authorities to commence production. The retail stores operated by the company performed well during the quarter, providing all-round value solutions including products, farm advisory and mechanization services. Retail business has improved its operational efficiencies, leveraging technology to reach out to the farmers, and 92% of the stores are currently profitable. We have also seen a good turnaround in the stores in Karnataka during the quarter. In its digital transformation journey, Coromandel has taken significant steps in the last 1 year with the adoption of business intelligence dashboards, Salesforce productivity tools, and robotic process automation. This has improved the process efficiency and forecasting capabilities of the organization. Healthy reservoir levels and expectation of a normal monsoon augurs well for the upcoming kharif season. Coromandel shall continue to work to fulfill the needs of the farming community through its innovative products and farming solutions. I will now cover the financials and the results of the company. Starting with turnover. Coromandel recorded a consolidated total income of INR 4,304 crore during the quarter and INR 19,255 crore during the full year, vis-à-vis same quarter prior year, where the turnover was INR 2,872 crore for the quarter and INR 14,257 crore for the full year. This represents a 50% revenue growth in the quarter and 35% for the full year. Nutrients and allied businesses contributed to 87% share, the balance coming from crop protection business. The percentages are the same for the whole year. Subsidized versus non-subsidized share of business stands at 82% and 18% during the quarter, and for the full year 81% and 19%. Corresponding numbers for the previous year, 74% and 26% for the fourth quarter, and 78% and 22% for the full year. Moving on to the profitability. Consolidated EBITDA for the quarter was INR 417 crore vis-à-vis INR 262 crore of last year. EBITDA for the full year is INR 2,196 crore, vis-à-vis INR 2,023 crore of last year. In terms of the subsidy and non-subsidy share, it stands at 59% and 41% during the quarter, and 70% and 30% for the full year. Previous year, the ratios were 55% and 45% for the fourth quarter, and 72% and 28% for the full year. Net profit after tax for the quarter was INR 290 crores, in comparison to INR 156 crores for the corresponding quarter last year. For the full year, net profit after tax stood at INR 1,528 crores, vis-à-vis INR 1,329 crores during the previous year. On the subsidy front, during the quarter, company received INR 2,618 crores towards subsidy receipts. The comparative figure for last year was INR 2,943 crores. For the full year, company received a subsidy of INR 7,077 crores, vis-à-vis INR 5,040 crores in the previous year. Subsidy outstanding as on 31 March 2022 was at INR 294 crores, vis-à-vis INR 590 crores during the previous year. I will now cover the interest income. During this quarter, company earned net interest income, excluding the Ind AS interest, of INR 32 crore, vis-à-vis interest income of INR 7 crore in the same quarter last year. For the full year, company earned a net interest income of INR 66 crore, vis-à-vis INR 28 crore of interest cost in the previous year. Company's balance sheet continues to remain strong with 0 debt. Company maintained its surplus funds in board-approved securities, and these are earmarked for specific growth-related investments which the company is currently pursuing. On the Forex front, we have seen that the rupee has been quite volatile in the last quarter, moving in a broad range of 73.70-76.90. Company continued to follow a very conservative approach in terms of hedging and managing its Forex exposure, and this has been managed quite well. On the dividend front, the company and its board has approved an interim dividend of INR 6 in February, and this was paid out in March. The board, in its meeting held on 28th April 2022, has recommended a final dividend of INR 6 per share. With this, the total dividend for the year is INR 12 per share. It corresponds to the dividend of INR 12 per share declared in the previous year as well. Thank you all for your interest in Coromandel and joining us on our call today. We will now open the session for question and answer. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Reminder to participants, anyone who wishes to ask a question may press star and one at this time. The first question is from the line of Vishnu Kumar from Spark Capital. Please go ahead. Thanks for the opportunity, sir. The first question is on the margin. Sorry to interrupt you, Mr. Kumar. The audio is very low. Yeah. Hello? Am I audible now? Yes. Hello? Yeah. The first question is on the margin outlook. Can you help us understand how you kind of look at margin, say, for the next six months or one year, given that, you know, the subsidy revisions have taken place now? Is there any change in outlook from what you thought previously? Good afternoon, Vishnu. We have seen that day before, the government has announced the new NBS rates, which is also in line with the increase in the raw material prices that we have seen in the industry. Currently, the outlook for raw material continues to be firm, and this relief by the government should actually help in sort of offsetting some of the increased costs. As far as Coromandel is concerned, we think the profit levels would be similar to what we have seen in the past. We're expecting close to INR 4,000-INR 4,500 per metric ton in terms of EBITDA on manufacturing products. The backward integration undertaken by the company couple of years back, especially on the phosphoric acid plant, has actually helped in the last year's performance, and we believe that it will continue to help us going forward as well. Because the value gap between bought out acid and manufactured acid would help us to retain the margins even as we go along. We are also looking at debottlenecking the PA plants, both at Vizag, PAP 1 and PAP 2, to see how we can increase the capacity utilization and also move the PA production to close to 1,350 tons per day. The value gap capture is going to be critical for us. We think that will actually play a very key role. Apart from the flexibility that the manufacturing plants have now developed in processing various kinds of rocks, which also helps us to take advantage of the cost of manufacturing. That's as far as fertilizer is concerned. On the crop protection, you would have seen this year has been witnessing high RM prices as well. However, some of the new products, especially on the formulations that have been introduced, had helped us to get a better margin on our domestic formulation. There are four more products that are planned for the coming year, and those would be introduced in June 2022. They are combination products as well as products that are coming out of our captive generics, and therefore we believe this would help us in further strengthening the margins. We did have a lag between the cost and the price, which our teams are also trying to address. You would have seen that partly helping us in Q4, and we expect that momentum to continue. On the technical front too, we are looking into three new molecules and MPPs, coming up for that. Overall, the crop protection side also, we should see the margins on an upward trend. Yeah, helpful. Just couple of follow-ups there, ma'am. One, on the backward integration, so we are roughly around 60%. What is the extent to which we can achieve, and what is the limitation for us to not to get to 100%? That's one. Second thing, on the recent subsidy increase, whatever that has happened, coupled with the MRP price increase, whatever we have taken. Based on current levels, do we have some headroom in our existing NPK grades, for absorbing any further cost increase? These are two follow-ups. Okay. As far as phosphoric is concerned, we used to import somewhere close to 5.5-6 lakh tons of phosphoric until a couple of years back. Currently, we are expecting this to be around 3.5-4 lakh tons. With the product mix that we are evaluating, this could further come down. The tenth evaporator that had been commissioned at Vizag has actually helped us to also concentrate and move the strong acid to Kakinada. For us to get 100% capture, we may have to look into another PAP plant. This also has considerations in terms of rock availability, environmental clearance, approvals, so on and so forth. Currently, our strategy is to see how do we minimize the import of phosphoric by increasing the throughput in the existing facilities. When we had both PAP 1 and 2 coming in, the capacity of those was about 1,100-1,150 metric tons per day. We are gradually moving it up to say 1,300-1,350 tons per day, which will sort of reduce the requirement from the 5.5 that I was speaking to say 3.5-4. Even at Ennore, we are now 100% using our own acid. It's only for the Kakinada plant, which is not a fully integrated plant, we will continue to have imported acids. Unless we put up another plant, we will not be in a position to get to 100% on our own. On the other hand, we have our JVs in Tunisia and South Africa, where our operations teams are going there to further support and see how we can maximize the throughput. Both these have been having some challenges, one or the other, over the last 2-3 years. In Tunisia, we had 3 of our engineers. Now our partner is also having a few more sent. That's the way we are trying to manage the phosphate. As far as the question in terms of how will we be able to manage the cost increases of raw material, it also depends upon the grades. So there is a mix. There are certain grades where if they are not going to be profitable and there are certain other grades that are going to be profitable, the mix is going to play a key role and the core management will be working on it. Thanks. Thank you. Mr. Kumar, may we request that you return to the question queue for follow-up questions. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to two per participant. Should you have a follow-up question, we would request you to rejoin the question queue. The next question is from the line of Ankur Periwal from Axis Capital. Please go ahead. Hi, congratulations on a good set of numbers, and thanks for the opportunity. So first question, on the crop protection side. You know, while for the full year, we have shown 20%+ revenue growth there, and there is, you know, you mentioned in the opening remarks there are new products launched there, both on the formulation as well as the combination side. So just wanted your thoughts in terms of, you know, how should we look at this business, from a 2-3-year perspective in terms of growth? I think, firstly, there's ample scope for crop protection to grow. Even while we had a strong double-digit growth, there's opportunity to grow further, because the base still has to increase and we are doing several things on that. Of course, we need to ensure full raw material availability, to ensure that the technical plants are fully operational. That's one thing. We'll continue to grow both our international markets, our domestic B2B, and also a lot of scope in the formulation business to grow. That's where it is. The other strategies like Jayashree was saying is to go for the new generation projects and the combination projects, and we have a huge pipeline of that, which actually helps us with better margins. Not only that, they are more effective use and adopted by the farmers. We see that business continuing to do well, and we hope that the margins also will improve as and when we keep introducing new molecules. That's been going to be our strategy. We'll also look at any other inorganic growth opportunity which may come along the way. Sure, sir. You know, the earlier geographic distribution that you know we had talked about in the domestic market itself, is that expansion on the distribution network side largely done, and we should be seeing the benefit of that playing out going ahead, or it's still work in progress? There are two things we are looking at business to grow. One is, we have to still leverage a lot while we have done better, but there's still a lot of scope for the business to grow, particularly in our key markets, of AP, Telangana, and Karnataka, Maharashtra and MP. Now, one of the strategies which we have is to leverage the strength of our fertilizer distribution to ensure that we fill up whatever gap are available and also to have a stronger agronomic and demand creation structure on that. There's still a lot of scope. At the same time, we have, say, you know, areas where because of the new molecules, including combination which we are having, is to address all the growth, you know, all the applications which the plant may require. We are bridging the gap. At some stage, you know, take agri cultivation. We only was at 20-25% of the need of crop protection. We have moved this up to 60-70%, including and we are basically more centered towards insecticide and fungicide. Now we are actually completing the entire cycle. That is the progress which we are making. Hence there's a lot of scope, you know, for our crop protection business to grow, given our strength on the fertilizer side, and also our retail outreach, especially in AP, TG and Karnataka. Sure, sir. That's helpful, sir. My last question on the capital allocation side. Now, on the balance sheet, we already have around INR 3.5-2,000 crore. We are generating incremental, give or take INR 2,000 crore plus every year. You did mention that we'll be debottlenecking some bit of fertilizer capacity there. Any thoughts there in terms of how should one look at the capital allocation incrementally? Ankur, the way we are looking at capital allocation is to see how we can further strengthen the backward integration for fertilizer. There's good amount of CapEx that's been planned for it. We had last year approved the SAP 3 plants, which is about INR 400 crore, and most of the work will get completed this year. Almost 90% of the work should get completed this year. We're also looking into some debottlenecking, as I was mentioning earlier, on the PAP and also in some of our trains. Apart from the normal CapEx, which would be there. The main area where we are focusing currently is also to see how we can further strengthen on CPC with the new multipurpose plants. The business has come up with a proposal, and we are also looking into further strengthening on the bio side. Now, there are opportunities on the specialty nutrients, especially on the liquid fertilizer. Last year, we had launched a liquid fertilizer, commissioned a liquid fertilizer plant. We are looking at further expansions there. These are all work we are planning internally, where the CapEx could be around INR 7.5 billion. Beyond this, we are also evaluating any good inorganic opportunity. That's how we are looking into the use of surplus funds and capital allocation primarily is going to be for the high EBITDA businesses, which comprises of CPC Bio SND. Sure, that's encouraging. Just one clarification. INR 700-800 crores CapEx is over next year itself, or it's over a period of time, over 1 or 2 years? The coming year. This year. If the broad break-up here will be out of INR 800, INR 400 is going for the sulfuric acid plant, and the balance will be for the other projects which you mentioned. Exactly. Okay, great. That's helpful, ma'am. Thank you and all the best. Thank you. Thank you, Ankur. Thanks for coming. The next question is from the line of Tarang from Old Bridge Capital. Please go ahead. Hello, ma'am. Hello, sir. Good afternoon, and congratulations for the transformation that the balance sheet's seen from about $200 million in March 2020 to now with $500 million of cash. Two questions from my side, actually three. I mean, incrementally, however one slices and dices, the conclusion that I get to is that the profitability on a per ton basis for the manufactured business has increased contribution per ton successively, FY21 over 2020 and now 2022 over 2021. Without getting into specific numbers, just wanted to, if you could probably, you know, give us a sense in terms of what has really driven this contribution in this year. If on a descending order, I mean, there is obviously the spread between rock and acid. There are rock procurement efficiencies and maybe perhaps better pricing or some other reason that I may not be aware of. If you could just give us some sense on what has driven this. That's number 1. Number 2, if I look at your crop protection business, the business while on the top line has grown at about 20%, profitability, for obvious reasons, has not moved up, about 6-7%. Now I understand this business has three parts to it. There's the domestic formulations piece, the domestic technicals piece, and then there's the export piece. If you could give us a sense on what went right and where were there margin pressures in this financial year. Last, in the phosphatic manufacturing piece, what proportion of your manufactured phosphatic volumes would be DAP? That's it from me. Thank you. Thank you. Let me take your first question in terms of what's driving the profitability. Publicly, as you said, the backward integration is key. Our PAPs have been very helpful. We are also looking into NPK as we go along. Rock mix, the flexibility of the plant to process various types of rocks. Smart choosing, getting the raw materials at the right time at the right price, ensuring the plants are not going through any shutdown. Capacity utilization of the plants has been very good. Control on fixed costs has also been extremely good. We have been taking selective pricing. The pull of the brands has been phenomenal. For instance, the GroPlus, the GroSmart, GroShakti. I think it's not just the grades. The economic structure has actually helped in terms of creating the awareness and the pull for our products. Finally, it's also about the mix management. Given the dynamic movement of raw material prices, how do we optimize through the right mix so that we maintain our profitability and enhance it over a period in time? I think these are broadly the six, seven items one can look at in terms of, how we've been managing and, trying to improve our margins. As far as your second question from CPC is concerned, the growth over the last year, because the previous year we also had a bit of a challenge in the first quarter, because of COVID, our plants were not able to operate at full capacity. Plant capacity utilization has been up compared to the previous year. The domestic formulation, we've seen an increase in our margin profile, whereas we have seen some amount of stress in our export markets, mainly on Mancozeb. As we mentioned earlier, looking into newer technicals as well as formulation is going to be the key for us to enhance the margins in the crop protection business. We are currently working on a good pipeline of products there. The third one was on how much of DAP do we manufacture? Phosphatic manufacture. Yeah. In the phosphatics, I would say about 7%-8% would be a share for DAP. We can produce more if we do our other grades of NPK vis-a-vis DAP, given the consumption of PA in DAP is going to be higher. Wherever we are able to get DAP at reasonable prices for import, the company has been following a strategy of manufacture as well as imports to meet with the requirements in the market. I missed that number. Was it 8% you said? Yeah, it's between 7%-8%. Got it. Thank you. Thank you. The next question is from the line of Bharat Sheth from Quest Investment Advisors. Please go ahead. Hi. Congratulations, Sameer and Jayashree, for excellent performance. Hello? Your lines, we can hear your lines, Bharat. Hello. See, Jayashree, first question is on this sulfuric acid plant. When is expected to commission and how much this can add to the contribution to the gross margin once it is commissioned? We will probably have it by June of next year. If all goes as per plan. You can expect it to meet the kharif requirement for next year. Okay. This is more of an intermediary which we have found it helps in the times when the sulfuric acid prices are high. Also is an option. We will be reducing our dependence on imported sulfuric acid, you know, as compared to doing in-house manufacturing. It will give us flexibility for us to look at and go. That kind of pricing flexibility to see whether we want to import acid and then burn it, or we need to go to our own manufacturing. Okay. Is that a fair understanding that it also is a part of the allow us to increase the phosphate capacity? It's the other way around. You know, if you have more phosphate capacity, you need more sulfuric acid. Yeah. Either import depending on the price of sulfur. You can make sulfuric acid or you can import sulfur and burn it. That's the way it is. It just gives the flexibility which we have. Okay. Some of the logistics challenges which could happen as you increase your capacity for that. Okay. Is there any plan to de-bottleneck or expand the capacity on our complex side, NPK? We are already doing that. We are looking at how we can make them more efficient and be quite successful at that. We continue to do that as part of a project at all our three plants. You know, looking at how we can get a better throughput through all the lines. We have three lines in Vizag, three lines in Kakinada, and also one line in Ennore, and we are looking at both expansion on that count. Obviously a lot also depends upon the price of raw materials, especially at Kakinada, and how much we want to operate. Okay. Last two question. See, what is our current mix of formulation and, technical grade in, CPC business, and where do we see this next three year time with the kind of new product registration pipeline and we are continuously, introducing new product? Our technical plants actually supply both, we do export in technical plants, you know- Sorry. For export market. At the same time, the technical plants are also used for making our formulation. The whole idea is to increase more and more of our formulated products using our own technical raw material, including looking at combination projects. That's how we are looking at it. Currently, our capacity utilization is 70%. We're also looking at, you know, making more, some of the plants more fungible, so that, you know, we can then look at making molecules which are, you know, making money and where we are more competing them. That's how we are looking at it. Okay. Continuation to the second. See, what is total contribution of other business like plant growth nutrient, organic manure, and retail in overall top line? What percentage of EBITDA it is operating? How do we see the growth in that business? Okay. Coming to specialized nutrition, which includes organic, we are very happy. We are continuously having a very strong CAGR growth. We do believe that this business will continue to grow as the farmers get more adopted and with the help of our own sales and agronomist team as people get more adapted to it. We are seeing this as the future of the business, and this includes, you know, getting into applications like drones. We've already launched what is called a liquid fertilizer plant, which will give us both, you know, things which can be used for sprays and other things. We are increasing our manufactured volumes in specialized nutrition by upgrading our plant because we want to capture the entire value chain on that count. We do see this as a future growth business, and it will continue to do well. We have integrated the teams, and we are expanding well beyond our current markets where we are. Definitely it's a business for the future, the way we see it. You talked about retail. Our retail main emphasis was three things have happened on retail. While we grow on the top line, our main thing is to continue to promote our own manufactured products across the retail chain. Also have what is called value addition for new categories which are there, but obviously look at products which are making margins. What we have done this year is to ensure that all stores are getting profitable. We've closed down some loss-making stores, so now 90% of our stores are profitable. We aim to make it 100% before we look at further expansion. Last would be the good news in retail is we are, with the inventory management and credit from our suppliers, we are actually working on what is called a negative working capital. That's going to be our story of retail. Thank you, Mr. Sheth. One thing which we are doing in retail is to see how we can get into more into services and charge value for that. Not make it just product oriented and advisory oriented, but also look at the service model in retail. Thank you. Thank you. Mr. Sheth, may we request that you return to the question queue for follow-up questions. Thank you. The next question is from the line of Tejas Sheth from Nippon India AMC. Please go ahead. Yeah. Hi. Good afternoon. I have two questions. One, on the crop protection side, what kind of acquisition are we really looking at, and are we actively looking at any of the acquisitions? Second question is, on the export side, how big the crop protection opportunity can be over next 3-5 years? Yeah. On the acquisition front, we have been looking at a few opportunities. We'll have to see whether it will fit, and it has to be complementary and synergistic to our traditional business. Efforts are on, and we hope we should be able to come up with something in the coming year. On the export front, obviously there is a very good opportunity across the market. Coromandel has a very balanced presence across the globe, whether it is South America or Africa or Asia. Currently the primary molecule for us is Mancozeb. The crop protection team has identified few more molecules, and they are coming up with a proposal to manufacture them. Hopefully those technicals, along with some of the combinations and global registrations that the team has come up with should help us expand our presence in the global market. The opportunity there is quite high. Okay. Here we are, on the export side, are we looking at, any contract manufacturing on the technical side, or it will be purely filing our own registrations and selling it under our brand? See, currently our business model has been manufacturing technicals, holding registrations and selling. The current thought process has gone through a change, meaning that we are also open and in discussions for exploring some contract manufacturing opportunities. Having said that, it's a new line which Coromandel would be getting into. Obviously it takes a little bit of time because our current model has been purely into technicals. This has to be a different segment within the crop protection business itself. Okay. Thank you for answering. Thank you. Thank you. The next question is from the line of Rohan Gupta from Edelweiss Securities. Please go ahead. Yeah. Hi, good afternoon, and congratulations on such a strong set of different scenarios. A couple of questions. First is on the recent government subsidy rates. We have seen that the cost or input cost is likely to remain at the same level, what it was in the previous quarter. If you can also help us the current quarter phosphate phosphoric acid rate, which you have negotiated with. With the current subsidy rates revision, which is effective from the current quarter, reducing the prices in the market to the farmers or we can see on the market. Yeah, hi. I think the good thing the government has done, with obviously inputs from the industry, they have taken the rates, as, you know, as per March, what were prevalent in the international market as per March. Now, you know, now if we have to guess how the raw material prices are going to move up, given the fact that there's a war which is going on and the fact that, you know, obviously global commodity prices, including agriculture, has done well, it is going to be anyone's guess, right? Won't like to crystal ball gaze here, but couple of things can help to soften prices. One is of course the war in Russia and Ukraine comes to a quick settlement. Secondly, we are putting the pressure, we are telling the government to use the diplomatic channels to get Iran back into business. That will help prices of certain raw material commodities. Third, the big third is here, you know, because China not only for fertilizer, but also for crop protection. What sort of protectionist policies will they have after the season gets over. That's why we are looking at how the raw material is going to go. As far as phosphate is concerned, I believe the key players are still negotiating to, you know, come to a fix on the pricing. We for one, we have diversified our sources. So for us it's not a problem. We are covered. That's how we are, and we'll take it as and when it comes. Yeah. That's the way we are. What will be the effective prices of phosphate for us for the quarter? We won't know about it till the prices are firmed up, which I hope with the subsidy getting announced, it should firm up by end of this week. Yeah. We don't see that with the government subsidies taking care very well of all the input price increases. We have already spoken to you that obviously they want to also have a look at pricing. They have already taken inputs on pricing prevailing as of March. Obviously, the whole mix can change depending on what the thing is. But the good news with the government is firstly they have given the subsidy till the last date, including which we have to compliment the government for it because it is a huge bill for them. The second thing, whatever cost increases, if at all will come or depending on how it is, I'm sure the government will look into it. Yeah. Early, very early for us to comment. Okay. Second question is on this, crop protection. Can you give the break-up of B2B business and export and domestic formulations in terms of revenues? Yeah, I think our export is mainly 45%, and the rest is split between B2B and formulation. Sir, what will be the segment further between domestic and formulation, sir? I've already told you export is 45. No, the export is $45. Yes. The rest is split between the two. The rest split between the two. Okay. Thanks, sir. Thank you. Thank you. Thank you. The next question is from the line of Dhruv Muchhal from HDFC AMC. Please go ahead. Yeah. Thank you so much. Just to correct myself, you mentioned that the PAP capacity currently is about 1,000 tons per day, which is effectively about 3.35 million tons, and you're planning to increase it to 1,300 tons per day. Is that right? Yeah. The current capacity is about 1,100 tons per day, and we are looking at increasing to 1,300. Got it. Any further details in terms of what would be the CapEx and by when do you see this expansion happening? This is mostly debottlenecking, so it would not require any major CapEx. Definitely some amount of CapEx would be required. This is being factored in our business plans this year. I think on an aggregate could be about INR 10-15 crores. That's the type of CapEx. A lot of this has been taken care of in the APA which we have done. A lot also depends on the rock quality which we use. All right. Throughput also depends on the rock quality. All right. By when does it happen? I mean, is it already largely done or We hope to have it happen as soon as possible. For this full year largely, we should be running at this 1,300 tons per day capacity. We hope it to happen. Yeah. A lot depends on. We are closely monitoring that. Sorry, from a lack of understanding, I'm just trying to understand. Yeah. From a lack of understanding, but how does this operate? I mean, does this capacity depend upon the kind of rocks you take and hence the expansion also happens? Or it is, I mean, it's a fixed capacity. It's rock nutrition does play a role because we have to balance out. Yeah. Okay. Part of this increase is also driven by your expectation of better rock grades. Sure. Okay. Got it. Sure, sir. Thank you so much. Thanks. Thank you. The next question is from the line of S. Ramesh from Nirmal Bang. Please go ahead. Hello. Good evening. Thank you very much. Congratulations on your results. Sir, can you, if you look at the phosphoric Sorry, Mr. S. Ramesh, the audio is not clear from your line. Please use the handset mode. Can you hear me now? Yes. Hello. Yes, better. Yeah. Yeah. Thank you very much. The first thought is, if you're looking at the phosphoric acid prices in the second half, more between $1,330-$1,530, and the subsidy fixed in October was perhaps building in the second quarter price plus some increase. I would like to understand how you managed to achieve the kind of growth you have shown in the nutrient segment in the fourth quarter. To what extent is it based on the captive production of acid? And to what extent is it based on the price increase you have taken? And secondly, what is the kind of volume growth we can expect for the kharif in both nutrients and crop protection, assuming that the monsoon is normal? Okay. Thanks, Ramesh, for the question. We had earlier indicated that, Q4, the reason for the margin expansion is full capacity utilization of our PA plants. We were able to capture the value gap between the imported raw material, which is imported PA versus our own manufactured PA. Along with this is the cost controls that have happened and better capacity utilization. Now coming to where we are expecting both these businesses in the current quarter, we're expecting normal season, given the fact that the predictions is for a normal monsoon. The reservoir levels are good, soil moisture conditions are good. All of this would mean that we will continue to see good demand. Our aim is obviously to see how we can maximize our primary as well as phosphate during the peak season. That is as far as fertilizer is concerned. Given the high prices, we're going to be very selective in terms of import of finished products in fertilizer. We're also trying to maximize the SSP production, mainly because there is an increased demand from the farmers as some of them are not able to afford fertilizer at these elevated prices, though the government has given a high level of subsidy. We'll also see a good growth in SSP. On the crop protection front, again, we are looking at high double-digit growth in the higher teens. As we mentioned, capacity utilization of the technical plants is key, and four new products are getting launched in June. Last year we launched six products, year before another four. I think the new products into our portfolio is actually filling gap, and they are also margin accretive. It's going to be helpful in terms of not only the revenue growth but also improving the margins in the crop protection business. As a follow-up, can you give us the volume growth in the crop protection business for the fourth quarter? We have the top line growth. If you can get a split between volume growth and how much has come from increase in prices. I can come back to you on this. I don't have the numbers right away. Again, we can take it offline, if you don't mind. Thank you, Mr. Ramesh. May we request that you return to the question queue for follow-up questions. The next question is from the line of Abhijit Akella from Kotak Securities. Please go ahead. Yeah. Good afternoon, Sameer. Good afternoon, ma'am. Congratulations on a great quarter, and thank you so much for taking my questions. Just had a couple of clarifications regarding the phosphoric acid segment. I just wanted to, you know, how much our annual requirement of acid is, how much we are currently producing, and where we expect to go to, you know, over the next foreseeable future. Okay. Abhijit, our total requirement in Vizag and Ennore is fully met with the production in these facilities, right? The capacity in Vizag is about 410,000 tons, and this will also mean that there is some excess acid that is available for shipment to Kakinada, which we've been doing. Ennore has a capacity of about 60,000-70,000 tons of PA which primarily is used captive in their facility. With two plants in Vizag and then Ennore, the requirement for import this year could be anywhere between 350,000-400,000 tons in terms of imports. Again, the product mix will play a very important role, because there are certain products which can consume a very high level of PAs vis-à-vis others. Depending on that, the requirement for Kakinada could vary between 2.5-4 lakh tons. Okay, understood. That's very clear. Thank you so much, ma'am. The second question I just had was on the you know, the value gap between imported acid and own manufactured acid. So do you expect this to persist you know, over a long period of time? Or do you see this as some kind of you know, cyclical up move which could correct at some point in the future? There will always be a value gap between manufactured and imported acid, right? The quantum could vary depending on the prices. Currently, PA prices are at very elevated levels, and we've also seen the rock prices going up. When you buy the rock and then you manufacture, the value gap goes up, right? When the PA prices settle down, the raw material prices also will come down. At that time, you will see the value gap coming down. I think it's a function of PA as well as rock prices and also to some extent the subsidized acid prices. Currently, the PA gap is high. In a longer period, I would expect it to normalize. Sorry, just one last clarification on this. Would we expect phosphoric acid to remain relatively tight in supply compared to phosphate rock over the medium to longer term? Mm. See, phosphoric acid, they are currently, you know, few suppliers were there unless new capacity comes up, which I'm sure will come up. While rock sources are a lot more diverse, so you need to then set up a phosphoric acid plant to use it. You know, it's a lot more diverse. One good thing is, thanks to our PAP plant, we have the ability to use various type of rocks and various type of acid. Got it. Very clear. Thank you so much, Sameer. Thank you, ma'am. Wish you all the best. Thank you. Thank you. Thank you. The next question is from the line of Sumant Kumar from Motilal Oswal. Please go ahead. Yeah. Hi. Hi, sir. My question is regarding if there is a further price increase in phos and ammonia. Will the government give additional subsidy or will the government give us power to increase the price of NPK and DAP? I think we can't say what the government will do. The government has been helpful. If you see the subsidy prices, this has been fixed up till the kharif season. That way they are. Now of course, a lot will depend on how the prices behave. What the government is looking from their side is to get long-term contracts with all manufacturers and suppliers so as to ensure availability. The key thing is to ensure availability of fertilizer during the current kharif season. We'll have to take our terms. They are monitoring that closely. No, but if there will be a price increase in phosphoric acid, are we going to increase the price? The prices will vary from. It depends on things. It's not just price of phosphate, it's price of ammonia. Right. Price of sulfuric acid, a lot of other things. A lot of numbers of factors will play. We can't say just on one particular price what it's going to be, you know, and how it's going to play. It's also a question of demand and supply in the international markets. No, government has restricted to increase the price in the past. If the price increases from here, so we have seen FY 2022, government has given additional subsidy, apart from the all the prices has been fixed. Do you think the government will give additional subsidy? They're working. Government has looked at the workings, which is up till March. There are a lot of factors which will also play, how is the Forex behaving, how are other things behaving. It's not just one factor alone. Yeah. Okay. The next question is for the technical overall our crop protection export side. We have seen we are struggling with the new product and we are still tied to higher sales of Mancozeb. Newer product development and sales is becoming a challenge for Coromandel. There is a huge opportunity in technical side. What are the challenges we have, say, in R&D side, or we are trying to fix up and we are going to have more molecules available to the market? Sumanth, as we mentioned earlier, the business has identified a long list of patented molecules. Based on the feasibility, technical feasibility, based on the scale of commercialization, we have shortlisted the molecules which can be taken up for technical manufacturing. The R&D team is very well equipped to work out the processes and ensure it is piloted and scaled up. Now, key for all of this is also going to be the backward integration. Just to do the technical without having proper N minus one, N minus two levels also tied up. Mostly, I would prefer it to be in our own plants rather than depending on some sources from other countries. That process is going on. We don't see any constraint on the R&D front. We don't see a constraint on the capital allocation. We don't see a constraint in terms of the ability of the manufacturing team to scale up. I think the business case for some of these molecules has been worked out. As I was mentioning just in a couple of sessions before, the proposal for multipurpose plant has been put up by the business for evaluation. Once it is cleared, work will start and we'll have the new technicals also coming up in the plant. Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to the management for closing comments. Yeah. Thanks everyone for attending. I think, when we look at how the business is, firstly, as far as agriculture is concerned, the good thing is, that, you know, demand continues to be good, both at the global level and also at the Indian level. Agriculture as an economy has done well. Coromandel is well placed to take advantage of that. That's a positive sign. Obviously, like most industries are also facing, it's an issue of, you know, higher raw material costs, the availability and then the pricing. I think number of steps which we have taken in the past and also the steps which we are planning to do, including the current CapEx which is in line, is a step in this direction to ensure that, you know, firstly, we make fertilizer and agri inputs available to the farmers as he wants it and, you know, and also supporting. We are also hoping that, you know, over years, you know, India will become like it's done for urea, at least on the NPK side. We would get some PLI scheme where investments can happen so that we are less dependent at least or capture the value back while we are, for manufacturing, while we are here. These are testing times, but I think Coromandel as a company, we are quite resilient. We've also started a journey of digital transformation, where we hope to look at efficiencies and real-time data, both to benefit the farmers, but also look at, you know, how we can improve our efficiencies and also look at new opportunities for growth. Our balance sheets are strong enough. If there's any good opportunity which will come our way, we'll also look at inorganic growth. Thank you very much for supporting Coromandel. Thanks. Thank you all. Thank you. Thank you. Ladies and gentlemen, on behalf of Batlivala and Karani Securities India Private Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.