Ladies and gentlemen, good day and welcome to the Coromandel International Limited Q2 FY23 results conference call hosted by Axis Capital 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 telephone. I now hand the conference over to Ankur Periwal from Axis Capital. Thank you, and over to you, sir. Yeah. Thank you, Kathy. Good evening, friends, and welcome to Coromandel International Limited's Q2 FY23 post-result earnings call. The call, as usual, will be initiated with a brief management discussion on Q2 and H1 performance, followed by an interactive Q&A session. Management team will be represented by Mr. Sameer Goel, Managing Director, Mrs. Jayashree Satagopan, Chief Financial Officer, and Mr. Mayur Gangwal, GM Finance. Over to you, Sameer, sir, for the initial remarks. Yeah. Good afternoon, everyone, and thanks, Ankur, for organizing the conference call. I'm audible, Ankur? Yes, sir. You are. Just to start off, global economy, you know, the global economy is expected to slow down from 6% in 2021 to 3.2% in 2022 to 2% in 2023. It is facing several challenges. Inflation higher than witnessed in several decades, tightening financial conditions in most regions and resulting calibration of monetary policies. I think the main issue is the strengthening of the US dollar against major currencies, and the Russia-Ukraine war all weighing heavily on the global economy's future health. A bit positive news on the agriculture side. The Food Price Index has declined to 136.3 in September of 2022, sharply lower than the record high of 159.7 in March. The main reason is at least some exports are happening out of main agriculture market, Ukraine. Also, the commodity prices, which were high globally, have been softening. Coming to Indian economy, most of you would know Indian economy is progressing better through the growth rates, though the growth rates have been revised downwards and India is likely to remain the fastest growing large economy in the world. The tax collections have been buoyant, reflecting all round performance of the economy. The headwinds are rupee depreciation, high inflation and of course, energy prices. These need to be watched. The good news is, the Indian agriculture continues to be a bright spot. India received the fourth consecutive year of good monsoon. Southwest monsoon was 106% of the long-term averages. South and central part of India, where we operate, received excess rainfall. While north was irregular but got adequate, east had a huge deficit. The crop acreage in kharif was at 1,103 lakh hectares, 1% down prior to the previous year. Here also cotton has done better, but obviously there is a deficit in paddy, mainly as a result of the less acreage which happened in the eastern parts and UP part. The Northeast Monsoon is expected to be normal and with good reservoir levels currently at 108% of last year, we do expect the rabi season to be good. Coming to the fertilizer industry performance, the global supply of key commodities improved during the quarter, and the industry has witnessed softening trends for major raw materials. The only place where we expect some hardening to happen is ammonia. A lot will depend upon how the winters are there in Europe. Domestically, the fertilizer demand has remained strong, supported by good monsoons and favorable policies by the government. Coming to the quarter, DAP and complex industry primary sales volume was up by 11%. Current year was 64.6 lakh metric tons, while last year it was 58.5 lakh metric tons. Mainly as a result of higher imports of DAP. DAP and complex fertilizer offtake sales, which are actual consumption, went up by 6%. Current year was 67.2 lakh metric tons versus 63.6 lakh metric tons last year. As I mentioned before, major raw material prices witnessed a downward trend against the all-time high. The NBS rate for Rabi for the full year 2022-2023 has been approved by the cabinet. Subsidy for Rabi season will be to the tune of INR 51.875 crore. For year to date, DAP and complex fertilizer industry primary sales volume were up by 15%. Current year was 119.1 lakh metric tons vis-a-vis 103.4 lakh metric tons last year. DAP and complex fertilizer industry off sales, which is consumption sales, was marginally down by 1%. Current year was 103.67 lakh metric tons versus 104.3 lakh metric tons previous year. Coming now to Coromandel's performance. Like you have seen, Coromandel delivered a robust performance during the quarter, registering strong growth in turnover and profitability, with the agricultural environment remaining favorable in most of its key operating markets. Normal crop sowing coupled with favorable policies from the government helped. Coromandel registered a revenue growth of 65% during the quarter and 62% for H1, which was largely led by higher subsidy and MRP in the nutritional business. Other businesses did well even on volumes. Coromandel ensured that agri inputs are made available to the farmers in its key operating markets and promoted the use of balanced nutrition, including organic fertilizer to help rejuvenate the soil and farm productivity. Specifically on the Coromandel nutritional segment performance, the nutritional and allied business, which includes our specialty nutrition and organic, revenue increased by 73% during the quarter and 70% during the half year. Company specialized nutrition and organic products registered a very good growth both in terms of turnover and profitability. We now introduced in the liquid fertilizer segment, which is the first in the Indian market, Econo-MiCal during the quarter. On the sales front, in quarter two, DAP complex volume was at 12.4 lakh tons, 11% higher than last year at 11.2 lakh metric tons. For YTD, DAP and complex volume was at 19.7 lakh metric tons versus 19 lakh metric tons last year. Manufactured DAP and complex volume was higher by 19% during the quarter and 6% during the half year of last year. Imported products was lower by 30% during the quarter and down by 14% during half year of last year. Company market share in quarter two was 19.2 and half year was 16.5. Last year it was the same for quarter two at 19.2 and 18.4 for half year. In the complex segment, market share for quarter two was 28.8%. Last year was 28.6, and H1 was 28.4 versus 26.3 against last year. This is on the phosphate. SSP quarter two sales was 2.43 lakh metric tons with a growth of 8% over last year, and for the half year it was at 4 lakh metric tons. Market share for half year was at 14.3%, which was down from 16.1% last year. Mainly due to our first quarter one. Our commercial team have been abreast with the latest development in the global market and have ensured timely availability of raw material to ensure continuous production at the manufacturing plant. During the quarter, our DAP and complex plants operated at 107% capacity and at 99% during the half year and produced 9.2 lakh, 2.6 lakh metric tons of fertilizer during the quarter and 17.16 lakh metric ton during the half year. Phosphoric acid production during the quarter was again at all-time high of 1.2 lakh ton, and H1 was 2.3 lakh metric ton. Progress on our key CapEx are as per plan. The work on sulfuric acid project is progressing well and will be commissioned as per schedule. We have initiated a desalination plant at our Vizag plant, which will help to improve our operational flexibility going forward. To further enhance SSP facilities, the company is increasing the granulation facility. A new facility has come up at a plant in MP, Nimrani, which has added to this value. We have also revived our Pali plant, Hospet plant, and also, we are manufacturing in our Kothari plant. Progress by our technology team on new product development like nano, liquid, customized fertilizer is as per our internal plan. With these initiatives, we will continue to promote balanced nutritional approach and support the farming community. In fact, we have successfully done drone trial with our liquid specialized and liquid fertilizers in the market, and they have been well accepted by the farmers. Coming to crop protection. Crop protection business registered a growth of 1% in revenue for the quarter and 3% for the year. Increase in key raw material costs and price challenges due to high production of Mancozeb impacted domestic business to business and export business. Domestic formulation business saw a very good growth with positive traction from the new product launches which we have made this year. In a single year we have exceeded our full year target. The business has received total of five patents during this year. These are unique product combinations which have been developed by our own R&D team, and this will do well for our crop protection business as we come. The business is building a rich product pipeline backed by strong R&D capabilities, and is partnering with global investors to further strengthen its product offering. On the manufacturing side, the CPC plant operated at a capacity utilization of 53% in quarter two. Last year was 77%, and 56% during the half year. Last year was 78%. The main reason for this was we had to slow down our production on microjet due to the stocks which we had. However, this has now picked up with the softening of raw material prices. The Ankleshwar plant has had a very high capacity utilization, and we are expanding the capacity. Work has set up on a new multi-plant for the manufacture of fungicide at Ankleshwar, which has been progressing well, and is expected to be commissioned during the year. As I mentioned before, specialized crop nutrition, we have successfully done drone spraying trials in the farm field and crop protection also. The business will be scaling up usage of drones during the remaining part of the year. Our retail centers operated very well during the quarter, focusing on providing all-round agri solutions, including products, farm advisory, and mechanization service. business has improved its operation efficiency and leveraged technology to reach out to the farmers. In quarter two, which has a record 94% of our stores have been profitable, and retail has operated with negative working capital. As part of our digital transformation journey, Coromandel has strengthened its digital data center initiatives, which includes creating unified data platform on cloud, building automated dashboards, and building advanced use cases for the business. It has also you know, created enough data for our manufacturing sector center. The company has taken significant steps in the last one year in the adoption of business intelligence dashboards. Salesforce productivity tools and robotic process automation you know, has improved the process efficiency. With the expectations of normal Northeast monsoons and higher reservoir levels, Indian agriculture could be a bright spot. With the strength of our key operating markets, Coromandel will continue to ensure timely availability of agri inputs to the farming community through our dealers and our retail outlets. Coromandel has a diversified presence across the value chain. It will continue to provide balanced nutrition and integrated pest management solutions to maximize farm productivity. I would now like to hand over to Jayashree for the company's financials. Thank you, Sameer, and good afternoon, all. I will now provide updates on the company financials. In terms of turnover, the company recorded a consolidated total income of INR 10,145 crore during this quarter, and INR 15,927 crore during the first half. The numbers for the corresponding period last year is INR 6,166 crore for quarter two, and INR 9,852 crore for the first half. The company has registered a growth of 55% during the quarter, and 62% during the half year. The increase in revenue has been mainly on account of higher subsidy and MRP realization in the fertilizer business, driven by high RM costs. Nutrients and allied businesses contributed to 93% share, and the remaining 7% coming from crop protection business in the quarter. For the half year, it is 91% and 9% respectively. Subsidy, non-subsidy share of business stands at 89% and 11% during the quarter, and 87% and 13% during the half year. During the previous year, it was 83% and 17% during the quarter, and 80% and 20% during the half year. As far as the profitability is concerned, the consolidated EBITDA for the quarter was INR 1,068 crore, as against INR 744 crore last year. For the first half, it was INR 1,744 crore as against INR 1,129 crore last year. In terms of the breakup between subsidy and non-subsidy business, it's 78% and 22% during the quarter, and same for the first half. During the previous year, it was 71% and 29% for the quarter, and 72% and 28% for the first half. Net profit after tax for the quarter was INR 741 crore, in comparison to INR 519 crore for the corresponding quarter last year, and INR 1,240 crore for the half year against INR 867 crore last year. On the subsidy front, during the quarter, the company received INR 3,866 crore, comparative to the last year was INR 1,671 crore. For the half year, the total subsidy received was INR 4,002 crore, and the previous year it was INR 2,162 crore. Subsidy outstanding was INR 4,166 crore, vis-a-vis INR 1,698 crore during the previous year. On the interest front, during the quarter, company incurred a net interest expense excluding indenture interest of INR 13 crore, vis-a-vis interest income of INR 8 crore in the same quarter last year. For the half year, company earned a net interest income of INR 8 crore versus INR 20 crore interest income in the previous year. Company maintained its surplus funds of almost INR 2,374 crore in bonds and equity securities, and these have been earmarked for specific CapEx and growth-related investments. Short-term borrowings of INR 1,279 crore were taken to bridge the higher working capital requirement. Our company's balance sheet continues to be strong. During the quarter, the company received AAA/Stable rating by India Ratings and Research, a Fitch Group company, and a short-term debt rating at IND A1+. Company's long-term credit rating by CRISIL continues to be CRISIL AA+ Positive, and the short-term rating at CRISIL A1+. On the forex during Q2, rupee was extremely volatile and traded in a very broad range of 78.50-81.95. Coromandel followed a prudent conservative approach of hedging the forex exposure, thereby limiting the impact of currency depreciation. We thank you for your interest in Coromandel and joining us in the conf call today. We shall open the session for question and answer. Thank you very much. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchtone 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. Thank you. The first question is from the line of Tarang Agrawal from Old Bridge Capital. Please go ahead. Hello, good evening, and congratulations for an extremely strong set of numbers. I have a couple of questions. One, on the manufacturing of your phosphatics and manufacturing of SSP. As we go forward, can we expect you to probably cross your phosphatics manufacturing volumes north of 3 million tons and SSP volumes north of 7.5 million tons? Considering the capacity constraints or the debottleneckings that you might have. That's number one. Number two, if you could give us some trend on how phosphoric acid prices have moved for you in the past, and what was the price for the upcoming period? Thank you. Thank you, Tarang, for your questions. As regards the capacity for manufacturing of NPKs and SSP, your question was whether we would exceed the 3 million tons and 7.5 lakh tons of capacity that we have. Definitely with the debottlenecking that has happened and the use of different sources of raw materials, we believe that both these are possible. As far as the PA price trend is concerned, we have seen the prices shooting up from last July onwards. July 2021 onwards, we've seen an uptick. Last quarter, for instance, the PA prices was almost $1,715 per metric ton. The current quarter it is $1,175 per metric ton. After a continuous increase in the prices, we are seeing the raw material prices are cooling down, and we expect this trend to continue. Okay. Thank you. Thank you. The next question is from the line of Himanshu Binani from Prabhudas Lilladher. Please go ahead. Thank you for taking my questions, and congratulations on a good set of numbers. I have two questions. Number one is on the margin side. Despite we are seeing a lower contribution of the unit rates- Excuse me. This is the operator, Mr. Binani. Can you speak a little closer to the phone? We are unable to hear you. Uh, now- This is much better. Now is it audible? It's audible. Thank you. Yeah. Sir, despite we are seeing a lower contribution of unit rates to the overall volumes, while the increased volumes in the trading side of the business, and what I understand is that some of the competitors have actually posted the numbers citing taking some inventory loss from the carryover inventory from the last year also. Due to the volatility into the RM prices from 2Q to 3Q. There might be some component of inventory loss also in that. But despite that, we have like posted this sort of EBITDA per ton on, in the manufactured volumes. Just wanted to have a sense on how the margins profile are and how should one actually look into the EBITDA numbers going forward. The second question was on the CapEx side. Sir, any sense or color on the capacity enhancement into the complex fertilizer side as in we are like we have just alluded that we are already working at, optimum utilization. Going forward, is there any plans for enhanced capacities into the complex fertilizer side? Thank you. Just firstly, you talked about the margins. Obviously, when we look at how we do our planning, we look at whichever grades are giving us good return depending on the raw material and the conversion part and the market. As per the crop demand, we go for that. That is how we balance off how we look at things. That's one for part of it. The good thing about Coromandel is we have a lot of grades to choose from, and we can promote them in various ways. You said we did more trading volume. We did not do more traded volumes as far as NPK is concerned. I had actually highlighted that we have done less given the higher raw material you know given the higher prices which had happened. At the same time, we did manufacture some of the fertilizer which we do more, and that's why we enhanced our manufactured fertilizer. One of the good things was we were able to source all the raw materials on time, and therefore our manufacturing team were able to manufacture. As JC alluded in the previous question, we were also able to improve our efficiencies much more. You want to answer the capacity? The other thing, Himanshu, that we need to also look into is the backward integration that has been undertaken, which has been of tremendous help in terms of the value capture at our end, right? Now I will talk about the CapEx. The CapEx plan for the year was, you know, close to INR 809 million gross. We are tracking well on it. The projects are going well. Currently in the plan we have some debottlenecking CapEx. But at the same time, depending on the market conditions, we are also exploring what could be the future capacity creation. For instance, we have set up a liquid fertilizer plant, and that is currently getting fully operational. We are also looking into setting up in the coming year, possibly another liquid fertilizer plant which could be used for, say, a Nano DAP, for which, we are currently going through the regulatory approval processes. There is work that's going on in the businesses to look at capacity augmentation and future capacity creation. Right. Ma'am, was there any sort of inventory loss component which is into the reported numbers? I think you are referring to the Chambal comment in terms of. Right, ma'am. As we do not deal so much in DAP, we don't have any inventory related loss. The way the government had set up the subsidy for DAP was anything that is manufactured during the year is at a INR 50,000 of subsidy, and anything which was in the carry forward inventory of prior year was about INR 33,000 of inventory. In the last quarter on the carry forward inventory, we had recognized only INR 33,000 and therefore there is nothing to come and impact Coromandel's books this year. Got it, ma'am. Got it. Thank you, ma'am. Thank you. The next question is from the line of Manish Mahawar from Antique Stock Broking. Please go ahead. Yeah. Good evening, everyone. First question is in terms of NBS rate, what the government has announced day before yesterday. How do you see the rates and our action in terms of MRP in the marketplace? And how do you see the full year subsidy outgo for government as a whole and the payment to the companies? Yeah, Manish. The NBS rates that have been announced by the government is very close to what has been announced for the Kharif season. Right. The raw material prices have been coming down. At an appropriate time, we believe that the government will be re-looking into the NBS rates and may come with a downward correction. Having said that, when the raw material prices come down and the subsidy at its current level, there is also a responsibility for companies to see how we work through the MRP. Those options are being contemplated by Coromandel as well. Currently, what the government has announced the rates and phosphatic price, right? So, how much maybe possibly do you think MRP will come down in this next three months? Maybe the government will take time to reevaluate this number further. That is being worked out, Manish. Possibly we will get a clarity on it in the next one or two weeks, and accordingly the actions will be taken in the market. As regards subsidy, your question was how is the government disclosing there is additional outlay which has been approved by the cabinet. Right. Even in the month of October, we have received from them close to INR 2,400 crores of subsidy from them. We hope during the next couple of months also, they should be in a position to process and pay the subsidy outstanding to the companies. The government has been very good at this. By March maybe 2023, do you think the situation will because the balance sheet as well as the subsidy outstanding has increased, right? In terms of because of date number. It will normalize by March 2023 balance sheet time? I think so. Okay. The second Last year you have seen that the government has paid out the subsidy money almost all through the year. This time also they have taken approval from the cabinet, and I do not see a reason why subsidy would not get paid. Okay, understood. Second question, in terms of production capacity, which the earlier question also asked about. What type of because right now, how much of a production we can do because we have done a lot of debottlenecking in NPK plant. What is optimal production we can do in the existing capacities? In terms of NPK, I'm talking about or DAP. We can continue to do even more production. A lot also depends on how we take our annual turnaround. This depends on number of factors which includes the demand in the market, but more importantly, you know, when we look at the safety of our plants and equipment. That is something which we'll take a call closer to the time when it's a off-season. Okay, any number you can say with maybe 32 lakh tons or maybe 35, what type of number we can manufacture on an annual basis? I think we should be able to do between 32-33 lakh tons. As Sameer mentioned, there are two factors that could come in. One is the mix that we adopt. There are going to be certain products where the throughput is going to be much higher. Right. If you're going to do too many products and you do a changeover, that is going to impact. There are certain products where the throughput would inherently be lower. One is the component of mix. The second one is the timing of the ATAs, right? During an annual turnaround, normally between 15-35 days, the plant could be shut down, depending whether it is a fully integrated plant or it is just a granulation plant. Therefore, these also come and impact our capacities. Long and short, between 32-33 lakhs is possible. If you have to take a call, say I want to do an ATA in March vis-a-vis April, then there could be a lower production. That call normally the manufacturing team takes about a couple of months before. That's the flow of how to look into the manufacturing capacity. Okay. Last one in this same question. In terms of granulation plant, right? Maybe the brownfield expansion. How much time do you think we will maybe take or we are waiting for again, raw mat sourcing for basically the final plant? We have mentioned on the previous calls that it is going to be important for us to tie up the sourcing as we look into further capacity expansion. The business is looking into seeing how we can get our PASA secured as we think about additional granulation capacities. If once you set up a plant, right, it will take around 18-24 months time to come on stream, right? Definitely. Okay, sure. That's from my side. Thanks and all the best. Thank you. Thank you. The next question is from the line of Bharat Sheth from Quest Investment Advisors. Please go ahead. Hi. Thanks for the opportunity, Sameer and Jayashree. Coming onto this crop protection, despite, I mean, we have been introducing new and we have been taking out earlier old product moving out. This time also our growth is not, I mean, compared to industry is very low. Where do we see a sustainable growth and what are the factors that has affected the growth? Yes. Firstly, our domestic growth has been very good. You know, we have, when you compare across the companies, our domestic growth in quarter two has been very good. This is despite the fact that we had what is called excessive rains, and therefore it stopped some of the what is called application to happen during the quarter because of excessive rains. Like we said, we are obviously concentrating on our high margins and new products. Therefore we have also done downsizing of some of the other products where the margins have been an issue, but this requires investment. Domestically, things have been well. There has been pressure, like we mentioned in our call, on Mancozeb, which is, you know, has had higher capacity, plus also, you know, across both in the export and the domestic market. Primarily also got to do with the high prices which were, you know, what we could do. That has impacted some of the things. The good thing is, raw material prices and Mancozeb is also coming down, and we are putting up this thing. Therefore again, from September onwards, we are seeing quite a good upsell. Yeah. Rishi, you want to add anything? Yeah. As Sunny said, the prime reason for the muted sales is our export and B2B markets, mostly driven by Mancozeb. That is also because of the high RM costs. The decision from a business was not to produce more and sell at a much lower cost. Having said that, in the last month or so, the raw material prices have eased, and therefore it gives an opportunity for additional Mancozeb sales during the coming quarter. On the domestic front, we had almost, on the formulation business, we had almost a 29% growth year-on-year. The new product that has got introduced has been doing extremely well, which has also helped in sort of balancing the margins overall. As far as CPC is concerned, there are two, three things which going forward should help the business. One, the new multipurpose plant that is being constructed at Ankleshwar should be ready for commissioning in January this coming year. This will be manufacturing three technicals, Azoxystrobin, Picoxystrobin and Cyproconazole. This should complement and also help reduce our heavy dependence on Mancozeb. Apart from this, the business is looking into further new technicals which have become off patent in the last few years. We have identified in the first list another 10 AIs, out of which the R&D team has come out with their dossiers for six of them. The business is looking at a new proposal for setting up another multipurpose plant, and the proposal should hopefully come in and get cleared in the next two to three months' time. All these actions in terms of sprucing up the AIs portfolio will help in the B2B business, which is both export and domestic. On the formulation front, the business is continuing to look at introduction of new molecules. This year, already four have been introduced, one more is in the pipeline for the coming quarter. The business has also got patents for five combination molecules, which also is for the first time. Apart from this, about 23 odd registrations have been successfully obtained for the global market, which also includes some formulation-related registrations. While the current quarter has been soft, we think some of the actions that have been taken up should help get a much better portfolio mix for crop protection and also address some of the concerns on the overdependence of Mancozeb. Apart, also looking into a deeper penetration in select Southeast Asian markets to go on an aggressive B2B and also possibly on a B2C. Jayashree, currently, Mancozeb contribute how much to the total revenue? Second question related this five new patent which we got it. Have you already launched the product or if not, then when we will be seeing those product launching? Okay, good question. Mancozeb currently is about 35% of our total revenue. It used to be 60-65%. It has come down to some extent, but still export is heavily dependent on Mancozeb. As far as the five newly patented molecules, the patents have just been received, so we will be working on the formulation, and we should see the product launches in the coming year. In Rabi season, do we expect or it will be again, next year only? This will be next year. In Rabi season, we will be coming up with another me-too product for launch. Fair. How much are these specialty nutrient and organic is contributing and what if you can give roughly around the size of that business and how do we see the prospect of that? Yeah. Specialty nutrients and organic as a business has been growing quite well. We have seen the business growing in almost 25-30% on a year-on-year. Currently, on a year-to-date basis, they will be about INR 250 odd crore in terms of revenue. Okay. On SSP side, any color you would like to give? Or how is the profitability vis-à-vis which was earlier with now new granulation facility coming up? Sorry, can you repeat the question please? On SSP. SSP business is doing quite well. One of the issues, which we had, was to increase our capacity, which we have done by reviving, like we had told. We bought a couple of plants which we have revived. We have also taken some additional facility from QAFCO, and we are expanding the granulation facility. The granulation facility not only helps to improve the use of SSP, but also helps in terms of you know, launching our new products like Groplus, which is now doing extremely well and has a better margin profile. One good thing which we should have mentioned is which is happening from the government on subsidy on freight. This will help us to supply almost pan India and especially the big markets on the east where currently we are not tapping, so that we supplying regularly. So we will be doing that also. SSP, we continue to see it grow. Even the government is promoting SSP against either imported DAP, especially in the markets of North and West, as a better substitute. Because from a farmer's point of view, it not only gives phosphate but also gives other required mineral which is very useful for the soil. Thank you. Sir, are you done with your questions? Yeah. I think two questions are returned, please. We move to the next question, which is from the line of Ranjit from IIFL Securities. Please go ahead. Hi, sir. Thank you for taking my question. My question is on the profitability of the fertilizer segment. We have been outperforming our guidance for quite some time now. Whether there are any thoughts of the EBITDA margin guidance revising upwards? The second question is that we have also seen a bit of hardening in the prices of the rock phosphate. I do believe that we have been having the super efficiencies, and probably a part of that, at least on the rock phosphate front. Do we see a hardening of prices might lead to a bit of pressure on the conversion or the benefits that we have been getting due to the backward integration? Thank you. Thanks, Ranjit, for your question. On the profitability front, we had already guided on EBITDA percent of about 4,000-4,500 or so for the full year. Given the way the margins have turned out for the first half, I think it would be reasonable to expect that the margins will be better during this year. Somewhere between INR 5,500 per metric ton or something, which I think would be reasonable. On the rock phosphate pricing that you were mentioning, we should also note that the prices across the commodities, except for ammonia, has been softening, and we are seeing a similar trend in rock phosphate. I don't see a reason why the prices for rock phosphate would go up. DAP prices are down. Phosphoric prices are down. We are seeing softening in the rock phosphate as well. Would we able to the guidances for this year or even for the next year? Do you see a fair bit of comfort? I think the guidance is for this year. As we work out the business plan, we should be in a position to guide for the coming year. Sure, ma'am. Thank you. Thank you. The next question is from the line of Rohan Gupta from Nuvama. Please go ahead. Hi, sir. Good evening, and thanks for the opportunity, and congratulations on such a strong set of numbers in the current quarter. Sir, two to three questions from my side. First, we start with this current phosphoric prices. What are the contractual prices for phosphoric? Though Jayashree mentioned that government may look at further reducing the prices or the subsidy, but I think that the subsidy rates which have been announced so far are already fixed for the entire Rabi season. If the market prices are remaining or holding for the farmers at the current level, do you see that the margins at current level in DAP and NPK fertilizer will be much better than what we have already seen in first half? Yeah, Rohan, the Phosphoric Acid prices, as I mentioned, for this quarter is about $1,124 per metric ton. It has come down from $1,715 in the last quarter. As I was mentioning, while the cabinet has gone through the NBS rates, and we have a circular with states which is for the Rabi season, when there is going to be steep reduction in the prices, we believe the government may look into the NBS rates and could come with a revision during even the Rabi season. We'll have to wait and watch. Second, as the Phosphoric Acid prices had just got finalized for the quarter and the raw material prices are coming down, the company has also been having inventory for continuous production. There is going to be some level of high-cost inventory which has to get liquidated. To that extent, that will also sort of compensate for the margins. The third one, as I was mentioning little while ago, with our input prices coming down, there is also responsibilities for companies to look into how some of the benefits can be passed on to the farmers who are our end consumers. That is being worked out and probably in the next couple of weeks as we go through the cost proposal, it should be coming up with some MRP related action. Ma'am, can you quantify or some numbers a little bit that high cost inventory which we have of the raw material, what can be the impact on profitability? I think that all will be visible in the Q3. Yeah, mostly all this should come into Q3. This varies, right, across various raw materials. It could be some on the sulfuric acid. We have some rocks which are being put in, which are clear for a longer term. Then there is also certain quantum of sulfuric acid. We've seen the prices in all these commodities coming down. It is a mix between various raw materials. I'm hoping that most of it should get exhausted in the coming quarter itself, in this current quarter itself. Irrespective of the high cost inventory, if I look at closely the, as you also mentioned, that the government reduction in subsidy rate is on DAP is hardly INR 1,500 per ton. If we maintain the prices to the farmers at the same level, it means that even the previous raw material which we are carrying is enough to maintain our old margins. However, now the phosphoric acid which we are procuring right now is going to have a significant improvement in margin. Didn't get that. Will the inventory losses which you are talking about can be anything significant because the subsidy has not come down sharply and the farmer prices will remain same. I don't see a significant reduction in the margin, Suvanc. However, having said that, this is also the value gap that we capture when the phos acid prices are very high, right? Because when you do your own backward integration, you do your manufacturing of phos acid, there is a value capture that happens between you buying the rock and converting into acid, instead of you buying acid. When the acid price has come down, it's good in a way, but at the same time, the value capture in terms of getting the rock and processing will also come down. Got it. Amount of inventory. That is the reason why I'm saying. The MRP corrections that could be possible. You know that we are not mostly into DAP, we are into NPK. There are different grades of NPK which we manufacture and sell. When you look into a combination of all of these factors, I'm saying that that could sort of to some extent moderate the margins compared to what we have seen in Q2. Overall in a year wise, I think we'll still be better than last year. Sure. Second, in terms of the margin guidance which you gave, as we have already seen a first half solid number, definitely at INR 5,500 EBITDA per ton, may not only hold on, even we may exceed that number as well. That's what looks like. For next year, any sense that will you see that these are the sustainable margins, which one should be looking at going forward, even at the phosphoric acid coming down and the backward integration which we have now? Do you see that these are the sustainable margin per ton level? I think so. Over the years, we've seen that the margin, margins per se have been getting better with a lot of efficiencies that are being built in the plant. The plant operating at a higher capacity and the de-bottlenecking efforts are also helping to spread the fixed cost better. Margins should be definitely in the range of INR 5,000-INR 5,500, slightly more. I think those are good numbers for us to look into. Like Jaishree said, we'll go through the planning process and we'll be able to tell you better for next year. Fine. Sir, on our agrochemicals part of the business, we have been highlighting that we are open for growth and even also have been very aggressively looking for inorganic growth opportunities also in that segment and even in other businesses as well related to agri. Do you see that we are having enough options or we are getting enough such opportunities which you may like to pursue and we may see some inorganic growth opportunities as well in the agrochemicals part of the business? Or in terms of you want to build a business towards the contract manufacturing and intermediates manufacturing or CRAMS model, you would like to increase significantly in the agrochemicals part of the business over next couple of years. How do you see that business panning out? We have had a detailed listing with McKinsey, which is a long-term strategy. We are looking at each of the avenues which you have talked about. Right. This is not just for crop protection, but we'll also look for any other adjacent businesses which are there. It needs to make business sense to us. That is something which we have done. You've already seen that our Dare Ventures has invested very well in three startups, including we have taken up a drone company manufacturing, we've taken up share there. Part of the reason is so that we can then leverage them for our own operations for the benefit for the farmer. Which is both for the crop protection and the nutrition side of the business. We'll continue to look for those opportunities. Thank you very much. In order to ensure that the management is able to address questions from all the participants in the queue, we request you to please limit your questions strictly up to two. We move to the next question from the line of Akshat Mehta from Sameeksha Capital. Please go ahead. Yes, sir. You're welcome. Mm-hmm. Akshat Mehta from Sameeksha Capital, please go ahead with your question. Yeah. Can you hear me? Yeah, we can. Yeah. Congrats your opportunity. I have a couple of questions. The first one is that, you know, what kind of a sustainable benefit that we can get, in our EBITDA per ton, on account of, you know, the recent Phosphoric Acid expansion, that is done, as well as the new sulfuric acid and the phosphate, you know, backward integration that we are going to complete in next year and in the next two years as well. What kind of a benefit that we will get in EBITDA per ton because of that? The benefits of PA has already been factored in. Mm-hmm. As far as your sulfuric acid, that will get commissioned next year. I had indicated earlier. Uh-huh. This is more to do with securing our raw material so that Mm-hmm. We can avoid a high fluctuation in the procurement price. There will be benefits in terms of power, steam that get generated, so on and so forth. The primary intent of putting up a sulfuric acid plant was to ensure that our imports are coming down and we are not subject to huge variability. I think it can help with some improvement, to help us with our negotiating power, that way one should look into the extra capacity that is getting added. Thank you, ma'am. You know, under the normalized environment, I know the primary reason is your raw material security. You also have some kind of an arbitrage in pricing, even if, you know, the raw material prices are in a normalized environment and not elevated as they have been in the past. There must be some kind of a quantifiable benefit that you could have received on account of, you know, on account of just putting up the backward integration facility. There could be some, which I said, normally this comes from the power and steam generation. Can you give me some range or quantify that? I don't have the number right away with me, Akshat. Probably you can take it up offline. You can give us a call. I'll have the numbers with me. Okay. My second question is on Nano DAP. As you said that it is still under the approval process. You know, what kind of margins and what kind of, you know, growth are we seeing in Nano DAP and the application of Nano DAP in the fertilizer industry? You know, as you know, your competitor already has a patent which he has taken three months back for Nano DAP. How will that, you know, create a threat to our company in terms of the Nano DAP that we are going to release? I think there are a couple of companies who applied for approvals for Nano DAP. Each one would be following a different process. Once we get all the approvals, then the manufacturing distribution will start. We have done the trials in the field, and we find that the results are quite encouraging. Normally these are in liquid forms, and therefore it is a foliar application. We'll have to see to what extent this will sort of substitute the granulated DAP. Our estimate is that it could be anywhere around 15%-20%. Okay. Over a long period in time. Initially, the adoption could be lower and, over a period in time based on the input that comes from the field, there will still be improvisation because these are the very, very early stages of these new products that are being introduced. Ma'am, I assume that there will be the Nano DAP, which you guys have been testing and requiring the approval process, will be of a different grade than- Sorry, Akshat, we're not able to hear you. Yes. Yeah. Am I audible now? Yes. Ma'am, my question was that the Nano DAP that you are, you know, testing and, you know, has been given for the approval process, will that be of a different grade than your competitors are using? There is nobody else today who has come with Nano DAP. There is Nano Urea that is being manufactured and distributed by IFFCO. Ma'am, IFFCO has already been granted a patent for Nano DAP three months back. What- Okay, what you're trying to say is the processes are different, entirely different, so there's no issue at all. Yeah. Okay. Thank you. Thank you. The next question is from the line of Prashant Biyani from Elara Capital. Please go ahead. Yeah, thanks for the opportunity. Ma'am, while you have quantified that the high-cost inventory will be exhausted in Q3, but specifically at the start of Q3 or during the start of Q3, how much of phosphoric acid and rock high-cost inventory will be there for how many days, if you can quantify in terms of number of days? I don't have those numbers right away with me, Prashant. Typically, phosphoric acid could be for 20-30 days, right? It also depends upon the mix that we are using. And the rock could be for slightly longer period, because we don't know how the fertilizer prices are going to be. We cannot predict the rock prices. Therefore, typically, rock you hold for because you will not be in a position to import. That's been the normal case when the raw material prices were going up. Sensing that there could be some moderation in the prices as we went through August and September, we have consciously looked into and sort of optimized and reduced the inventory for rock, which typically is for a longer period. The inventory that we are holding are not at the same level that one used to hold when the raw material prices were going up. It is lower. While it is lower, since the prices are coming down, you will definitely see some impact. Ma'am, would the strategy be to reduce the MRP after we liquidate the high cost inventory? I think that's what we have been looking at. I don't have an answer. We look at after the liquidation of high-cost inventory, or it could be like, well, on an average, we will be able to achieve a certain cost proposition, and therefore is it better to pass on the benefit to the farmers. That's something that is being considered by the management. Sure. Ma'am, just a bit on a longer horizon, with the kind of initiatives that we are taking on crop protection, organic and specialty nutrient, do you think that the incremental growth from these three segments will be able to give us a decent incremental growth maybe next year or FY 2025 onwards so that we don't feel the impact of lower volume growth in the core complex fertilizer business? Prashant, the way we are looking into each of the SBU is they will have their own growth path and trajectory. There is opportunities across all the BUs. Obviously, CPC or FMB and organic have several white space opportunities as well. For instance, in CPC, we can look at the Indian market. We can look into global market both for B2B and B2C. There are opportunities to look into product or contract manufacturing. On FMB, more of liquid fertilizers come in with the water shortages that could impact. There is a much more opportunity out there. Organic, again, is a very, very sought-after product, and we're seeing as well as the revenue during the year. These will have their own aggressive growth plan. At the same time, there is opportunity for the fertilizer business that will also have its own growth. For instance, between last year to this year, the SSP growth has been very good. While SSP is much lower in terms of cost compared to NPK, given the high prices that happened for DAP, there's been a good offtake of SSP. Even in SSP, we are looking into converting most of the powder into granulation. There is value-added SSP that we are looking into. Each of our businesses are looking into how they can plan, how they can grow and grow profitability in, profitably in each of their areas. That focus is continuing. Sameer mentioned earlier, apart from the existing SBU trying to grow, there are going to be focus areas in terms of how we even use technology to aid the farmers in improving their productivity. We have been in the last year or so investing into ag tech companies. We have done three investments so far. All of them are very promising. Primarily the drones investment that we have done in Dhaksha in the last quarter, we think is going to be very strategic for Coromandel because with the labor cost going up, more of liquid applications coming in, whether it is in crop protection, specialty nutrients, the usage of drones is going to be helping the farmers in terms of getting the better efficiency as well as reducing the cost of input labor. We will be exploring multiple opportunities across the existing businesses and adjacencies to enable consistent growth within Coromandel. Sure. Lastly, ma'am, for the nano fertilizers or organic or specialty nutrients, how many seasons or years of demand generation is required at the farmer end? We have been trying to do this since when? What we did was for our specialty businesses and organic, we already got an agronomic team set up, which is basically an expert marketing team which works with the farmers. They work on specific crop types. Obviously, it is a concept selling. But now the farmers, and including the fact that we can reach them with digital media, are adopting this very fast. We do see a very faster adoption. In fact, our strategy here is to move, more away from trading, more into manufacturing so that we can also do the value capture and at the same time upgrade our offering, to the farmers. For example, you know, in sulfur, we used to sell, we are the pioneers in the bentonite sulphur. Now we have moved to a much more better product for the farmers called Sulphamax. We also have Bosmax which is created. We have limited our sales of bentonite sulfur, which has become generic. We keep doing this to ensure that, you know, adoption is very fast. I believe that our agronomic team, aided with the Nutri-Clinic which we have in the key markets, you know, Coromandel is very much. Our retail outlets, we are very much geared up for a very fast introduction. Yeah. Thanks. Thank you. That's it from my side. Thank you. Ladies and gentlemen, this was the last question for today. I now hand the conference over to the management for their closing comments. Over to you, sir. Yeah, thank you very much. Thanks for taking the time on a Friday evening. It's been a very interesting and challenging year, last six months, especially given the international crisis which is there, especially with the Ukraine war. I think our company, with what we have done in the past and with our diversified portfolio and our direct contacts with the farmers, both through our retail outlets and with our Nutri-Clinic, you know, has done very well with the storm which is there, which is impacting across the industry and have been able to deliver. I think, given our farmers focus and the new products which our R&D team is getting, plus our application, plus our advent into AgTech, and you have seen reality there, it's no longer just a dream, we will continue to support the farmers in our key markets for improving their productivity and hence the company will continue to do well. Thank you very much. Thank you, members of the management. Ladies and gentlemen, on behalf of Axis Capital, that concludes this conference call. Thank you for joining us. You may now disconnect your lines.