Ladies and gentlemen, good day, and welcome to Deepak Fertilisers And Petrochemicals Limited, Q2 FY24 earnings conference call, hosted by IIFL Securities 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 the conference is being recorded. I now hand the conference over to Thank you, Akshay. Good afternoon, all. On behalf of IIFL Securities, we welcome everyone to Deepak Fertilisers And Petrochemicals Corporation Limited's Q2 FY 2024 earnings call. Today, we have with us Mr. S.C. Mehta, Chairman and Managing Director, Mr. Deepak Rastogi, President and Chief Financial Officer, Mr. Tarun Sinha, President, Technical Ammonium Nitrate, Mr. Suparas Jain, Vice President, Corporate Finance, and Mr. Deepak Balwani, Head, Investor Relations. I would now hand over the floor to Mr. S.C. Mehta to begin the proceedings. Thank you, and over to you, sir. Yeah. Thank you, Ranjit. My voice is clear, right? Yes, sir. It's loud and clear. Okay. Thank you. So very good afternoon to all of you. I extend a very warm welcome to each one of you for the Q2 FY 2024 earnings call of Deepak Fertilisers. I trust that you have had the opportunity to review the financial statements, press release, and earnings presentation already made available on the stock exchange and our website. Now, on the face of it, as we look at the figures, I'm sure, you know, we all would feel that it seems to be quite dismal. However, let me share some insights for your better appreciating and understanding the numbers. Firstly, when we look at the last year, Q2, the last year, Q2, was indeed a somewhat of an abnormally high base. So if you were to compare with Q2 of FY 2022, Q2 of FY 2021, Q2 of FY 2020, Q2 of FY 2019, the performance of current Q2, Q2 FY 2024, is indeed better, and this is decidedly better in view of the challenges that we faced. So despite the challenges, you know, we are seeing this kind of a performance, and let me share some of those challenges. So on the fertilizer front, let me just explain that the government policy on subsidy is a little backward-looking. That is, the prices of the previous 6 months form the basis of the new subsidy, 6-monthly kind of thing. So now, and the subsidy is given on the tonnages actually bought by the farmers. So there is a POS machine, and, you know, on that basis, the subsidy is given. So what happened is that, you know, the inventories which have been sold to the channel or dealers, but not sold to the farmers, that gets impacted. And in a situation where the global prices are falling, the industry gains on this channel inventory, while it loses on the channel inventory when the global prices of raw material are going up. Now, in view of this, basically, we took a hit in the Q2 of almost INR 106 crore on just this count. On the other hand, the performance of the quarter in terms of sales and liquidation was the highest ever that we have ever done. And what is more, is that our crop-specific grades, you know, the move that we had from commodity to specialty or, you know, the crop-specific grades, is gaining very good ground and very good acceptance. The second aspect, that I might share is that we also took a hit of around INR 87 crore in this quarter itself, emanating from our new ammonia plant. Now, firstly, any new global scale plant takes a quarter or so to stabilize, and during this stabilization phase, there are some plant trips and restarts which always add to the cost. So post our COD, some of those costs, you know, are contributed by the stabilization phase, and this is quite normal and expected. What is peculiar was that the ammonia prices during the Q2, when we started the plant, were unusually low, almost down to $330 Middle East. Now, as we speak, the plant is now stabilized, and it is both in terms of capacity, efficiency and sustained running. It's now reached to the design capacities. What is more, the global ammonia prices have also climbed up to $550 levels, aligning to the long-term average, which was what was expected. The other thing that happened was that, you know, the other major impact came from the Russia-Ukraine war, you know, ramification. So what actually happened was Russia found an embargo on its various products in various countries because, you know, of the tilt towards the psychological tilt towards Ukraine. In this situation, India became a good dumping ground for the Russian products. And this brought in large quantities of cheap fertilizer-grade ammonium nitrate, and that impacted our TAN, the technical ammonium nitrate business. There again, however, you know, because of our strong market grip, we have ensured in Q2 also, despite all these headwinds, a very strong volume growth. Going forward, all the mining activities that we are seeing are on an upswing, whether it is coal mining, limestone or cement or the infrastructure, you know, based on the government budget outlay, they're all having a very positive current. And the key that is there is that, we have started making this, concrete shift from commodity product-oriented business to mining solutions business based on success fee. And this is in a good wicket and is moving into a scale-up phase. On the industrial chemical space, the nitric acid business, besides a typical monsoon lull, did have some impact emerging out of our downstream customers, the agrochemicals and pharma customers, because they were getting impacted by the Chinese dumping. In that space, of course, on the other hand, the IPA had a very positive current. Here again, as we see it, as we move to the specialty space, steel-grade nitric acid or solar-grade nitric acid or pharma-grade IPA, we will be gradually scaling up into those specialty areas, and that should create a good insulation for us, you know, from the larger global, I would say, vagaries. So in summary, all in all, if we compare the previous four years Q2, other than last year, it validates, you know, our strength and resilience to take in the headwinds of the geopolitical environment. And at the foundation level, I remain completely convinced that our strategic transformation journey from commodity to specialty or holistic solution in each of our business lines, that is, mining chemicals, industrial chemicals, and also the crop nutrition business. In all the three, I feel very deeply that they are in the right direction. And over the next few years, quarter on quarter, as we consolidate our this part of the journey from commodity to specialty, and as we solidify the premiums and the brand, I feel that, you know, we will bring Deepak into a complete different light. I also feel that now that the ammonia plant is, you know, with us in the group and running fine, it will bring a huge risk mitigation for the group's downstream from all the global vagaries. The other is, of course, overall, in terms of the financial controls also, we see the gross debt to equity now at 0.76x, so which is also a healthy kind of a state. In terms of, you know, our growth strategies, all of it would be, since they are all in areas where we continue to have, you know, the support of our last 40 years of strength, that that is only going to be something that will, once again prove the resilience against any kind of geopolitical situations. For more granular details, I will now hand over to Mr. Deepak Rastogi, our new CFO, and I also take this occasion to share my warm, wishes to you and your families, a little in advance for the Diwali festival. Thank you. Deepak? Thank you, Mr. Mehta. I hope that I am loud and clear to everybody. Yes, sir. Good afternoon, ladies and gentlemen. I thank you for joining the Deepak Fertilisers And Petrochemicals Corporation Limited conference call to discuss the Q2 financial year 2024 results. In Q2, we achieved a total operating revenue of INR 2,444 crores, with an operating EBITDA of INR 286 crores, which translates to 11.8% margins. This Q2 EBITDA of INR 286 crores, as what Mr. Mehta was mentioning, we have basically taken around INR 87 crores EBITDA loss or a charge due to ammonia plant stabilization and INR 106 crores charge on account of fertilizer inventory based on the new notification, subsidy notification, which actually got recently notified. Therefore, our net profit for the period was INR 63 crores, with a margin of 2.6%. Last year, for the same quarter, the base was 495, which was a positive operation, but we all knew that, this is, you know, the margins are very high, and we may not be able to sustain, for a long term. Barring Q2, financial 2023, Q2 2024, which is financial this year, EBITDA is one of the best quarterly performance for DFPCL.... DFPCL is on an exciting journey despite raw material volatility, geopolitical concerns, and other external challenges impacting the business. Our lifting of export ban of in growth CapEx towards our nitric acid, Dahej and TAN Gopalpur, which basically helps us and transitioning our from commodity to, specialty products and also to giving holistic solutions, capturing the overall backward integration. And on the top of it, the ultra mega benefits will act as catalyst and is laying strong foundation for long-term sustained growth. Manufactured TAN business had a revenue of INR 516 crores in Q2 of this year, with a strong sales volume of over 9% on year-on-year basis. The company achieved its highest ever Q2 sales volume of AN melt. The margins were impacted on account of dumping of cheap Russian FGAN in Indian market. During the quarter, our manufactured pharma/specialty chemical business recorded a revenue of INR 409 crores. IPA registered a volume growth of 62% on year-on-year basis, supported by strong demand and implementation of SGQR, while nitric acid volumes growth was almost 12% Y-o-Y. Regarding fertilizer business, it recorded manufactured revenue of around INR 708 crores during the quarter. Sales volume of manufactured NP and NPK, including Croptek, was 1.47 lakh metric tons, as compared to 1.55 lakh metric tons in the same quarter previous quarter. This was slightly impacted on the erratic monsoon, which actually continued during this quarter, even though we had obviously record sales, you know, after that. In Q2, IPA plant operated at 76% capacity utilization, while both acids and TAN operated at 93% and 118% respectively. In the crop nutrition segment, NP/NPK plants had a utilization level of 51%, while Bensulf plant operated at 52% utilization. With capacity headroom available across our businesses, we are well positioned to capitalize on future growth prospects. Gross debt as on thirtieth of September was approximately INR 4,000 crore, with a gross debt to equity is 0.76 times. Net debt was INR 2,700 crore. Our similar number for March 31, which is net debt, was around INR 2,500 crore as on March 31, 2023. With this, we would be happy to take your questions. Thank you. Thank you very much. We'll now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handset while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. The first question is from the line of Jainam Ghelan i from Swan Investment. Please go ahead. Thank you for an opportunity. So just- Jainam, can you please come closer to the handset? Yeah. So it's, it's audible? Yes, please go ahead. Yeah. So I want to check on the ammonia facility, that now you said that the last quarter we had an impact on the stabilization of the plant to the tune of INR 87 crore, that we have already taken a hit. Now, with the gradual ramp-up of the facility, can you give us the update in terms of how the spreads are looking currently, given the gas prices contract that we have already entered? So, your question is that how the spreads are right now, based on the current one, effectively? So, you know, the way the ammonia prices are currently, and they are in the range of around $550. You know, the spread is closer to, you know, give or take, around $100. You know, $75-$100 is the spread right now. Sir, this $75-$100 is including the benefit that we are getting from the government in terms of subsidy and the steam benefit? Yes, it would be, you know, it would be over and above that. Yeah. Oh, so that means it will be almost $150-$160 of this spread that we could get it in Q3? Yes. Yes, yes, closer to that, yes. So what is the current utilization that we are operating with? Because we have gradually ramped up, so have we moved to 40, 35, 40%, or how much would you say in terms of the overall capacity utilization for FY 2024? I'm sorry, I cannot hear your question at all. Jenam, sir, can you please come closer to the handset? So in terms of the capacity utilization, how shall one look for the second half in terms of the ammonia plant? We are, we are already reached capacity, you know, 100% design capacity. So we think, you know, we would be around, you know, 90-100% capacity utilized, you know, during next year. Sure, sir. And sir, second question is on the TAN business. Now, since that you have already indicated that our volume is growing in the TAN because of a strong domestic demand, but there has been huge dumping by Russia on the FGAN. So just wanted to understand whether we are getting any measures or the protection from the government, and how shall one look in terms of the margin of the TAN business, when the imports are continuing at such a high level? So, you know, obviously, the margins are impacted to some extent, but generally, the FGAN prices move in tandem with the IPP prices of ammonia. Currently, you know, they are not moving in tandem. We expect, you know, the things would basically move in tandem, and we expect the things may get better from where it is, but we'll have to wait and watch, you know, how the actual year pans out. Try to assume that at least for another couple of quarters, because the FGAN prices are not moving in line with the TAN prices, there could be a pressure in the overall chemical business margin for the second half? You know, we basically expect, you know, some pressures, but we'll have to really wait and watch to see. But overall, we think, you know, over a period of time, the things will only improve. But, you know, we'll have to really go through how the geopolitical scenario looks like and then take a call accordingly. Sure, sir. And the other question is on the fertilizer. Now, we have almost taken INR 267 crore of the impact of the reduction in the subsidy. Now, in the last quarter, which we did of almost INR 106 crore, that includes the revised subsidy rate, right? Yeah, that is correct. Sir, if we take it forward, assuming that there is no further reduction in the subsidy from the government and the fertilizer price remains steady at current level, is it fair to assume that our fertilizer business can generate near about INR 400-INR 500 crore of EBITDA on the quarterly basis? I'll have to just check on that, but, I will have to check and maybe come back to you on this. Sure, sir. And sir, with the expansion that you are doing it in terms of TAN and when, what will be our peak debt, peak debt, and when when could we see that number reaching in, by 2024, 2025? So, you know, it depends upon what kind of growth projects we encounter. Predominantly, you know, the only way I could answer is that we will be in comfortable position overall from gross debt to equity perspective. You know, so as I said, that, you know, we are comfortable right now, and we expect that we will be continuing to in a similar, you know, basically comfortable zone going forward. Okay, sir. Thank you. That's all from my side. I'll come back in the queue and wish the entire team of Deepak Fertilisers a Happy Diwali. Same to you. Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants in the conference, please limit your question to two per participant. Should you have a follow-up question, we will request you to rejoin the queue. The next question is from the line of Janhavi Doshi from Aequitas Investmen t. Please go ahead. Hi, sir, this is Nishit from Aequitas Investment. Thank you for this opportunity. Sir, I wanted to understand now, since the TAN export ban is lifted, by when do we see the exports to start? Yeah, so I'll just ask Tarun, you know, who can take this question, please. Yeah. Thanks, Deepak. Deepak, am I audible? Yes. Yes, you are. Okay, thanks. Yeah, so you're right. The export ban, you know, for ammonium nitrate finally got lifted a month or two ago from now, which is a great news. And currently, I think you must have picked it up through the information available on the public domain, that our company is going through some corporate restructuring. And one of them has been, you know, the name change of our previous company, SmartChem, which used to house technical ammonium nitrate business and fertilizer business, to another company called Mahadhan, you know, Agritech Limited, which continues to house the same two businesses as we speak today. So as a result of this name change, you know, the TAN business, which is a highly regulated business from a licensing perspective, is currently undergoing through some license, you know, transfers in terms of the name change from the previous company to the new company. And we are expecting, you know, the final, you know, steps to be completed in that direction, hopefully in this month. Once that license thing is transferred from old company to new company, all types of licenses of technical ammonium nitrate business, then we should be able to start exporting again. Okay. And sir, my second question is that in this current quarter, the production of IPA was only 76%. So any particular reason for the lower production, and how do we see that going forward? So, we have actually our capacity utilization for IPA is around, Seventy-six. Just hold on. Around 76%, yes. We would actually expect this to, you know, if the demand continues, we would expect that this should improve going forward. Okay, that's it. Thank you. Thank you. The next question is from the line of Arvind from ValueQuest Investment Advisors Private Limited. Please go ahead. Hello, am I audible? Yes, sir, please go ahead. Wonderful. Happy Diwali to everyone, and a few questions from my side, some of them have already come up. Now, when we talk about the fertilizer subsidy going forward, what is... I mean, this is obviously a backward-looking policy, so is there a possibility that any more could be hitting us around this, coming the election time? And the second thing that, one thing that asked, that I would like to ask is, in some areas, we are talking about 118% capacity utilization. Some light on this, what does this mean? And whether can a plant operate like this for a long time, or then, how would it reflect on the operations of the plant as well? Thank you. Your first question was on the subsidy part. Yes, sir. Difficult for us to predict anything, but we do not expect that, you know, any changes, at least still, because this subsidy notification is applicable until March 2024, and hence, you know, we are not expecting anything which will come in between. The other question is on the, on account of your plant capacity utilization, which is predominantly at, you know, 118%. And, obviously, you know, we basically, we are taking steps to improve the, you know, capacities going forward till March and things like that. And, you know, we are, because we are debottlenecking it, and hence, you know, this position is going to improve going forward. Very well, sir. Yeah, thank you very much. If I have any further questions, I'll get back in the queue. Thank you. Ladies and gentlemen, you may press star and One to ask a question. The next question is from the line of Deepak Poddar from Sapphire Capital. Please go ahead. Hello, am I audible? Yes, sir. Yeah, okay. Thank you very much, sir, for this opportunity. So first up, just wanted to have few clarification. Now, the subsidy impact of last two quarters that has come, if the subsidy rate remains same, there's no further impact, right? All the channel inventories impact has already been factored, right, in our P&L? The answer is yes. The answer is yes. Hello? Yes, that is correct. Okay, understood. Fair enough. And you did mention that, including the government benefit, at current price of $550, that is FOB Middle East price, right? That is correct. Landed price would be additional $100, that would be $650. That is correct. Okay. So, so we are getting about a spread of $150-$160, the spread we are getting, including the government benefit, right? That is, that is correct. And so I just wanted to understand, because that effectively means if we are utilizing fully, so INR 150 crore of benefit that we might get on a, assuming $150 on a quarterly basis from this plant. That is your estimation, obviously, and, you know, we will have to go through the utilizations, you know, over a period of time, and we see how it actually pans out. Utilization is 90-100, I'm assuming. I mean- I understand that, but, you know, that is just a calculation. Fair enough. I understand. So, I mean, this quarter we had a lot of one-off, right? Even if I adjust that one-off, our EBITDA would have been more than INR 500 crore. And if I take the advantage of our ammonia plant... So just wanted to understand, at the current prices, ammonia prices, what should be our steady-state EBITDA margin? I mean, would it be more in the range of 20%-22%? Because ideally, your EBITDA would have been more than INR 550 crore if that, this one-off would not have come, right? We are unable to give any forward-looking statement, so I will not be able to comment on this, please. No, this is not regarding forward-looking statement. I'm just trying to understand, if at current ammonia prices, if this one-off would not have been there, so our steady-state EBITDA margin would have been in the range of 20%+, right? I mean, I'm just trying to understand that, that point. You can add, you know, INR 87 crore, and, you know, I don't know whether you are adding subsidy. If you can add that number, it will be closer to around 426 odd number. Seven. Yeah, yeah, 470. Plus INR 87 crore, the impact will not come right now because it was in stabilization ammonia plant. Yeah. Yeah, looks like that. Yes. So that also we need to add, right? Yeah. So 106 + 50. Mm-hmm. Mm-hmm. Fair enough. I got it. And when we say this benefit of ammonia plant spread, we have factored in the recent change of UMPP benefit to 100% from 75% of this greenfield project, ammonia? Hello? Yeah. The answer is yes. You know, that would be- Okay, okay. Fair enough. Fair enough. I got it, and I think that's it from my side. All the very best to you. Thank you so much. Thank you. A reminder to all the participants, you may press star and one to ask a question. The next question is from the line of Sharon, an individual investor. Please go ahead. Yeah. Hi. Thanks for the opportunity. So my first question is, like, historically, how has been the price of ammonia fluctuating, and from when do you see you getting the benefit from the new plant with respect to price getting increased? You know, obviously, I can give a range, you know- Sorry for... Sorry to interrupt, sir. Yeah. Can you please come closer to the speaker, sir? Yeah, yeah. Deepak sir? Please. Deepak sir, please continue. Yes. Can you hear me now? Yes, sir. Yes, I can. Okay. The question I understand was that what is the kind of price of ammonia, you know, historically, and- Yes. how it has fluctuated. So the ammonia prices, FOB Middle East, has been ranging from $250 to almost close to $1,100. You know, and these are all US dollars, FOB ammonia price, Middle East price. Like, what factors does this price fluctuation impact, and from when do you see getting benefited, and from what price onwards Deepak will start getting benefit of it, and when do you see it happening? So, you know, effectively, it also depends upon how the gas prices are moving up and down, so it is not a straight answer. But, you know, as I said, you know, currently we have a spread of, you know, close to positive spread of around $100-$150, based on the current, FOB, Middle East, and that, and that will change over a period of time based on how the global prices are moving up and down. Okay. So, other question is, the new, new specialty chemicals for solar and the semiconductors, from when do you see those getting, those getting into production? And also, what do you see from, like, from next one or two year, the, the, revenue and the benefit from that, the profit? So, you know, for solar, as we have communicated in our press release also, that, you know, we will be starting production from October of this year. As far as semiconductors are concerned, obviously the market is still growing in India, and it will take some time for us to get to a full-scale revenue levels. And, you know, from a solar perspective, since you know, obviously it's a forward-looking statement, we will not be able to comment that how much and, you know, to the extent of the revenue specifically for this particular project. The other question on the same is, like, basically, are there any other producer who is producing the similar kind of chemical in India? And what's the total market size for that chemical, and what is going to be your share in that? Currently, to our understanding, there is nobody else who's actually doing this at this point in time. Okay. And what's the market size for Deepak in that segment overall? So we have just started that. We are talking solar grade. So we have just started that, you know, and we are obviously landscaping because the solar, you know, markets itself is, you know, obviously in a nascent state and growing. So, we basically are doing our own market studies to figure out how will that market would be and then how much we will play into that. Okay. And one last question about the real estate sale, Pune real estate sale, just to like non-core asset sale. So any update on that? So, as we have maintained that, you know, we basically would be looking for which are congenial pricing for us and take actions based on the board approval. Okay. Thank you. Thanks for your time and opportunity. Wish you all the best. Thank you. Deepak sir, lots of background noise is coming from your call, sir. Deepak sir? You just... Yeah. Fixing this. Yeah. Lots of background noise is coming from your line. Can you please come closer to the handset? Is this okay now? Yes. Okay. Okay. The next question is from the line of Neeraj, an individual investor. Please go ahead. As the current participant is not answering, we'll now move to the next question, which is from the line of Neeraj, an individual investor. Please go ahead. Yeah. Deepak ji, I just wanted to know, what is the status on demerger? It was announced long back. So what is the current status of NCLT approval, and by when we can expect listing of these two businesses? That is one. And second, what is the status of Gopalpur project? Can you please share a tentative investment amount which has already been done in this project till now? So your first question on the NCLT approval, we basically have, you know, got a hearing coming up for this, NCLT order, which is treated on tenth of November. And if the order is passed, then we will know the outcome. The other question which had on the TAN Gopalpur right now, so we have currently spent close to around INR 525 crore worth of, CapEx, which is in CWIP, and that would be up and running sometime in the second half of 2026, you know. So financial year 2025, 2026. So that is the, you know, currently COD dates, which we are looking at. Deepak-ji, let's suppose if we get the demerger approval in November, by when we can expect the listing of these two businesses, is there any plan currently? So whenever we firm up those plans, you know, you know, we will come back, you know, as a part of our statements. Then currently, you know, there is no approvals, which we have right now to go for a listing. Okay. Any plans of any strategic investors participating in mining business? We continue to obviously, you know, have those discussions, and whenever there is a right, right time, get the board approvals and all, we will come back and communicate accordingly to all. Okay, one last question. Recently, government has lifted the ban on the TAN export. So you were sharing some information on that, that it will take maybe couple of months before we start exporting it. So can you just give me the tentative numbers? What would be the revenue breakup of TAN in terms of export and domestic? I will request my colleague, Tarun, to take that call, question, please. Sure. Thanks, Deepak. So look, right now, the ban which has been lifted, it comes with a quantity, so there's a bit of a cap, because usually when Government of India imposes ban on certain commodities or products, and when it strives to lift it, then it is not an abrupt, complete lifting. It is stage by stage lifting, which then determines what quantities can start moving out in the form of exports. So for this financial year, the quantity which has been allowed for export is 20,000, and that's the sort of ceiling. And then, subject to how things pan out in the next financial year in terms of the overall demand supply of ammonium nitrate in the country, which is required for the mining and infrastructure sector's growth, then again, you know, the government may review this and decide to revise the quantity. So that's the kind of guidance I can give at this stage. Okay, Tarun, any understanding on Russian dumping anything in foresight? We can understand that this can stop by so and so time, or any implementation of anti-dumping duty by Indian government. Any update on these lines? Sure. So when can things stop or start again, as far as the Russian or the cheap Russian fertilizer grade ammonium nitrate is concerned, will largely be driven by, again, geopolitical situation, as our chairman, Mr. Mehta, stated in his opening remarks. Because, you know, Russia going through a lot of sanctions, as we know, with the Western world, they have limited markets, you know, to put their products in, and India, of course, is one of them. So timeline is anybody's guess, so we would not speculate. Coming to your next question in terms of any measures, remedies, things like that. So I think you people might be aware that, the Government of India had rightly imposed anti-dumping duty on, on a number of countries, and Russia was one of them, for, for import of ammonium nitrate in India, and that was, way back in 2017. It was a five-year tenure for that anti-dumping duty, which expired sometime in August, September 2022. After that, you know, Ministry of Commerce and Industry, one of its arms, which is DGTR, Directorate General of Trade Remedies, they were looking at, you know, what to do with this, for the continuation of anti-dumping duty. They recommended, you know, that, the anti-dumping duty should be extended for a few countries, and, certain rates were also prescribed. However, it is interesting to note that one arm of our government, which is Ministry of Commerce and Industry, in the form of DGTR's recommendation, was rejected by another arm of the government, which is Ministry of Finance. This didn't just happen for ammonium nitrate, but a lot of similar recommendations in the form of remedies, which were proposed by DGTR, were actually rejected by Ministry of Finance, and that too, without assigning any reasons. Because so many industries were getting impacted as a result of this, I think the matter went to court, and the matter is still sub judice as we speak. Okay, one last question from my side, Tarun. What would be the revenue contribution, in terms of domestic business for TAN? Earlier, when we used to export, what was the contribution then? When you say contribution, you mean export as a percentage of total revenue? Is that your, are your question as well? Absolutely. So that's why I gave you a guidance that there is a ceiling this year for the export ban, which is at 20,000 tons in this financial year. And, TAN capacities, you are aware of, you can see the level at which we are operating, which, Mr. Deepak Rastogi talked about. You could do your sums, you know, based on those numbers. Okay. Okay. Right. Right, Tarun. Thank you. That's it from my side. Thank you so much. Thank you. The next question is from the line of Parshva Vir, an individual investor. Please go ahead. Am I audible? Yes, sir. Please go ahead. Well, superb probably to the entire team of Deepak Fertilizers. Very happy to speak with you, and I have two questions. First thing is, what is your current TAN capacity? We have close to 525 lakh metric tons. So if I understand correctly, from that, only 20,000 tons will be exported, the remaining will be used for domestic sales, and we are operating on 100% TAN capacity. Am I correct? Currently we have around 487. We are going to add 50,000 metric tons additionally by March 2024. Okay. Thank you. Second question is, coming to the ammonia plant, wanted to understand the math. How is our gas pricing contracts being done? And, you know, the FOB, normal current UAE charges, and what all are we saving after putting this particular plant? Like, like you said, it's approximately INR 550 crore, but there's a lot of math between the gas and the FOB prices from UAE and the government subsidy. If you could help me understand that, would be very helpful. So, you know, we have, you know, FOB ammonia pricing- Mm-hmm. Sorry, gas pricing, which is based on either Brent linked or HH linked and things like that. Are we doing it on Brent linked or the exchange link, to understand? It's predominantly combination of HH, Brent, and JKM. That would be how much% of the Brent, sir? It depends upon, you know, on contract-to-contract basis. I'm sure there would be an average number that you would have in mind that this is our normal pricing policy, with an average percentage. You know, we, you know, for your calculation sake, you can take equal, equal of all those. No, I mean, equal of all those, would that mean 22% of Brent? Would that be 50% of Brent? How, how should I consider that? Like- I will, I- If you can help me with an average number, would be very helpful. We will not, we will not be able to... 1/3, 1/3, that's what I was telling you. You can take that, you know, average, which is 1/3, 1/3, 1/3, because we will not be able to obviously provide that information. Okay. So basically- Parshva Vir, sir, may we request you to return back to the question queue for follow-up question? Fair enough. Thank you. Thank you. The next question is from the line of Dhaval Sanghavi, an individual investor. Please go ahead. Thank you for the opportunity. Am I audible? Yes, please go ahead. Yeah. Actually, based on our chairman's comment side, where we are moving from commodity to specialized solution, I just wanted to understand from a broader perspective like from a three-year perspective, FY 2027, where do we see ourselves as a as a organization, as a company? I mean, what direction we want to move, what kind of revenues on an average we should be expecting? So, you know, this, moving from commodity to service provider, this predominantly we are doing in, two businesses. Rather actually all the businesses, but predominantly in TAN. So I would request Tarun to just give some glimpse on, you know, how, you know, he looks at the business. So over to you, Tarun. Yeah. Thanks, Deepak, again. So, see, the way we are moving into the solutions business model, as far as our group's mining chemicals business is concerned, is we have come out with a concept which we call as Total Cost of Ownership, TCO, as an acronym, in short. In simple terms, layman's perspective, what that means is when a mine operates, it is basically operating to extract some mineral or to extract some rock, whether it is a mine or an infrastructure project, the blasting takes place. So Total Cost of Ownership is a concept which basically aims at, you know, cost of mineral extraction or cost of rock extraction. So what we are developing as a solutions business model is, that we try to improve the total cost of ownership, i.e., the cost of rock or mineral extraction in a mine or in an infrastructure project. So that's the theme. Now, how do we do that? Essentially, in any mine or any infrastructure project or a quarry, you know, where blasting takes place and rock and minerals are being extracted, there are five value streams where, you know, improvements can be brought about in order to improve the total cost of mine-ownership. What are those five value streams? It starts with drilling in the rock or the mineral to be extracted, followed by blasting, so that's the second one. The third one is excavation of that blasted rock from in situ to where it has to go for further processing and handling. So that's excavation. And then fourth is transport, from the place, it's blasted to taken to another place. And the fifth is crushing. So drilling, blasting, excavation, transport, and crushing. Now, we have developed tools, software, people capability, you know, different kinds of products, and we are continuing to do that, to attack each of these five value streams in an operating mine or in an operating infrastructure project. So that, the collective outcome of all these, inputs is that the cost of mineral extraction or rock extraction is improved. So that's the overall model in our mining chemicals business, which we also start calling as mining solutions business, because now we are migrating towards a mining solutions company. And, this is just started about, a year and a half ago. And it's a complex process because it requires working, you know, every day in the mines, and then showing all these improvements, and then eventually it starts to translate into a sustainable business, which was your question. Uh, right. Therefore, putting a figure is a difficult one at this stage. Entire Indian market is the canvas that we are looking at. This is a huge opportunity. Every single mine, every single infrastructure project operating in India, has potential to improve its total cost of operations, and that's how we see the overall size of the prize from our point of view. That's why we are investing heavily in that direction to be able to impact, you know, in that sense. But thanks, Tarun. No, this is really helpful, but what I was mainly looking at- Sorry for the interruption. Dhaval sir, can you get back in the queue for the follow-up question? It's just an extension. I mean, I've not got the whole answer of it. Okay. Okay. So what I was actually looking is... Yeah, I understand how the solution is going to work. What I was looking mainly from the perspective of three-year time horizon is, that at an organization level, year on year, or I mean, what's the guidance that the company is looking? Like, for example, in FY 2023, we did somewhere around INR 11,000 crore, right? This year, we will be somewhere around INR 10,000 crore. So I'm looking from that perspective, what would be what is our focus? I mean, how the growth would be three years down the line in terms of sales growth, in terms of ROE? So that's what I was looking mainly from the perspective. Yeah, no, I guess I tried to answer it by saying, putting a number to any of these new, you know, solution initiatives is not possible in the early stages. And another way I'd reply to that question is, entire mining industry and infrastructure industry in India is the opportunity for us from a longer term perspective. So it's a huge opportunity for us- All right. As we go along. All right. Thank you. Thank you. Ladies and gentlemen, please limit your question to one per participant. Should you have a follow-up question, we will request you to rejoin the queue. The next question is from the line of Rishabh Agnihotri, an individual investor. Please go ahead. Hello. Hi, thank you for the opportunity. I just want to understand that, you know, because of the new subsidy rate cut in NPK, the DAP premium has gone down, you know, for imported margin, imported subsidy, right? I think that has created, like, a $100 margin for DAP as compared to local peers. Now, you know, I think considering you have another $100 of advantage, do you see that market opening up? Because I think the imports are around 2-2.5 lakh tons of DAP this year. And that will be a very interesting opportunity. I would like to know your perspective on that. Yeah. You know, you are audible, but I could not actually get your question clearly, what exactly you are looking at? And like, you know, because of the DAP subsidy rate cut, there's like a margin shortfall of around $100 per ton on imported DAP, right? And we import two point nine five lakh... We imported like 2.95 lakh tons in September 2023. I think you know Deepak produces DAP. So do you see that as an opportunity going forward in the fertilizer market? You know, I can only say that, you know, we do not manufacture DAP for ourselves. We generally have trading volumes there. Okay. You know, based on the opportunities and the market, the thing, we continue to take those calls on a quarter to quarter. All right. Thank you. The second question is on the line of TCO. So, you know, I think, you've executed some projects. Can you give us some guidance on, like, I mean, like, the Solar Industries, as a competing segment in explosives, and then, you know, they, they cater to the same mining industry. How do you sort of like, you know, how does your TCO solution compete with solutions like them? So I will request Tarun to take this question, please. Yeah, sure, Deepak. Thanks again. So again, great question. Thank you for that. So one way to look at this is what Deepak is trying to do as a solutions model is completely different from any explosives manufacturer in India. And I'll try to explain it in simple terms. All explosives manufacturers in India, they supply explosives to the mining industry and the infrastructure industry. They invoice the client for the inputs in the form of explosives, in this case, and they get paid on the basis of the inputs that they have provided. What we are developing as a business model is, in order to impact, you know, all this drilling, blasting, excavation, transport and crushing value streams in a particular mine, we are definitely putting in inputs there in the form of products, services, technology, solutions, people on the ground. So that's the input, which definitely we, we also invoice for. But in addition to this, and here comes the difference: in addition to these inputs, we guarantee certain outcomes as a result of the inputs that we provide to the mines and infrastructure projects. So in other words, we agree to a set of KPIs as, as outcomes from coming out of the inputs that we are putting. So in other words, we are putting our skin in the game. In doing so, we also request the beneficiary, which is the mining company or the mine operator, to share a part of that benefit, which they get through the inputs that we provide and through the outcomes that we guarantee and produce for them. You know, we share the benefit. So we also get paid for the output and the outcomes that we generate. That's the fundamental difference between us and explosives manufacturing companies. Input only in one case versus input and guaranteed outcome, and getting paid also on the basis of the guaranteed outcome. So that's where I will try to... That's how I will try to summarize it at a high level. So that's, that's pretty amazing. Thank you for that explanation. Just one last question- Thank you. Rishabh sir, can you get back in the queue for the follow-up question? Thank you. Sure. Thank you. The next question is from the line of Deepak Poddar from Sapphire Capital. Please go ahead. Hello. Yes, please go ahead. Yeah, yeah. Thank you very much, sir, for the opportunity again. So just wanted to check just one question I have. The ammonia plant got commissioned, I think, in the first week of August somewhere, right? So ideally, only two months of incremental depreciation and interest would have got factored in, in this current quarter? That is correct, yes. I mean, I think on a quarterly basis, we were of the view that INR 50 crore of depreciation and INR 50 crore of incremental interest costs will come through, right? Yeah, yeah. Close to that, yes. Close to, but in this quarter, as I can see, only INR 22 crore and around INR 25 crore of incremental depreciation and interest has come. I mean, so, balance INR 25 crore for each depreciation interest is likely to come in the third quarter. Would that be a fair thing to assume? So, you know, effectively, we are, you know, we have capitalized close to INR 4,500 crore. Mm-hmm. So it may be around, you know, around, yeah, I think INR 25-30 crore approximately should be the depreciation. I don't know the numbers by heart, but, you know, probably, you know, that number sounds to be right. The incremental that may come in third quarter, right? I mean, 25. Yes. Could be, yes. Could be in that. Yeah, could be, I mean, yeah, incremental in terms of... Okay, sir. That's it from my side. Thank you so much. Thank you. The next question is from the line of Jason Soans from IDBI Capital. Please go ahead. Look at your result and the notes. Basically, it's mentioned that you have, there's a- Please repeat your question. Yeah, sure. Sure. Am I audible now? Yes, sir. Please go ahead. Yeah. Okay, okay. So, what I just required a certain clarification. So when you look at the results and the notes to accounts, it mentioned, there's a mention that there is a loss of INR 148 crore emerging out of the initial stabilization period for the ammonia plant. Now, but when you look at the presentation, this amount reduces to INR 87 crore. So I just wanted to reconcile what is the right number for this, for this stabilization. INR 148 crore actually is the PBT number. INR 87 crore is the, you know, the operating EBITDA number. That is the difference. Both numbers are correct. Okay. So, sir, INR 148 crore is the PBT number, you said? That is right, yes. INR 87 crore is the? EBITDA number. EBITDA number. Okay. Okay, okay, okay. So just one question I just wanted to know, I understand that you have announced the demerger of the TAN and the fertilizer business, and I've seen the structure of it, but just wondered if you could just throw some color on how, what do you want to achieve through it, you know? What, what is exactly your game plan through this restructuring? If that would be really helpful. So, you know, yeah, are you asking the question like, what is the game plan of restructuring, you know, of this- Yeah. -demerger? Mm, yes. What's the objective of it? Because I understand that you would want to move... You've already highlighted that you would want to move from a commoditized business to a more specialized one, and you're moving, you're taking steps towards it. Now, just in terms of the corporate structure, you know, it was a little hazy to me. So just wanted to know, what exactly is your objective behind this, you know, this corporate structure, the new one which you have, I can see it in your presentation. So just wanted to some color on it. So, you know, currently, you know, earlier the structure was that Deepak Fertilisers, which is the holding company- Mm-hmm. was actually holding, you know, obviously, and it, it continues to hold the industrial chemicals business as well as the realty business. Underneath, there was a company called STL, which is now, has been renamed as MAL. Right. With this restructuring, we are actually taking away. MAL had the crop nutrition business as well as the TAN business. So with this- Yeah. de-merger, we are actually separating the TAN business from CNB, which will... And the TAN business will be now called as Deepak Mining. Okay. The purpose for restructuring is predominantly because each businesses are quite big right now. Okay. And hence, they needed very specific strategies to obviously go through it, and that is one of the reasons why we want to do it. So there is a specific focus in each of the businesses. Okay. Sure. Sure, sure. So, sir, there will be two separate entities. One will, yeah. Can you please get back in the queue? Yeah, sure, sure. Thank you. The next question is from the line of Sunil Giri from Centrum PMS. Please go ahead. Hello. Thank you for taking my question. Just regarding the mining segment, the mining business, you mentioned that you'll be doing yield enhancement, yield, and you will be reducing the cost of ownership for the mine owners. So will this be coming from yield enhancements or changing the type of mix that is being used to complete the process? What would that be? That's one clarification. So I will hand you over this question to Tarun to take this. Yeah. Thanks, Deepak. So, as I was mentioning earlier, and, this is just a recap in case you may not have. Yes ... captured it at that point in time. There are five value streams in an operating mine, usually. Yeah. Which are namely drilling, blasting, excavation, transport, and crushing. This is all, this is how the rock is extracted. Okay. There are products in the form of different types of explosives that we are using. There are different kinds of services, which is on bench, last mile, you know, execution services. Then there are different kinds of blasting technologies in the form of software, tools. Tools also include artificial intelligence, you know, using drone, doing predictive blasting models, so that next blast gets better than the previous one, so on and so forth. It's a combination of products, services, and technologies which we depute and deploy, and supported by people, of course, because this needs really high-skilled people, which is a hard thing for any company to make overnight. Because it's first thing is to recruit the right type, sort of people who understand the consumer's language, and then to train them up, and then to hand them over all those tools that I was talking about, supported by products and services. And then this team of people goes and delivers all this in the mine. So it's a combination of all of this, which actually helps our consumers in terms of improving their cost of ownership. Okay, but wouldn't the cost of ownership increase using these enhanced services over a period of time than... Because then you'd have to offset that with certain improvements in their outcomes, like the entire outcomes, like how much you can extract from a rock or from any mine for that matter. So how would that cost of ownership get, how would they be able to compensate back with your enhanced services? Okay. So the way it works is, you know, we first do a baselining. So as we step into a mine, let's say, we do a baselining of their existing cost of extraction of mineral, which has got some, you know, benchmark levels of, cost of raw material, you know, everything included. And then through, we take up some pilot, you know, blasts, through our own design software, you know, all of that that I was talking about, in some cases, changing products and different kinds of services. And we analyze through the pilot blast, which of the five value streams between drilling and crushing we can actually impact, and then we convert that in the form of a proposal to the mining companies. So that's how we, you know, go about doing it. It's a process, you know, which works like that. All right. Thank you. Thank you very much. Sure. Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to Mr. Deepak Rastogi for closing comments. Thank you everyone for their participation. For any further queries or clarifications, please do get in touch with our investor relations team. Thank you so much, and Happy Diwali to all of you. Thank you. On behalf of IIFL Securities Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.