Please note that this conference is being recorded. I now hand the conference over to Mr. Nilesh Patil. Thank you, and over to you, sir. Thanks, Ishar. On behalf of ICICI Securities, we welcome you all to Q3 and 9-month FY2024 results conference call of Paradeep Phosphates Limited. We have with us Mr. Suresh Krishnan, Managing Director and Chief Executive Officer, Mr. Rajiv Nambiar, Chief Operating Officer, Mr. Bijoy Biswal, Chief Financial Officer, and Mr. Alok Saxena, General Manager and Head, Investor Relations and Corporate Finance. Now I hand over the call to management for their initial comments on quarterly performance, and then we will open the floor for question-and-answer sessions. Thanks, and over to you, sir. Thank you. Good morning and welcome everyone to the Q3 FY2024 earnings conference call of Paradeep Phosphates Limited. I would like to thank you all for joining us here today. We have circulated our earnings presentation and press releases and uploaded the same on our website and stock exchanges. I hope you have had the chance to review the same. To start with, we will give you an overview on the business strength and financial performance of the quarter, and we would be happy to take questions thereafter. Well, friends, despite continued headwinds on account of lower-than-average rainfall and less-than-normal reservoir levels spread across our key markets and unseasonal rains during the quarter, the company is driven to deliver a stable performance and navigate through this challenging environment. The total fertilizer production volumes during this quarter for us was 541,871 metric tons. In that, NPK-20 production volumes during the quarter was 270,427 metric tons, registering a year-on-year growth of 82%, while our overall NPK grew by 26%. The overall production volumes during the quarter were lesser year-on-year, owing to high base effects of Q3 FY2023 and the planned two-month energy improvement initiative undertaken in the urea plant at our Goa site. The total sales volume during the quarter was 591,152 metric tons. Total sales volumes clearly surpassed the total production volumes for the quarter. Coming to our financial updates, during this quarter, the company reported a quarterly income from operations of INR 25,950 million and EBITDA of INR 2,911 million with a margin of 11.2%. Our profit after tax for the quarter was INR 1,059 million with a margin of 4.2%, registering a growth of 21.8% on a sequential basis. Despite the challenging macroeconomic trends during the quarter, we've improved our profit margin on both sequential and year-over-year basis. This improvement is primarily attributed to fully functional backward integration of phosphoric acid capacity and softening of raw material prices coupled with our capability to store raw materials at our plant sites. With an overall improvement in raw material prices, our reliance on working capital needs has also come down, leading to an improved equity ratio. We've strengthened our financial position with a decrease in short-term leverage by 12% compared to the same period last year. I'm also delighted to share with you our update and commitment to ESG and sustainability. We recently published our second sustainability report, which comprehensively details our non-financial and ESG performance for the fiscal year 2022-2023. The latest report aligns with the global framework of GRI, SASB, and UN SDGs and discusses many new elements like ESG governance and policies, emerging risk, water stress, and biodiversity assessment, and responsible supply chain program, among other initiatives implemented in the organization. I will now come to the announcement of merger of PPL and MCFL. The board of directors of PPL and MCFL, in their board meeting held yesterday, approved a composite scheme of arrangements, marking a strategic move of consolidation for both companies. PPL and MCFL have consistently delivered robust financial performance, and by combining the forces, they aim to amplify shareholder values. The proposed combined entity shall become the largest integrated private sector company in India with a total capacity of around 3.6 million tons per annum. This proposed merger will bestow upon PPL a highly efficient ammonia-urea asset, access to newer southern markets, and the esteemed Mangala brand, and would additionally give us ample room to backward integrate and expand in the available land parcels that we'll get. I'm confident that leveraging the synergies between the two entities will unlock value and drive sustainable growth for our shareholders, employees, and partners. I thank you all for your continued support. Looking ahead, while short-term headwinds persist, the long-term outlook for Indian fertilizers remains strong. Growing demand for food security, a healthy soil, higher farm productivity, and balanced fertilization create a positive environment for our industry. We shall continue to remain focused on our existing strategies around product mix, farmer and channel initiatives, lower working capital, and faster receivable cycles to attain the best in this fiscal. Thank you very much. Now I would like to open the floor for Q&A. Over to you. Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touch-tone phone. 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'll wait for a moment while the question queue assembles. The first question is from the line of Harsh Shah from HSBC Asset Management. Please go ahead, sir. Hi. Good morning, everyone, and thank you for the opportunity. Our first question is on the scheme of arrangement itself. Last quarter, when we had a conversation and asked this question, it was there in the news. It was very clearly said by the management that they are not looking into anything, and they're just focusing on what they have in hand right now, which is continuous optimization of the Goa plant. What changed in one quarter? Yeah. Is that the only question, or do you have any follow-up on this? Right. So another follow-up is, since now you are anyways amalgamating the company into Paradeep. There's likely to be a lot of retrofit initiatives to turn around the plant of Goa. What are the plans that you will need to do in case of MCFL for it to get a better yield? Those are the two questions on the scheme of arrangement. And just one question on the company's reported earnings is, in your gross margin, how much of that incremental gross margin that you have made on a quarter-over-quarter or a Y-O-Y basis is because of integration, and how much of that is because of, let's say, you were having some low-cost inventory in your books and has led to an incremental margin? Basically, what I'm trying to understand is, what is a steady gross margin that you and we start to going forward? It was actually the first point about scheme of arrangement and what we discussed in the last earnings call. I clearly recollect that in the last earnings call, we were very clear that we're not allocating any more of financing from our side for further growth or using capital to really buy our shares. However, we also were very clear that we will look at both opportunities as we complete our backward integration plans and efficiency plans that we have at both the sites. Just to reiterate here, that as far as Paradeep is concerned, our backward integration of the phosphoric acid capacity has been completed. And during the month of December, we also completed the energy efficiency initiative that we had in Goa, wherein the ammonia-urea plant efficiency has been increased as proposed. Under these two circumstances, we were also looking at what is the further growth which is possible. As you know, opportunities do come suddenly. This was something that was shaped up for us. In this particular transaction, which is subject to various regulatory approvals, including the Competition Commission approval, all I'd like to say here is, we are not at this juncture planning any leverage at the PPL end. It's purely going to be a share swap arrangement that we're doing, wherein the MCFL shareholders will get into the PPL shareholding. Now, the other question that really comes out is, why is it that we're looking at this transaction at this point of time? Please understand that the phosphoric industry and the fertilizer industry in general is in for a significant amount of regulatory change that is taking place. When I say regulatory change, as you know, there has been a lot of clarity which is emerging in terms of how the NBS policy and how the NPK industry is going to play out. And it's also very clear that the urea policy going forward from 2025-26 onwards will have a new regime by itself. So having efficient assets is attractive. And in this transaction, what we did see was MCFL, during the last couple of months, completed their entire revamp of their ammonia-urea capacity. So we do not need to do any further CapEx out there to get the benefit. So it's a running, efficient asset that we are going to take into. And as far as the NPK plant is concerned, that has always been a good asset, running well and efficiently with its own product mix. So this was a good, clean opportunity that we thought we will get because this was an asset which had the potential for growth as far as future is concerned. So we decided to secure ourselves this particular asset. So your second question was about the third-quarter performance and obviously what helped us in terms of our backward integration and our storage capacity. Just to tell you, in volatile market conditions, as you've all seen, when prices fall, obviously, having higher-cost inventory will come and take hits on the bottom line. But when prices are kind of going up, the inventory helps you in a way. We have a robust facility at Paradeep where we are in a position to store more than 100,000 tons of raw phosphate, which has been a useful thing for us in the first place. In two cases, the new capacity which came, we managed to produce over 40,000 tons of production which we did. The incremental profit which we got for over INR 15,000-16,000 on the overall thing made a difference to us. There's been roughly about a INR 60 crore in benefit that we got in the last quarter on account of the fact that we had an additional capacity and we stored raw material well. That is something that I'd like to confirm. That has been one of the key things for us. Going forward, we should keep this in mind that we are at a time of the year when this is not market time for us. It's not season time for us. Also, the key markets of ours, which is Maharashtra and another neighboring state, have been through a very difficult monsoon time. There being very severe water stress in terms of availability has been quite challenging for them. So we can't really expect any major change in the marketplace right now till the next season commences, which is going to be the 2024-25 Rabi. And we all expect that a good shower and a good monsoon, which in any case is predicted, will be required and will turn corners for us. Understood. Just to reiterate, since Mangalore is already doing a major part of its ops, am I going to mention no major capex and results from PPL, at least in the short term, correct? In the short term, Mangalore is completely separate. Yeah. Correct. So for at least the next one or two years, there is no incremental needed to be done in Mangalore as far as PPL. Yeah. Mangalore with PPL is not required to do any capital allocation for any capital expenditure out there. Understood. Understood. Yeah. Those were my questions. Thank you for answering, and you were the very best. Thank you. Thank you. Ladies and gentlemen, please press star and one to ask questions. The next question is from the line of S. Ramesh from Nirmal Bang Equities. Please go ahead. Good morning and thank you very much. On the proposed merger, there is an item which says you need to transfer an aggregate consideration of INR 564.57 crores as consideration for such share transfer. What is this exactly? Is there a cash outflow, and what is this for? There is no cash outflow from Paradeep Phosphates Limited. The gross consideration which is being indicated there is a transfer of shares which is happening between Zuari Agro Chemicals and Zuari Maroc Phosphates, which is our holding company, to ensure that Zuari Maroc Phosphates continues to be the single largest and the controlling shareholder of the company. So there is no financing which is being done from Paradeep Phosphates. This is the shareholders who are financing it out there of Zuari Maroc Phosphates. Okay. In terms of growth plans in MCFL and Paradeep, it remains more or less unchanged based on your current product mix and the investments you have made and the efficiency gain in what products you have done. Is there any indirect tax saving or other tax savings which will help you improve the post-tax earnings post-merger? Sorry. This is not about taxation. This is primarily about the fact that you are aware that Paradeep is well represented in most of the major markets in India. So we're already close to about 14-15 states. And our representation is not as seriously there in the deep south markets. And so first and foremost for us is that expand our market to reach the deep south market in the larger countries, that's number one. The second thing is about the brand that we will get is a brand reach which is there for various products that we have. In the NPK space, we have a number of interesting products that are available which MCFL doesn't have. MCFL gives us a market reach and then very efficient ammonia-urea asset. So this is where we will be able to grow those markets. MCFL has the capability to house a new project at DAP in the medium to long term. As we get our market share to the right levels, we could always look at it at the end of the day. Is there any synergy benefits to this in terms of the overall manufacturing or distribution cost and thereby make that additional reach count in terms of the underlying growth? Yes. Synergies will obviously be there. And you want to, I think, Alok will want to say. This transaction is subject to all the regulatory approvals. So we will get exactly synergy benefits out only after the transaction is approved by the regulatory bodies. But yeah, as a management, we feel that there are potential synergies that can be leveraged and integrated into a much stronger force. So in terms of Paradeep energy efficiency projects for ammonia-urea, what is the additional growth and additional return or profit you can expect from that? Because MCFL already got the benefits and we see year-to-date numbers. So what is the kind of benefit Paradeep will see from your Goa energy efficiency projects? Okay. You see, when you look at MCFL, it has already completed its project, and you're right that we are already getting the benefit of that. As the benefit integrates more into the company, there are further improvements which are possible in terms of product sourcing that we'll end up doing and the reach that we will get, which will also improve the overall margin for the basket itself. So that is where the entire reach will come. And I'm sure once the regulatory approvals are in place, we will be in a position to discuss some of these things in detail. Finally, in terms of your nine-month net debt and your CapEx plans for the mergers between the next two years, can you give us some insight? Well, the nine-month debt position for Paradeep Phosphates, we can certainly share. If you look at it today, Paradeep's total debt in the company is INR 3,944 crores. As compared to the previous year ending nine months, FY2023 was INR 2,298 crores. So we are 8% down from the previous time. If you look at it here, the long-term debt is at INR 774 crores for us, and the short-term debt is about INR 3,170 crores. There is a substantial reduction in the short-term debt that's about 1%, which was INR 3,585 crores earlier. This This is INR 3,170 crores. Okay. So in MCFL, they had mentioned that they were also making a backward integration to sulphuric acid. That was mentioned sometime in the first quarter, second quarter, fourth. So when do you think that will be completed? Because you said their capex is over. That's not. That project is. It's not a very large project, and typically, it takes about less than 24 months to complete that. And that is primarily for their requirement of NPK production. So it's a small project. But the important thing is sulphuric acid is somewhere we are one of the largest manufacturers of sulphuric acid in the country with 1.2 million tons. And Paradeep itself will be moving towards 1.9 million tons over the next two years. And sulfur sourcing is an important area where we will certainly get to see synergies going in. Okay. Finally, can you share us the Capex estimates for the next two years? See, as far as Paradeep Phosphates is concerned, the only CapEx that we are working on is closing out our own sulphuric acid plant. Which the total expenditure plant is INR 425 crore. Against it, we have already spent INR 150 crore. So the balance amount, which is about INR 270 crore, is what we will be spending in Paradeep as a major capital expenditure. And we've got some infrastructure-oriented CapEx which is there, which is about INR 40 crore. That is a total plan that we have. As for the MCFL is concerned, we are only doing the backward integration for the sulphuric acid plant. And that is the only investment that they committed right now. Just to clarify, till we get all the regulatory approvals, MCFL will continue to do their business as usual. As a detailed management, our plan will only start after we get all the extensive approvals from MCFL. Thank you very much. I shall join the queue. We shall. Thank you. The next question is from the line of Kishan Giani from Elara Capital. Please go ahead. Yeah. Thanks for the opportunity. Sir, my question is a bit longer term and in some sense hypothetical also. I believe there is some surplus land at MCFL. Is that right? Kishan, that's right. Yeah. Sir, is it possible that on the western side now, we have 1.1 million tons of complex capacity which is without backward integration? So sometime down the line, can we set up a composite plant at Mangalore and then ship Goa's complex requirement from there? And hence, the assets from the western side will also be backward integrated? Kishan, these possibilities are absolutely live. I think as Alok has been mentioning earlier, since we are into our regulatory process, we certainly like to come to it at a stage where we are through with it. Yeah. But these possibilities are certainly there. Yes. I'm not asking for numbers, but directionally, is it something you would be interested in sometime down the line? Yes. Sir, technically, in that case, will Goa side be considered as backward integrated in the light of recent government norms of capping PBT margins at 8%, 12%, and 10%? Just to confirm this to you, the current circular, yes, has the previous condition that one needs to be fully integrated. Obviously, if they are able to meet our requirement of phosphoric acid as a backward integration, it will get considered. So as and when these projects are complete and documented, there is certainly a possibility that we can achieve this. Okay. Sir, on the current phosphoric acid prices, I think they are around $970, which is more or less same as the last quarter. Can you give some sense on your blended rock phosphate cost on a quarter-over-quarter basis? How much change have you seen either on the upside or downside for the first quarter? If you look at it, the phosphoric acid price has been varying right from $290-$249. Right now, it's come down to about $220 rock. The rock The rock rate. 210. 220 on an average. Oh, yeah. How much in Q3? No. Q3 is around 220 on a weighted average. And so if you would look at some kind of a similar number flowing right now, because the overall fossil market, nothing much has really changed from Q4. The asset price, VAP prices, and all of them are pretty much holding. Any benefit of the sulfur price is what they get to us. Okay. Sir, can I get the sales breakup for Paradeep's plant in Goa site? The sales breakup? Okay. This one. After the call. Kishan, we shared this with you. The specific bills, please begin Goa and this. Sir, how much is the subsidy that we have received in Q3, and how much is outstanding right now? 750 crore we received. In Q3, we received INR 728 crore subsidy. And outstanding? 2,000. Outstanding for us currently is 2,346. 2,000? As an industry, there's no payment because we paid in December. But we got a percentage of subsidy paid out in the month of January. Sir, lastly, after your completion of urea efficiency at Goa, how much will be the EBITDA per ton for Goa going forward in urea? See, if you look at it here, that whenever you look at EBITDA per ton for the urea business, it depends upon the gap with costs and the recovery that government allows as part of the policy for the energy savings that you end up doing here. So this kind of an energy improvement plan that we do, we normally add about INR 800 per ton as an incremental energy saving that we get. So if you look at it, the overall contributions if the government allows you, we assume that the gas prices continue at the current levels which are there, we should go up to about INR 2,700-INR 2,800 in the range as an overall contribution that we'll end up getting from the urea business. 3,800 per ton? Yes. Yes. Okay. Previously, it would have been INR 3,000 per ton? Yes, INR 3,000. Yes. That's true. Yes. And then further, obviously, since when we buy less gas, your working capital numbers and all that will also be used accordingly. Yeah. Thank you, sir. That's it from my side. Thank you. Participants who wish to ask questions may please press star and one. The next question is from the line of Mithun Aswath from Kivah Advisors. Please go ahead. Just wanted to understand this quarter as well. There were some shutdowns for maintenance that you had. I wanted to understand that impact in terms of your volumes for this quarter, or did you see some slackness in the demand as well? Well, the urea plant was closed during this quarter. The capacity that we lost was about 80,000 tons of urea in terms of manufacturing capacity. This is nothing to do with demand supply. This was a planned intervention we did based on the supply that we were getting of equipment and the technicians being scheduled for the same from the technology suppliers. Right. And now it is up and running, right, for this quarter? Yeah. This plant is up and running from 15th of January. Right. My next question was in terms of the merger synergies that you see. Could you just explain certain easy items that you will see maybe trickle in in FY2025 itself and maybe further in FY2026 if you could just kind of elaborate the same? Overall, we feel that synergies can be derived from the various outcomes such as supply chain in terms of sourcing capabilities, marketing reach, and convertedness optimization. We also have an opportunity to centralize our internal teams and all those things. The details will be worked out after getting requisite internal approvals. One thing we can tell you, sir, is that our sourcing ability will be put into place to work out efficiency with MCFL, and we should be able to get overall supply chain advantages out there. That's the first major thing that we will get. Secondly is also in our ability to redistribute some of the products the way we move from the various locations that we have. The third important thing is some of the retail network where we should be able to introduce some of the products that we don't have at this point in time. Right. And one last question on your overall debt that you have. What will your net debt be at Paradeep and at Mangalore Chemicals as of now? If you look at INR 3,900 is our net debt, it will be there for us. 3,939. 3,929 crores. Okay. Right. And that's on the Paradeep side, right? Yes. Yeah. And on the Mangalore Chemicals side as of now? That might be in their public domain, so I don't think we're going to take that question right now. But they hardly have any debt in terms of their working capital. And they have some debt. They have a debt of close to about INR 400 crore which they did for their long-term energy CapEx, energy efficiency which they are paying out. Yeah. Right. My question also was because a large portion of your debt is short-term, and you've been mentioning that there are going to be improvements on the market cap side. So I just wanted to understand over the next couple of years, how do we see that trend? I'll just explain to you from the two business lines. When it comes to urea, I mean, urea, over 80% of your supply chain is paid out by the government based on the sale that happens. So urea has never what we have seen operate in the last couple of years of performance, even in our cases, urea is not so much working capital ready because government payouts on that is quite strong. And when it comes to the phosphatic side, the big numbers are only on two fronts, which is the phosphoric acid and the ammonia. And the good thing for a site like MCFL is good amount of ammonia is made by them as excess ammonia in their own ammonia complex. They today make something between 150-175 tons as an excess ammonia available with them. So their overall purchase of ammonia is limited for them. As for phosphoric acid is concerned, they will get the benefit that typically flows into Paradeep in terms of credit terms and all that. So that will end up improving for them. Fine, sir. Thank you. Thank you. The next question is from the line of S. Ramesh from Nirmal Bang Equities. Please go ahead. Thank you for the follow-up question. So if you look at the growth in FY2025, would you get the full benefits of the backward integration? And secondly, what will be the growth drivers in terms of volumes on your phosphoric acid fertilizer and the urea in Goa? Let me address Ramesh. As far as the 2024/25 concerned, I'm not really strictly giving this as a guidance. But team has realized that the benefits of the completion of both phosphoric acid plant and energy efficiency in Goa will obviously flow into our books. So they will be fully completion as far as the technical and physical capabilities concerned. Now, coming to improvements that we will see for the next year, it's very important for us to realize that over the last three years, right since 2021 onwards, we've been through a rather very difficult external environment, whether it was the pandemic or the Ukraine crisis that we have seen and the recent disruption in the Red Sea area. We've had surprises coming to us every quarter from some way or another. This has delayed availability of raw material in some time or increasing the trade costs. But despite all that, we've been able to manage things well. But the most important thing that we are looking forward to in 2024/25 is our ability to use our capacities to the fullest extent at Paradeep. And obviously, we should be even looking at the other location also. And when I say using the full capacity, I mean that the markets of Maharashtra gets opened up completely. I think Maharashtra is a very large agricultural market. It has had sustained challenges in terms of availability of water and monsoon in general, and it's stressed at a farm level quite serious. So if that opens up, obviously, it makes things very different for us. That's the first thing. And second thing is I also believe that all this while, the pricing of the phosphatic fertilizer has also kind of gone around in a very different format. The pricing hierarchy I've always maintained is not in the right order. We need to have a pricing order wherein key fertilizers like VAP is priced at the right point, and the rest of NPPs follow the same. Also MOP comes somewhere in the lower order in the overall pricing hierarchy. This direction is something that I certainly expect should take place in the next financial year. That will benefit not only from the profitability perspective. First and foremost, it will correct the consumption pattern in the Indian farm sector, which is going to be good for everyone. I mean, this is the most important thing that we need to arrive. I believe the market changes and all this, we should get to see from the month of July 2024. I mean, I think this is currently, we are into an off-season phase. There will not be very many changes. We have to respect the fact that it is a national election going on. So all major changes will only happen thereafter. I think that's the way we will look at it. I'm expecting that second half of next year onwards, the fortune for the industry should really change in a positive way. Okay. That's useful. So can you quantify what is the third and fourth question we'll get from your backward integration in follow-up meetings next year? Well, when it comes to the backward integration, look at it. We've always guided that an ideal situation on EBITDA should be about INR 5,000 a metric ton for the products, whatever metrics we have. And if you're going to be looking at the perfectly backward integrated with the pricing norms being the way it should be in the marketplace, we have also discussed it in the past that the INR 5,000 can actually go further up to maybe INR 5,500-INR 6,000 range when things go right. So under this new pricing scheme in terms of the integrated producers getting 12% on PPL, would your backward integration savings allow you to get that? Because there is a provision in the new guideline that the first savings from your cost of production is going to be taken out. So even with that, would you be able to achieve this kind of upside in EBITDA for? Well, if you look at the headroom that we really have, if you look at our entire capacity that we have and what we can produce, and let's go by the guideline, which gives you a return on your percentage of cost of manufacturing, the headroom that's available is quite significant. A company like us would, well, in a good year, could be looking at INR 1,000 crores of PBT. I mean, on a pure mathematical number, we could be somewhere there. So there is a good amount of headroom which is left behind. And we believe that by the product mix that we will have, by the ability that we will be able to reach out to various markets, and also the flexibility between the two units, we should be striving for that. So there is a headroom for growth for us from here. I believe that the current guideline which the government has issued is a positive step for two very basic reasons. The first being that it clarifies a lot of things. There are still a few minor tweaks and clarifications that the industry has sought, which I'm sure will come pretty soon. That's the first point. Second point is the number of shocks that we've got over the last 4, 5 quarters in terms of changes in subsidies. I believe that a mechanism like this can ensure that there is no need for us to really keep changing the subsidy time and again. So this time will only tell whether that's going to work that way or not. It's a clear indication that by putting a framework and putting the owners of the industry to report on this basis, we are going to see a much more stable environment for the NPP sector. That was useful. Thank you very much, and wish you all the best. Thank you. And the next question is from the line of Darshita from Antique Stock Broking. Please go ahead. Hi. Thank you for the opportunity. My first question is regarding the regulatory approval. Approximately, according to your guess, how long would it take to receive the approval for the merger? Since we have to apply to two different NCLTs, we believe that 12 months is the time that we should get all the regulatory approvals. This process will involve getting approval from Competition Commission of India, Stock Exchanges, NCLT, shareholders and creditors. Overall, a timeline that we can give is 12 months is a good estimate. Till such time, we will be working in a different company. Yes. How much subsidy did we receive in the month of June? Can you come again? I didn't hear you. How much subsidy did we receive in the month of January? 760 crores. Okay. My question was regarding what's your expectation with respect to RM prices going in FY2025? I mean, we have seen reduction in rock prices, as you highlighted, that we've seen reduction in rock prices. Phosphatic has largely remained at the same level. What's your expectation for FY2025 with respect to the RM prices? There are basically three RMs that we maybe have to follow. One is obviously the rock phosphate, which is determined out of both phosphoric acid and the rock itself. At this point of time, it will not be fair to really look at what the future is likely to be. The Red Sea prices will be having an impact for the entire rock phosphate and the phosphoric acid supply to India because we are seeing much longer routes. Day trips are taking 14-15 days more. And then obviously, the net worth for the North African players is far better than Indian markets as compared to coming in here. So I would say that till the next 2-3 months, till we get to see some kind of stability in the sea routes, we will get to see the similar rates that we're getting today. The only correction that we are seeing is ammonia. But let me tell you, ammonia, if you have followed this over the last 12 months, has been highly volatile. It has swung in a very big way. And obviously, we have a large capacity. So every time those things happen, if it is a positive thing, we get the benefit with the large. And so that's how it is. So I believe that ammonia will be range bound, shouldn't cross that $450 range for some time now, given the way the demand-supply is positioned. The rock phosphate, I would believe that a stable regime will continue the way it is today. And sulfur is something that has corrected and is running at a level which it looks like a stable level for some time. Okay. Could you just help me out with the phosphatic contracted prices for 4Q and if any negotiations happening for 1Q? We have the phosphoric acid price only for the current quarter. There's been a small direction which is coming from the earlier levels that we had. The current level of phosphoric acid, which is $985, has come down to about $968 per metric ton. Okay. And my last question was regarding earlier, you just mentioned that with the revised framework taking place, what the government has done, with the specific margins, you mentioned that we will not have to change the subsidy or the NBS rates multiple times per year that we've seen over the past two years. Could you explain how that would happen? I do not quite understand that. I mean, if the raw material prices continue to be volatile, we would have to change the NBS rates more frequently, right? Primarily because the government has clarified in terms of what is the reasonable profit level for a manufacturer or a trader in India. So given that you have a limit which is being prescribed, you have to voluntarily surrender in case you're going to make profits beyond that. So the government is not at a risk to say that if you do not change the subsidy, they will have any that the industry will get away with some runaway profit. That's the only thing. So there is a clear guideline in terms of what is the maximum profit the industry can make. And so that gives us stability for both the regulator and also for the industry player to take on things in a more positive way. In case we make more money, we have to give it back to the government. And that is well articulated now. Okay. Sorry, just one last question. You mentioned that from the energy saving at the Goa plant, we are expecting an EBITDA per ton of INR 3,700-INR 3,800. Are we expecting this kind of EBITDA per ton from the one that we have done in December, like the energy savings scheme that we have done in December? The December work that we have done, we've got an energy saving of roughly about INR 800 per metric ton. We have a 4-lakh capacity. That's going to give us about INR 30 crore-INR 32 crore annually in terms of incremental return on an overall basis. Darshita, earlier, you were making close to INR 3,000. Now with this additional INR 800, we'll get around INR 3,800. Right. Yes. That's what I was informing. I think we have reduced the Gcal by 0.3, if I'm not wrong. So from this 0.3 reduction, our Goa plant or the Urea plant EBITDA per ton would increase to INR 3,800. Yes. That's right. Got it. Okay. Thank you so much. That's all from my side. Thank you. Thank you. The next question is from the line of Resham Jain from DSP Asset Managers. Please go ahead. Yeah. Hi. Good afternoon. Good morning, sir. So I have a couple of questions. First is within the Zuari Group now, the MCFL now, is there any other agribusiness which the group does? Resham, as far as Zuari Group is concerned, they just have one SSP plant which is there in Bihar as a fertilizer business. They also have an agri-retail business which is called Zuari FarmHub where they distribute; it's a multi-brand retail business. Yeah. Okay. Any plans to merge that as well? Or you don't see any synergies over there? The Zuari FarmHub business is a large retail base, grassroots connectivity to the farmer. We currently do not, in this case, looking at working on that particular asset at all. I think we have completed our backward integration, and we have well integrated our ammonia-urea complex and the phosphate complex of Goa. I think we certainly look forward to integrating operations with Mangalore, which has straightforward synergies for us. That will be our focus over the next couple of years. Resham, just on NanoDAP, how are we in terms of position in terms of our manufacturing and our R&D over there? If you can just explain because there is a lot of talk about that being marketed much heavily than what it has done over the last few years. And your thoughts also over there, what is the efficacy level of NanoDAP? I will ask my colleague, Harshdeep, to give you details on this. Yeah. Yeah. Good morning. So I just want to share that as Paradeep Phosphates, we're very well positioned to take on this opportunity as we're looking at more nutrient use efficient products. We would be shortly launching nano products in the next financial year. That's our plan. The objective is basically to move towards more nutrient use efficient fertilizers. And we will be doing both NanoDAP and Nano Urea. We are currently doing some test marketing of the products. We have done some extensive work with the farmers on these two products in both Karnataka and Maharashtra. The commercial launch is something that we're planning from April 1st, 2024. That's going to be an important one for us. We have our products which are biological in nature, which is different from what the other products are today. We also have the highest nitrogen content in urea, which is 8% in the nano product that we have. Also, the overall nutrient in our DAP is also 22%, 6% of N and 16% of P2O5. So these are all some of the USPs that the nano product of ours have. We've seen the results to be positive, and we expect to see growth on this. You asked a question about manufacturing. We currently are taking it through a third-party manufacturing which is happening. But we plan to set up and these are not capital-intensive projects. We plan to set up our own facility in the coming year near Mangalore. So the product is developed by Paradeep itself? The Nano? The product has been developed by TERI, the Energy and Resources Institute. It is based on the technology which has been there, and they have worked with the retail team of Zuari FarmHub. We have taken over the exclusive marketing rights for this. So the entire product is available to us on an exclusive basis to handle. We will also be allowed to make a set of manufacturing capability capacity for this to get the full benefits here. I understood, sir. Resham, lastly, on the other participants that asked about this, so INR 5,000-INR 5,500 is kind of in normal circumstances, this is the kind of EBITDA per ton one should expect from Paradeep at a consolidated level. Resham, you're correct. Resham, this has been, as you know, this has been a year where we had too many changes. I personally believe the fourth quarter is a very difficult quarter for the industry in general. Everything's up position. But I personally believe going forward from July of 2024, 2025, fundamental corrections should take place, and the industry should see better days, yeah, and more stable performance from the industry. Suresh, just one more bookkeeping question. In terms of provisioning, any raw material provisioning you expect in Q4, or more or less everything is a part of Q3 reserves? We have taken care of. We don't have to make any provisions in Q4, yes. I mean, we are going as per a normal accounting department. So I don't think there's going to be any inventory gain or loss as we go forward in Q4. Q4 is expected to be normal because already. Q4 is going to be a norm. Resham, let me be very clear to all the participants. Q4 has been a challenging year for us because it's going to be a challenging quarter for us given the way the prices of raw materials go with the brunt of the increase of prices that has happened has actually gone more towards Q4 rather than on Q3 for us because we did manage to get sourced raw materials fully well. And we also got one big positive development in the new capacity that we created. Q4 will be a lukewarm quarter when you go forward. But we don't expect any one-time kind of hits coming up in Q4. Understood, sir. Very clear. All the best. Thank you. Thank you. Before we take the next question, we would like to remind participants that you may press star and one. The next question is from the line of Manish Mahawar from Antique Stock Broking. Please go ahead. Yes. In terms of MCFL merger, right, what comes first? Synergy? I'm talking about merged entity, whatever P2P was saying, and you can see as an entity, boom. Well, Manish, when it comes to MCFL, I think maybe a little we have said that we're still waiting for all the formal approvals to come through before we cannot talk about things in detail. But I can certainly state that right across supply chain and P2P cost, both we will have synergy benefits coming in at this merger. That is for sure. And the larger benefits will flow through the supply chain and the product mix. Okay. Understood. And what could be, in terms of MCFL, for the last year, they did almost INR 310 crores of EBITDA, right? And this year, they have done a 9-month and good EBITDA than they have done. What could be a steady state or stable EBITDA this company can make on an annual basis? Well, they've been good. If you look at the way they're working right now, they're looking good for about INR 450-500 crores of EBITDA as a range that they're working on today. I'm sure we'll work towards maintaining and improving that, yes. Today, as all the CapEx and everything is concerned, their EBITDA margin is significantly better than what we get to see. So that will also help us to get a weighted average EBITDA returns better than what we have today. The third part means that they have completed their capex program on synergic improvement. So that will give us sustainable cash flows for the merged entity. That has gone to the number 9, by the way, because there's substantial improvement in terms of EBITDA. Should we try to understand, basically, the 350-400 gross EBITDA this company on annual basis consistently to be? Resham must realize that MCFL is a 9-month result they announced. Even though the entire capital expenditure was completed, they did not have full production in these 9 months because they took a shutdown to complete the last phase of their CapEx during the last quarter. So the full benefit of that is not going in. But as you know, in the fertilizer industry, we have got what is called a reassessed capacity from the government. So they will be reaching that soon, and they will be producing above the reassessed capacity. And there, the margins are determined by the government most of the time with the lag. So the numbers may not be as reflective. But from 1st of April 2024-2025, you will see them getting the full benefit of the CapEx they've done. Understood. Second question, in terms of quarterly, this quarter Q3 margins of Paradeep as an entity, you said it's phosphoric acid backward integration, which we have done backward integration, around INR 60 crore of basically incremental EBITDA. But what I understand is also in terms of your lower rock phosphate prices also, right, which you're carrying the inventory, the INR 60 crore. We can't. Yeah. We have been very transparent on this because we took care of the benefit of the fact that when the prices were going up, we had enough of stock available. And so that's the benefit that we got. And as we know very clearly that the industry at this point of time ideally needs a price increase or an increase in subsidy, one of these two. I mean, our preference would be a price increase. But given that it's given the overall situation of what I call as an off-season time today, a price increase is not warranted at this point of time. And also given that it's an election year, changes in subsidy is something that we expect to have a good clarity maybe a little later. At the same time, as an industry and as an industry body, we are taking this up, and we believe that this uniformly affects most of the players. We are hoping that we will get some clarity on this going forward. Okay. Just to clarify, in this quarter, we have not reversed any provisions what we made in the first half, right, in the Q3? No, we haven't. There were regular provisions right now. Okay. It's a pure operational business profit this quarter. Yes. Absolutely. Okay. Understood. Last one from my side, in terms of as a combined entity, MCFL plus PPL, what could be I think so the EBITDA per ton I think you already indicated INR 5,000+, maybe room to improve further, right? Combined entity, we are able to make that of MCFL because MCFL has a good EBITDA per ton. Yeah. I mean, if you look at 2024, 2025, I'm sure we should be looking at something. But we'll certainly get into that point, and that will improve with the MCFL coming into our fold. Okay. Resham, can you highlight the market share perspective as a combined entity? What will be our market share that PPL once the ramp-out is happening and post MCFL, what will be the market share? And if you see the southern market, what would be the number maybe after the ramp-out overall capacity? But if you look at it, Paradeep Phosphates is a major player when it comes to the NPK and DAP business, the total market size of which is about 20 million tons. On this 20 million tons, we currently have about 2.6 million tons, about 12%-13% market share is what we have on an all-India basis. When we look at MCFL, in the same space, they play about 300,000-400,000 tons, 300,000 tons of manufactured and maybe about 100,000 tons of imported products. So that is what the difference is going to be. So our 13% which is there, 12%-13% can go to 14% in terms of an overall market share improvement. But the game doesn't end here. The game actually is that this 20 million-ton market has close to about 7 million tons of imports which can get into there. This is where the combined can score. I mean, both in terms of market reach and the product availability that we can bring in. And that will also take in the incremental profitability that can come. There is a much larger play which is available if you look at the larger market share. And that will be primarily because we get newer markets. At the same time, we get newer product for the newer markets. So this is the combination which, in our view, will work. Okay. Understood, sir. That's from my side. All the best. Thank you. The next question is from the line of Prashant Biyani from Elara Capital. Please go ahead. Yeah. Thanks for the opportunity again. Sir, what would be the exclusive market where MCFL operates that we are not operating either in terms of states or number of districts? Well, if you look at Tamil Nadu, we don't operate in Tamil Nadu at all. If you look at Kerala, we don't operate in Kerala at all. And if you look at their own captive market which is within the 60 km of MCFL, we don't have any serious presence out there. And so there are certain pockets of southern Karnataka where we don't have a serious presence, where they're majorly present. So these are important markets which are there. And with the Urea, they pretty much reach the entire state of Karnataka. And they even go to places like Telangana and others. They have a market reach. So those networks will also be available to us to consolidate. Even from the Goa plant, they are not present in southern Karnataka? Goa products don't go that side. Goa is largely through a pocket of Hubli. Hubli is a major market for us. Hubli is not the most major market as far as MCFL is concerned. There's never been an interface between these two markets in a serious way. The two markets will be complementary to each other. Right. And, sir, when we acquired Goa plant, it was a struggling asset. But that is not the case with MCFL. So except more markets and a few grades of NPK, are we also getting something else which I may be missing? See, when you get a scale, it's when you can look at the efficient macro integration. And then that's what we're getting here. Correct. We're getting a scale of operation which is available. We're getting a site which is exciting. And so here, the value is both for the marketplace and the site as we look at it seriously. And just for your information, Mangalore is located inside the port itself. It's right in the port of Mangalore. So then they have an exclusive corridor which is less than a kilometer wherein all the pipelines transport their raw material from the port to the plant, which is not the case that we have in Goa today. Bangalore, as a site, will get benefit from the sourcing capabilities of OCP? But, sir, that he would already be getting at PPL. Or as a group also, MCFL would be enjoying that benefit? Not necessarily because phosphoric acid is a scarce commodity in which, if you look at today, the supplies are only coming to the direct group companies. Where PPL is a group company, MCFL is not. Okay, sir. Thank you. That's it from my side. Thank you. That was the last question. I would now like to hand the conference over to the management for closing comments. Thank you, everyone, for participating in the earnings conference call. We have tried to answer all your questions. If you have any further queries or inquiries, please connect with our investor relations team. We'll be happy to address the same. Thank you, and have a good day. On behalf of ICICI Securities, that concludes this conference. Thank you for joining us. You may now disconnect your line.