Please note that this conference is being recorded. I now hand the conference over to Mr. Harmish Desai from Phillip Capital (India) Private Limited. Thank you, and over to you, sir. Mr. Harmish ?
Yeah. Can we start?
Yes, uh.
Yeah. So, thank you, Manav. Good afternoon, and welcome to the Q3 and Nine-Month FY 2024 Earnings Call of Deepak Fertilisers and Petrochemicals Corporation Limited, hosted by Phillip Capital. From the management, we have 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'd like to thank the management for giving us the opportunity to host this call. We will begin the call with opening remarks from Mr. Mehta, followed by Mr. Deepak Rastogi for details on financial performance. Now, we'll have a Q&A session. Thank you, and over to you, sir.
Thank you. Is my voice clear?
Yes, sir.
Okay, good. A good afternoon to all of you. I extend a warm welcome to each of you for joining us in our Q3 NINE-Month FY 2024 Earnings Call of Deepak Fertilisers. Our earnings presentation and press release have been uploaded in the company's website as well as on the stock exchange, and I hope you have had a chance to review it. Now, as you would have noticed from the figures, that we have faced yet again a very challenging quarter. However, let me take this opportunity to share what are macro and micro undercurrents that will help you to better understand the context as well as the figures, and also get a bit of a medium-term, long-term perspective as we see it. The results are good or challenging based on what they are compared with.
So last year was our historic unusual best. Hence, comparing with last year, the current quarter, nine months, do appear rather pale. However, when we took the average of last five years, same quarters or last five years, nine months, we have noted that the contribution margins continue to be good, and this shows the resilience of our business. If I were to put aside, you know, the one-time subsidy hit on the fertilizer side and also the one-time, ammonia plant stabilization cost, you know, during the stabilization period, then in fact, our margins profile are actually better. As far as the ammonia project goes, which, as you all recall, was a large investment, it is now fully stabilized. We recently completed our guarantee test runs, and the capacities and efficiencies have been now well proven.
So in a nutshell, from a higher volatile zone of ammonia to all downstream, we have now moved to a lower volatile zone of gas to downstream, with the ammonia plant coming in, and that is going to help all the three businesses, as we go forward. We are also broadly seeing that, the global newer ammonia capacities, like at Ma'aden, they are getting tied up with downstream fertilizer needs. And with all that put together, we expect the ammonia prices to stabilize. Now, in case of our TAN business, technical ammonium nitrate business, which serves the mining sector, we did, you know, face a big hit emerging out of the huge quantum of Russian fertilizer-grade ammonium nitrate dumped into India because of the sanctions on the Russian products in some other countries.
Now, as we see, we are seeing that some demand revival of the fertilizer-grade ammonium nitrate for Russia's domestic demand itself, as well as in Brazil, where earlier this year the pickup was almost half of the typical needs. Also as what we had envisaged in the last call, that the government has now opened up the ban on exports of TAN by some 30,000 tons, and we expect the complete removal of the ban in the near future as a good policy, and that will allow us to export our top-grade TAN, which will, you know, help going forward. The government is also being sensitized to non-level playing and safety/security concerns, which are there for the imported fertilizer grade AN, and which may result into some non-tariff barriers and controls for the imported FGAN.
Lastly, as you would have read, more recently, Coal India's aggressive plans to supply domestic coal is targeted to completely replace all the imported coal coming to India. This Atmanirbhar drive is likely to boost TAN demand, technical ammonium nitrate demand, to probably double-digit CAGR-... positive for our Gopalpur project. Now, as regards industrial chemicals, we have seen some global slowdown overall emerging out of, you know, the increasing interest rates and aggressive supplies last year at higher prices. As we speak now, we see the upward interest rate regime slowing down, which you are all reading about in the U.S. and elsewhere, and a fair degree of destocking that has happened, which we are now seeing that gradually we should shift back to normal prices.
Finally, as far as the fertilizer business goes, just to explain the context, Government of India had come up with the nutrient-based subsidy scheme some 10 years back. What it simply meant was there would be fixed subsidies and free MRPs. So they would allow us to price our products, fertilizer products, freely. However, in the last few years, with the global prices of fertilizer shooting up, the government clamped down upon free pricing. And as regards fixed subsidies, as per the formula, they are based on previous 6 months average. Now, in case of rising global prices, the industry would suffer losses on its inventory because the fixed subsidies would be covering based on the previous 6 months. In light of this, the industry had been pleading to the government to restore the old nutrient-based subsidy scheme, with free MRPs.
But worries of farmer vote bank, the government was worried about any exploitative pricing. Now, I might share that a very good middle path was announced by Department of Fertilizers just 7-10 days back, which you know, came up in terms of guidelines for reasonability of margins. So up to what margin the industry can make and beyond which it would be something that you know, would be exploitative and we would need to give it back. So these margins are allowing us a decent headroom and definitely better margins than what we are looking at today. And these margins, the margin guidelines are also somewhere giving us headroom for innovations.
This policy and this clarity is something that, you know, the industry was looking forward to, and it will be a very positive dimension to look at the fertilizer sector going forward. Our innovative, crop-specific Croptek product has been gaining very good traction. If I summarize at the fundamentals, our committed strategy of moving from commodity to holistic solutions for the crop nutrition business, for the technical ammonia-related mining business, as well as industrial chemicals, where we are looking at specialty grades. That strategy we feel is validated again and again, even during tough times, and that is something that we are looking forward to further building upon. Our recently approved restructuring will get a more focused, I would say, drive on each of our businesses.
So with these broad perspectives, I will hand you over to Mr. Deepak Rastogi, our CFO, to take you through more details, and then, of course, be available for any clarifications for any of your questions. Thank you. Yeah, Deepak?
Thank you, Mr. Mehta. Am I audible and clear?
Yes, sir.
Okay. Good afternoon, ladies and gentlemen, and I thank you for joining Deepak Fertilisers and Petrochemicals Corporation Limited conference call to discuss the Q3 financial year 2024 results. During quarter three, we reported total operating revenue of INR 1,853 crores, with an operating EBITDA of INR 282 crores. Our operating margins grew by approximately 343 basis points, quarter-on-quarter to 15.2%. The net profit for the quarter is INR 61 crores, with a margin of 3.3%. Similarly, for the nine months, which is YTD December, for this financial year, we reported total operating revenue of INR 6,590 crores, with an operating EBITDA of INR 849 crores.
Nine months revenue and operating EBITDA have shown consistent increase over the previous five years, except for last financial year, which we know that, you know, it was a positive aberration. The operating EBITDA margin is 12.9%, and without the one-time impacts, which actually we took in H1, the same will be 18.3%. The one-time impact includes subsidy impact of INR 267 crore and INR 87 crore on account of ammonia business stabilization during the first half of financial year. Coming to the performance of our business segments. For chemical business, chemical segment margins, that improved to 8.4% in quarter three, versus 21% in quarter two. The capacity utilization of our acid and, you know, ammonium nitrate business was closer to almost 89%-90%.
Similarly, the capacity utilization for nine months was around 90-92%. Our manufactured specialty chemical segment recorded revenue of INR 382 crore, compared to INR 454 crore in Q3 of last year, last quarter, which is YOY. Nitric acid sales volumes improved by, you know, 9% YOY and for nine months it was similar, which is around 10%. For IPA, the sales volumes improved by almost 49% for the quarter, which is YOY quarter, and 66% YOY for the nine months period. Now, due to poor demand and downstream, you know, from the downstream industry, there was huge amount of imports of nitroaromatics from China at a very, very cheap rate, which actually impacted the margins for our nitric acid business, and it also impacted the volumes.
However, the margin pressures which, you know, nitric acid business actually faced were more than offset by our IPA business profitability during the quarter, as well as obviously for the nine-month period. The manufactured, TAN business had a revenue of INR 440 crore in quarter three, and despite the positive industry trend, because the cement as well as power sector actually grew almost by 14%-15%. Overall, TAN sales volumes during the quarter declined by 15% YOY in Q3, and by 7% for the nine-month period because of a huge import from Russia during this period, and it, it was at a very, very cheap rates. Following the lifting of export ban in phased manner, we will restart our TAN export operation in the coming quarter onwards. Demand is going to be, we understand, would continue to be stable.
The expected increase in domestic demand in Russia and demand for Russian products in Brazil are projected to reduce, and hence we expect that the Russian imports would gradually be obviously coming down over a period of time. During the quarter, bulk fertilizers volumes improved by 23% YOY for quarter three, and the plant utilization was closer to 75, 75% in Q3, versus 67% for the nine months, you know. As you are aware, that because of the erratic rains during you know the rainy season has actually impacted, and similarly you know lower than average rainfall and inadequate irrigation water. And especially for Q3, unseasonable rain, unseasonal rains and hailstorm actually has created a reduction in sowing of rabi crops.
But Skymet's recent predictions indicate normal monsoon for the current year, which would support a good fertilizer season for our crops. PCL ammonia plant, you know, we actually, after successful commissioning in August of this year, which means last year, 2023, the plant has conducted performance guarantee test run, which has conclusively established the design norms are achieved. The plant is currently running at full design capacity. With available capacity across our plants, we are well positioned to navigate through challenges and capitalize on the growth opportunities. With this, I would like to open the floor for question and answers. Over to you, operator. Thank 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. Please note. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use only handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We have our first question from the line of Jainam Gilani from Swan Investments. Please go ahead.
Hi, sir. Thanks a lot for this opportunity. So we had a few questions. So what is the current spread for ammonia and, and when do we expect it to run at, like, optimum utilization?
Mr. Jainam , sorry to interrupt, but you are sounding very distant. Can you please-
Hello, can you hear me?
Yes.
Yeah. I wanted to know, what is the current spread for ammonia as for the imported ammonia versus our production? When do we expect it to run at full utilization?
Yeah, you know, maybe, you know, I'm not clear on your first question. You-- Are you asking that what is the ammonia pricing FOB Middle East, US dollars, which is closer to around $400 and ... and it ranges, you know, which one, but, you know, last quarter it was closer to, almost $475-$480 on average. As far as your second question is concerned, we are actually running the plant at full capacity now.
Sir, how much sequential improvement can we expect in this quarter or the upcoming quarters?
I'm not clear about the question. Are you asking that, is that on the margin side?
In terms of the spreads, sir, for us, for the ammonium spread, how do we expect it to... Like, what would be the spread for us in the upcoming quarters? Do we expect it to improve or should it be stable?
So effectively, what we are expecting is that it should be more or less stable or maybe slightly coming down, because it depends upon how the ammonia prices, you know, globally actually are going to behave. So we expect, you know, the ammonia prices would at least be either stable or you know, coming down a little bit. It's what our understanding is, but we will have to really see how it will actually happen. So for the time being, you can think it will be stable to slightly marginally.
Mm-hmm. And sir, in the fertilizer, the Department of Fertilizers policy that has been given by the government, so where will we be standing? Will we be considered a manufacturer or an integrated player?
We would be actually considered as manufacturer.
I guess the cap for us would be 10% PBT margins.
That is correct, yeah.
How would that impact our profitability?
I don't think that it is going to impact our profitability because the reasonable, you know, we basically, you know, it is within our, overall limits that we can actually improve our profitability until that, you know, 10%. So, you know, the profitability can go up. You know, so we have, room, to be able to actually improve our profitability going forward.
Sir, as you mentioned that the ban of TAN exports has been lifted, so when do we expect the first shipment from us for exports?
Tarun, go ahead. Yeah, so I will ask my colleague, Mr. Tarun Sinha, to respond to this, please.
Yeah, thanks, Deepak. Moderator, am I audible?
Yes, sir, you are audible.
Okay. So thanks for the question. Right now we are just waiting for our export license, you know, from the statutory bodies. And it has taken a little bit of time because of the corporate restructuring that Mr. Mehta talked about when we, you know, where we had actually first changed, you know, the name of the company from Smartchem to Mahadhan, under which the TAN business came. And then, you know, through a recent demerger process, we are demerging the TAN business from Mahadhan to Deepak Mining Solutions Limited. So as a result of these name changes, you know, we are just awaiting some licenses from statutory bodies, and with that we expect, if not by March, then certainly by start of April, our export should commence.
Okay. Okay. And sir, last question: So as you had mentioned, that the chemical business was impacted by imports, so can you please help us, what was the total imports for our products, and how is the situation in the month of January?
Are you basically looking at, for the TAN products, are you looking at?
Yes, TAN.
Okay. Yeah, over to you, Tarun.
Sorry, I probably thought this question was about chemicals, or was it about the import of ammonium nitrate? Can you please come back with your question?
Yes, yes, import of the Ammonium Nitrate.
Okay. So what's your specific question around that?
So we were mentioning that we were impacted by imports. So, is there any figure that what was the total imports for the products during the last quarter? And, you know, how is the month, like, how is the situation in January? Have the imports reduced or so?
...Yeah. So I'll just give you some pointers to get some picture around it. So last financial year, which was financial year, you know, ending 31st March 2023, the total quantum of imports were 3 lakh 55-56 thousand, of that order.
Okay.
In the first 10 months of this financial year, which is in the January, it has been around 373,000-374,000-odd MTs. You know, so that's the kind of-- So, so the imports are higher this year. But having said that, the demand of ammonium nitrate in India is also growing.
Mm-hmm.
So, a part of that growth is being taken by imports, naturally, and while the domestic capacities are trying to service the rest of the demand of the country.
Okay. Thank you so much, sir. Thank you, sir, and all the best.
Thank you, sir. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to two per participants. Should you have follow-up questions, we request you to rejoin the queue. We have our next question from the line of Deepak Poddar from Sapphire Capital. Please go ahead.
Am I audible, sir?
Yes, sir, you are audible. Please go ahead with your questions.
Thank you, very much, sir, for the opportunity. So first up, just wanted to understand, and I mean, couple of impact that you mentioned about, the Russian imports as well as, the Chinese import, right? Impacting the TAN and nitric acid respectively, the sales. So I mean, how much time do you think that, it will take from now, for situation to normalize as we speak now? I mean, we are, are we one quarter, two quarter away from things getting normalized? And plus the export impact also, and benefit will also come. So, yeah, some light on that would be helpful, sir.
So, you know, obviously it's difficult to basically pinpoint any specific timelines for it, but I'll give you an answer in, you know, very specific part for our industrial chemicals, which is nitric acid, and obviously for TAN, ammonium nitrate. As far as the, you know, industrial chemical, which is nitric acid, is concerned, given that, you know, the destocking has already happened, and obviously we are expecting that the interest rates are, you know, obviously, Fed has already said that, you know, the interest rates are going to eventually increase. Hence, there should be an uptick of volumes, and obviously the reduction in imports, you know, overall, is what we are expecting over a couple of quarters.
Now, whether it will happen in one quarter or two or three quarters, it is difficult for us to obviously comment, but it is in near term, obviously, you know, the things are getting stabilized now.
Okay.
You know, but obviously, the stability will continue and, you know, it will eventually improve, but we'll have to really wait and watch how and when the situation improves. As far as ammonium nitrate is concerned, as Mr. Tarun Sinha was mentioning, we have actually seen the imports actually coming in from Russia, because of that, they are actually exporting close to 1.5 million metric tons of PraPrilled AN gan to Brazil in the past. But in this year specifically, they have only exported around 1.1-1.2 million tons, you know, to Brazil. And it was because of obviously, you know, the lack of demand in that markets. And all that product which was to be going to Brazil has actually made into India.
So, so obviously, the things again on ammonium nitrate are stabilizing now. And obviously, you know, this could be one time event, it could repeat, but we'll have to really see. The other thing which, you know, I would also place on record is that, you know, generally there is always an imports, you know, closer to 350 thousand metric tons, which would continue, which doesn't impact our growth and things like that, because the domestic market is also improving. So, you know, for ammonium nitrate, also, we are seeing a stabilizing sign. Obviously, Q3 have been one of the tough quarters, you know, across both these businesses. But we have seen a lot of signs of stabilization, and hence, we think that, you know, the improvement would obviously start coming in.
It's only a matter of time, you know, whether it will take one quarter or couple of quarters. You know, we'll have to really wait and watch how the situation improves.
Mm-hmm. Fair enough. I got it. That's quite helpful, sir. My second question revolves around your ammonia. Currently it is at $470-$480 per ton, the ammonia FOB Middle East price, because that was you mentioned about was for the last quarter.
Currently, obviously, you know, it keeps changing. You know, currently it is hovering around $425-$400... That is the range, you know, especially in January.
$425-$ 440?
$400, $440, $450. Yes, that is right. So, you know, it. But you know, what happens is that, you know, on an average, you have to see how the whole month actually drives it. So the ammonia prices, FOB ME, have actually been varying quite a bit, and we think, you know, it would actually stabilize over a period of time. But I would say generally, the range of ammonia is closer to $400-$450 to $475. So it should have stabilized, you know, in that range.
Understand. What would be our spread at this $425-$450 per ton, including the benefit we get from the government, yeah?
We had been basically talking about a spread between, you know, $75-$125, depending upon how, you know, how the actual variation is. But, you know, at $450, generally we talk about a spread of close to maybe around $75-$100.
Okay. That includes the government benefit, right? Of $75 that we get.
That may be, that may be slightly over and above that.
Over and above that?
Yeah.
Okay. Okay. That's it from my side, sir. Thank you so much. All the very best.
Thank you, sir. We have our next question from the line of Aditya Sen from Robo Capital. Please go ahead.
Hi, thank you for the opportunity. Sir, with the capacity addition in Pune, and given that we will start exporting in the coming quarter, how much volume addition do we aspire in the coming year, that is FY 25?
So, you know, we basically are currently at 486,000 metric tons. You know, we basically are looking for 100,000 tons worth of capacity expansion going forward in next year, which will-
Mm-hmm.
-take us to around 587,000 metric tons, with Gopalpur coming in sometimes in 2026, 2027. You know, that would actually add up additionally 376. So give or take, by, you know, in couple of years, we'll be close to a million, you know, metric tons of capacity.
Right. And this 100,000 tons in next year is expected to come by which quarter? Quarter two?
So 50,000 tons is already in place. You know, fifty-
Yeah
... thousand tons is under, you know, obviously planning more. So it will come in, you know, next, early next, you know, next year, financially.
All right. And, with the ammonia CapEx, how much, roughly how much percentage increase in EBITDA do we aspire?
What is your question again?
So, my question basically is because ammonia CapEx is sort of a backward integration CapEx, ultimately, we believe that the objective is to cut down the volatility on the ammonia prices. So do we expect any increase in gross margins or in EBITDA with the addition of such CapEx?
Yeah, the answer is yes. Otherwise, you know, there will be no ROI. So effectively, there will be an increase. But, you know, it also depends upon how the ammonia prices in the global markets are doing effectively. But, you know, just to give you an answer, you know, overall, you know, we have been looking at a payback period of around six-seven years for the project, and hence, you know, accordingly, the numbers, you know, and we think we would be able to basically, you know, be delivering those numbers.
Mm-hmm. All right. Thank you, sir.
Thank you, sir. We have our next question from the line of Mr. Ranjit from IIFL Securities. Please go ahead.
Yes. Hi, gentlemen. Thanks for taking my question. The first question is on the,
Sorry to interrupt, Mr. Ranjit. Can you please come closer to the device?
Is it better?
Yes, sir. Please go ahead.
Yeah. So I was asking that, thanks for giving me the opportunity. The first question is on the PCL, Performance Chemicals. Can you share a rough financials, whether you would be able to break even at the EBITDA level for this quarter? And second, you have also mentioned that we are looking forward to getting the government incentive, the state government incentives. How do we account that? Would it be considered in the Q4 or as and when we would receive that? So that's the first question I had.
Sorry, Ranjit, so that I understand, are you saying that will we be break even at EBITDA level this year, or means coming quarter, is what your exact question is?
Yeah, for PCL.
Yeah. Okay. So the answer, obviously we'll have to do some math, but, you know, the answer could be yes, definitely. But we'll have to really see how the overall thing stands out in terms of, you know, external FOB ammonia, you know, obviously pricing, because the revenues of PCL are determined on the, obviously, how the, you know, it is marked with the market pricing. So that is number one. As far as the other question which you had was, how do we account for the incentives, is what your question is?
The state incentives.
Yes. So these numbers, these numbers, if I were to basically, you know, obviously start adding the incentives, because these numbers are without incentives, then definitely we will be a bit of positive. But, you know, we have—we are actually currently in a process of filing the details for the eligibility certificate, and once we have got those things. We should be able to account for it. Now, we'll have to—we are working on the timelines as to when we will be able to get those from the regulator, you know, from the DIC. Actually, it is the district DIC, which is District Industries Commission.
So we will have to release when we get it, but the idea would be that if we can get that eligibility certificate during this year, then we should be able to account for it, as well during this year.
Just one extension, whether the Q2 or Q3 quarter production that we have done, we would be eligible for that, or it would be only be implemented from the date of eligibility certificate that we get?
No, it is from the start of the production.
Yeah. Good. That's helpful. The second, what is the average gas costing now, since we have already almost entirely tied up? So if you can help with the average gas costing, that would be helpful, yeah.
So it is around, you know, it is, somewhere around, you know, closer to around $13.5, you know, dollars per MMBtu .
Yes. Thank you. And final bit, the FOB price that you have shared, what will be the landed cost of ammonia?
So you can actually, when you talk about FOB, ME you are talking about, right?
Sorry, your voice was not clear.
Am I audible now?
Yeah.
Your question is that, FOB ME pricing, how much dollars we have to add to be able to basically get to the landed cost, right?
Right.
So, you know, closer to around, you know, $100-$110.
Sure.
Because, you know, just at the landing, it is $100, then you have to add customs and all, which will add maybe around $15 more. So that is the reason I said, you know, it's around $100-$115.
Right. And finally, so any update on the nitric acid project that we have done? What are the timelines we are looking at for the commissioning?
We are looking for the second half of 2026.
FY 2026?
Yeah.
What is the CapEx that we have incurred till now out of 1900 outcomes?
You know, we have just started it. It is actually currently because we are into more procurement right now. You know, it's more of, you know, placing the orders and providing the LCs wherever it is required, because a lot of assets are long-lead items. But just if from a cash perspective, you know, we have hardly incurred INR 20-30 crore, you know, so far.
Sure. Thank you, sir.
Thank you, sir. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to two per participant. Should you have a follow-up question, we request you to rejoin the queue. We have our next question from the line of Mr. Ankit from Kotak. Please go ahead.
Hello, sir. So, can you please let us know the net debt number for December 2023? Hello, am I audible? Hello.
Yes, sir.
Yeah, just... Yeah, yeah, just hold on, please. So it will be closer to around, you know, 4,000, closer to that number.
This is net debt, right?
Sorry, this will be around. Yes, yes, that is correct. You know, it's, it's an annualized number. That's the way we are looking at it.
Annualized, as in annualized for FY 2024? Hello?
Yeah, that is correct. Yeah.
Okay. And what is the status on Gopalpur project?
Currently, it is, just to answer you, you know, currently we are at around, you know, around INR 3,400 crore, you know, as a net debt, effectively.
Okay.
Just to give you a sense. Yeah? Okay. Yes, tell me.
Yeah. My second question, what is the status on Gopalpur project?
The progress, the project is progressing well now, and the timelines are for the second half of 2026.
Okay. Thank you. Thanks a lot.
Thank you, sir. We will have our next question from the line of Sharon Andicuri for... From Investor. Please go ahead.
Yeah, thanks for the opportunity. I would like to know the demerger status and by when both the entities will be listing separately in the stock exchange.
So, you know, we have got the order, you know, actually, they pronounced the order on 17th of January. The demerger has been approved. We have yet to receive the order. So it will take a while, maybe a month or so, to basically put that process in place. The second question on the IPO side is what you are saying. You know, we'll have to basically run these companies, and whenever the board actually approves the listing process, then we will come back and then accordingly plan and then inform, I think.
What, what's the timeline? Do you have any timeline, like in the next two quarters, this will happen, like, share allocation of share ratio for the existing shareholder and the both entities will be listed separately?
So, currently, the board has not taken any view on that, so there is no timeline as such which I can provide.
Okay. And the second question is about the non-core asset, the real estate. I think from last more than one year, we have been discussing in all the calls, and currently, the company is going through tough times with respect to imports and other pricings. Is there any plan on that, selling the non-core asset or to liquidate and make the balance sheet stronger?
There is always a plan, obviously, for liquidation. Only thing is, the board has not taken a final view. Whenever, obviously, you know, we get the best pricing, so the board will take a call and then accordingly we'll do it. We are aware of this, and we want to do it, you know, no sooner than later.
Okay. Quick question on what's our production cost of ammonia. Currently market price is $450, what you said. What's our production cost?
So you can basically, you know, it's closer to...
Sorry, I'm not able to hear you. Can you suggest-
Around, you know, it's around 38,000-39,000. Or maybe around closer to 40,000.
Sorry, the $450 per ton is the market price, right? And what's our per ton production cost?
You know, the production, obviously, we don't devise, you know, we don't, you know, provide those numbers. But, you know, net-net, you know, we always say the margins which we basically or the, you know, spread we have, depending upon how the, you know, the ammonia price is, the spread ranges from, you know, $75 to underneath $25.
Okay. Yeah, I have one request, actually. Can we get an update on whenever there is an increase in the export? Like, export ban was there and it's lifted now from 20,000 to 30,000, any further? Because all these updates we will not get to know until the con call. In between the quarter, whenever such things happens, if we get an update on these things, it will be helpful.
Sure, we will look at that.
Also the export licensing, that's also pending from last one quarter. Mr. Tarun mentioned in the last con call as well, that it is pending, and even today it's pending. Whenever that happens, if we get update on such things, these, these are major events in terms of export ban, export lifting, and getting approval on all these things. Yeah. That's a request. Thanks for your time. All the best.
Sure.
Thank you, sir. We have our next question from the line of Mr. Neeraj, a shareholder. Please go ahead.
Hi. Just wanted to know, what is the status on putting Anti-Dumping Duty again? And last con call, I gathered that the matter is sub judice. So any update on that front, this is specific to TAN business.
Yeah. Tarun, can you take this, please?
Yeah, absolutely. So the answer is still the same. As we know in India, when the matter is sub judice, we would be lucky to have a decision in a quarter, you know, which is the time gap between two consecutive con calls like this. So the matter is still sub judice. That said, it appears that now the Ministry of Finance, which earlier had been rejecting unilaterally without assigning any reasons to a number of ADD, you know, recommendations from the DGTR, which is the Director General of Trade Remedies, you know, under the Ministry of Commerce and Industry, and this is not just for ammonium nitrate, for many products in different industries. Now, I think the message we are getting is that stand of Ministry of Finance is changing slowly, slowly.
We'll just see what happens, you know? As I said, it's hard to put a date or timeline to a matter which is in the court.
So if that stand is changing, are we expecting that something positive can happen in terms of, again, putting this anti-dumping duty? Any such feedback or feelings you have from the government side?
At this stage, no. It is just a very recent, you know, you know, information we received that, now probably things are looking better. Not sure whether it is for ammonium nitrate or it is for which product, but, but certainly there is a bit of a change, you know, is what we feel. Now, if we are talking of the pending matter, which is matter pending in the court, now that probably will continue to be in court, and we will have to wait till the decision comes out. If it comes to a stage that, you know, there's a case for putting in a new ADD request, then it will follow the entire process as it does, which is starting from Director General of Trade Remedies.
And then if they feel, you know, there's enough justification for a fresh anti-dumping duty, then they may, you know, develop a case, put up the case to Ministry of Finance again, and then we will have to see what happens then.
So, we are expecting any such development?
If there is a case, we will. So, I think our chairman mentioned in the initial part of this call that we have sensitized different government bodies in terms of the need to create a level playing field for the Indian producers. And there are ways to do that, through tariff barriers, through non-tariff barriers. So all those measures are being looked at, and we will toe the line depending on how the government and the various ministries guide us on this process. Oh, okay. Right. Thank you. That's it from us. Thank you.
Thank you, sir. We have our next question from the line of Tarun Dhingra, a shareholder in the company. Please go ahead. Mr. Tarun, are you there? Mr. Tarun, are you there? As we are unable to hear from Mr. Tarun, we will move on to the next question from the line of Kushal Shah, an individual investor. Please go ahead.
Hello. Am I audible?
Yes, sir.
Thanks a lot. So, my questions are on the lines of the Mining Solutions business that we have. And my first question is about the nature of contracts that we have with our customers. What are the inputs we- do we provide to our customers? I mean, do we provide some kind of promise that we will produce X tons of the material? And what kind of return do we get? Like, do we get a percentage of amount we save from the save for them? Second question is, since we have no experience in downstream, like, we do have experience producing them, but we do not have experience in mining.
So what kind of prototyping have we done in this, this area, and what kind of customer reviews we have got till now?
Yeah, Tarun, if you can take it, please.
Yeah, absolutely. Thanks. So that's a great question because it is aligned to, again, one of the comments our Chairman made right in the beginning of the call, which is, our transformation strategy for all our businesses from, you know, just selling products to solutions. And, in the technical ammonium nitrate, which is now going to become a Mining Solutions company anyway, going forward for the corporate restructuring, this is the buzzword. So what we do, and I'll try to keep it simple, the details can be quite lengthy.
What we do with the mining companies and the mine operators is that, see, effectively, there are five value streams in a typical mine, and they are starting from drilling, which is drilling holes in the rock, then blasting, which is putting the right type of explosive in the right quantities in those holes in the rock. So that's blasting. After the rock is blasted, the third value stream is lifting that rock, excavating that broken rock, so excavation. And then that excavated rock is moved somewhere. It was blasted to the place of processing or further treatment. So that's transportation, the fourth one. And the fifth one is crushing, if applicable. So drilling, blasting, excavation, transport, and crushing.
If we combine these five, you know, operations in a typical mine or an infrastructure project, then, this is what we call as the total cost of ownership of the mine operator or the quarry operator of the project operator. So what we do in the form of Mining Solutions business is we, we reach out to the mines and, and the infrastructure projects, try to do a baselining work in terms of mapping the baseline cost for each of these five value streams that I talked about, because that is drilling to crushing. Figure out, you know, where are the scope of improvements in terms of the delta, through introduction of, the right products and the right technologies, which we are in the process of developing, and that's a part of downstream, the term that we used in your question.
Then we deploy a team of people, which is another area where we are building capability. Then we actually offer, you know, put an offer on the table for the mine operator, saying, "Look, look, this is what we see it is in terms of the current cost structure, and these are the, let's say, two out of the five value streams or four of the five value streams, depending on the case, where we think we can bring a delta improvement.
And, as a result of we being able to bring that delta improvement, and if we are able to bring that delta improvement, we would like to share some of the benefit with you." So in other words, the model that, that the Mining Solutions business of Deepak is putting in the market is, we provide inputs to the mines in the form of, products, services, and solutions, which includes technology, and get paid for that. And at the same time, we guarantee certain outcomes as a result of the inputs that we provide. And those outcomes are agreed in the form of certain KPIs in our contract, and then we try to go for benefit sharing once we deliver those outcomes. So it's a two, two-way, you know, income stream, input and outcome based.
That's the kind of model, which we are working on, and we will continue to develop as we go along.
Sorry to interrupt you. Is this a one-time contract, or is it a long-running contract for multiple years?
So initially, you know, we were doing shorter term contracts, let's say 6 months kind of thing, because this is a new concept, a novel concept in India. No company in India is doing it, actually. So we and therefore, the consumers also wanted to see, you know, how does it actually work from their perspective. Now that, you know, we have done a number of these and now the success is there and the consumers can see it, we are now targeting long, slightly longer term contracts. When I say longer term, we will be looking at anywhere between one-two year kind of contracts to begin with.
Again, as we get more mature, the industry gets more mature, the consumers start to see even more value out of this, potentially, in the longer term, we can go for even longer term contracts.
... so unanswered part of my question is what kind of prototyping have we done, and what kind of customer reviews have been till now? And so, what roadmap do we expect? How long do we expect till we go to full scale?
So, the short answer is, the entire country is the canvas that we can, we can attack with this model because nobody in India is doing it. When I say entire country, one level down detail is, you know, all the mines in India and all the infrastructure projects in India, and there are thousands of them, as we know. So it's a huge canvas to cover. But then the point is, not every consumer is at the same level in terms of how they look at productivity improvement. So we are very conscious in terms of approaching those consumers first, who actually understand this language that we are trying to develop, and then we start to engage with them, and the results have been quite good. In saying so, we basically approach the entire market in three segments.
One is what we call as coal segment, which is a very big segment in India. So coal mines, that's coal segment for us. Then the non-coal mining segment, which is all other minerals other than coal and limestone, all put together, because they have different ways of, you know, running their mine. Their nuances are different, their requirements are different, mindset is different. And then the third segment, which we approached for this solutioning model, is the infrastructure segment, which is completely different from mining anyway. So these are the sort of customers, and we have actually covered all three types of customers, in the past, 12-18 months, with this novel idea and this novel business model. And as I said earlier, it's picking up traction as we go along.
Thanks. So if you can just mention some kind of reviews we have got. Thanks for the answer.
Thank you, sir. Ladies and gentlemen, that was last question for today, and I now hand the conference over to Mr. Deepak Rastogi, sir, for closing comments. Deepak, sir?
Thank you, everyone, for your participation. For any further queries or clarifications, please do get in touch with our investor relations team. Thank you.