Ladies and gentlemen, good day and welcome to the Deepak Fertilisers and Petrochemicals Corporation Limited Q2 FY 2026 Conference Call hosted by Emkay Global Financial Services Limited. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing Star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Veet Mohra from Emkay Global Financial Services Limited. Thank you. Over to you, sir.
Thank you. Sopnali. Good afternoon and thank you for joining us on Deepak Fertilisers and Petrochemicals Corporation Limited Q2 and H1 FY 2026 earnings conference call from the company. We have with us Mr. S.C. Mehta, Chairman and Managing Director, Mr. Subhash Anand, President and Chief Financial Officer, Mr. Tarun Sinha, President, Technical Ammonium Nitrate, and Mr. Suparas Jain , Executive Vice President, Corporate Finance. We would like to begin the call with brief opening remarks from the management following which we'll have the forum open for a Q& A session. I would now like to invite Mr. S.C. Mehta, Chairman and Managing Director, to make the initial remarks. Thank you. And over to you, sir.
Thank you. Very warm welcome to everyone for the Q2 FY 2026 earnings conference call of Deepak Fertilisers and Petrochemicals Corporation Limited. Our earnings presentation and press release are available on our website and the stock exchanges and I do hope you have had an opportunity to review them.
Now. Prima facie, Q2 results in a sense indicate a bit of tough going. Looking at the operating EBITDA margins dropping from 18% to 15%. It is essential to go a little deeper and granular to understand the true picture and the resilience the businesses have shown in the context of the global geopolitical headwinds. Now, as we consider the granular details, we do need to keep in mind the strong headwinds from Trump's tariffs that triggered sudden and chaotic repercussions in many markets and in many countries as the world slowly came to terms with these sudden changes. In some places the extended monsoons have also had multiple impacts, positive and negative, on the different sectors of India as well as Deepak Fertilisers businesses. Now, keeping the above in view, I am happy to share the positive resilience shown by our TAN business.
With almost a 29% volume growth and our crop nutrition growing at 54% resulting in an overall top line growth of 9%. Our journey from commodity to specialty or holistic solutions stayed steadfast and now contributes to almost 22% share in our H1 revenues with crop nutrition leading with crop specific and PK grades.
Taking a little larger perspective, the H1 top line grew by 13% with PAT growing by 11%. Now for the quarter, what hit us were only IPA and ammonia. Rest of the sectors I think have shown very positive growth and both IPA, ammonia, some readjustment in the global trade winds is something that we are awaiting. On the IPA front as we await the realignments, our focus on specialty, pharma grid and also other cost optimizations will continue to help us. On the ammonia front too, we have already begun seeing a market price correction while our efforts to unlock some capacity and efficiency gains are underway. Also our attractive LNG gas contract with Equinor will kick in by middle of next year to bring further positivity. The other development that happened was that we completed a full acquisition of Platinum Blasting Services, our Australian subsidiary at an attractive EBITDA multiple.
Now this is strategic in nature because it strengthens our footprint in the high potential Australian market and will also reinforce our forward integration strategy. Learnings from the best practices in Australia to be brought to India. Now DMSL is very well positioned to lead mining solutions across India to Australia. As regards our growth projects, they are progressing steadily well despite all the challenges. The TAN project at Gopalpur is almost 87% complete and the nitric acid project at Dahej has reached almost 70% completion. Both these projects are not only central to our growth and long term value creation, but as you are aware they are built on our 40 years of proven capabilities right from raw material, safety, health, environment, market, customer reach in comparison to anyone else.
As we see the rest of. The year pan out, the above normal monsoon will provide a very good foundation for the Rabi demand for our Croptek. The crop nutrition business and the mining activities also which will then support the market will also be something that we will see an upswing post the monsoons for the coal and infrastructure activities. The key aspect I was wanting to leave behind was that our transformation journey is definitely something that is on a clear strong path and is continuing on a strong manner. That is somewhere where the focus on value added products and services to our end consumers in each of our sectors is yielding better and better results. That is something that we will see pan out in a stronger way as the second half and the next year emerges.
With these broad thoughts? Let me hand you over to Subhash Anand, our CFO, who will take you through all the detailed financial performance for the quarter and H1. Subhash?
Thank you and thank you, Mr. Mehta. Good afternoon ladies and gentlemen. Thank you for joining us today for Deepak Fertilisers and Petrochemicals Corporation Limited Q2 FY 2026 earnings call. We are pleased to share another quarter of resilient performance underscoring the strength of our diversified business model and disciplined execution. Our strategic priorities focused on specialty product, customer engagement, and operational agility are translating into tangible outcomes across segments. We continue to reinforce our balance sheet and maintain sharp operational control, laying a strong foundation for sustainable growth. Let me walk you through the key financials and operational highlights. On the operating revenue front, Q2 stood at INR 3,006 crore reflecting a healthy 9% Y-o-Y growth. This was driven by strong contribution from our specialty product portfolio in the crop nutrition business, which now accounts for 28% of segment revenue, up from 22% the previous year.
The B2C segment of our TAN business also gained momentum, contributing 14% to total revenue. For actual FY 2026, operating revenue grew at 13% Y-o-Y to INR 5,665 crore. On the EBITDA front, the quarter stood at INR 464 crore. On a half yearly basis, EBITDA grew 2% Y-o-Y to INR 977 crore. The largest segment continued its strong trajectory, delivering a robust 36% Y-o-Y growth, while TAN maintained its momentum. The chemical segment was impacted by subdued performance in IPA and ammonia, resulting in the chemical segment showing a 21% Y-o-Y decline. On the net profit front, Q2 remains stable at INR 214 crore, margin of 7.1%. For H1, net profit rose 11% Y-o-Y to INR 458 crore on a growth project. As Mr. Mehta highlighted, the TAN project in Gopalpur has reached 87% completion, while the nitric acid project in Dahej is at 70%.
Both projects are on track for commissioning towards end of Q4 FY 2026 with focus executions to ensure timely delivery. On cash flow and leverage front, in H1 we generated INR 782 crore cash from operations despite a CapEx outlay of INR 870 crore. Net borrowing increased only marginal to INR 3,402 crore. Our net debt to EBITDA stands at healthy 1.74x supported by improved operational performance and capital infusion through CCD. Net debt to equity was at 0.48x as of September 2025. I am pleased to inform that we have completed the full acquisition of Platinum Blasting Services at an attractive valuation of 6.7x EBITDA with an enterprise value of INR 537 crore. This strategic move strengthens our mining solutions footprint across Australia and India, enhancing forward integration and long-term value creation. Let me now take you through the performance of our key business segments.
In Crop Nutrition business, this segment delivered another strong quarter. The manufactured bulk fertilizers sales stood at 1.85 LNT, down 31% Y-o-Y due to limited availability of key raw material. However, this was well compensated by trading bulk volume what we were able to import and sell. Our flagship specialty product Croptek recorded a remarkable 54% Y-o-Y growth, reflecting strong market acceptance and increasing farmer adoptions. On outlook front, with a favorable monsoon, rising adoptions of Croptek and Solutek, also a focused marketing approach, we anticipate robust demand for Mahadhan products and strong Rabi 2025 season. In our mining chemical TAN business, the business continued to sustain its strong momentum. TAN sales volume grew 29% Y-o-Y to 137 kt with full capacity utilization.
The export quota which was announced in June 2025 to 50,000 metric ton a year now start showing into the results and our export now started reflecting increasing trend in terms of volume in export market. Elden volume stood at 18 kt, down 3% Y-o-Y due to monsoon related disruptions in mining activity. Our B2C business grew 33% Y-o-Y supported by deeper market penetration and product diversification. On outlook front, we expect a strong post monsoon recovery in this demand driven by increased mining and infrastructure activity. Our focus remains on expanding export, enhancing direct sales and delivering value through reliable supply, product flexibility and tailored solutions for the mining sector. In the industrial chemical segment, nitric acid volume remains steady at 70 kt supported by stable plant operations and consistent demand across key sectors.
IPA volume were flat Y-o-Y at 17 kt but impacted by a sharp decline in acetone and IPA prices. The segment continued to face margin pressures due to global oversupply, a steep drop in acetone prices. Additionally, a surge in U.S. import following anti-dumping duty on China has intensified competitive pressures in the domestic market. Our specialty product portfolio continue to gain traction. PICKBRITE is showing promising result in ongoing ash pickling trials with stainless steel customer while Cororid has expanded its presence to over 250 hospitals across 16 states. On outlook front, while the near term environment for IPA remains challenging, we are encouraged by early sign of price stabilization driven by global trade realignment and sanctions. We are actively pursuing opportunities in pharma grade export and technical grade applications along with cost optimization activities to enhance competitiveness and margin recovery.
Nitric acid prices expected to remain stable influenced by increased import. Our strategic focus on market segment and customer-centric innovation continue to support resilience in this segment. On ammonia front, the segment experienced a challenging quarter impacted by global price volatility and operational constraint. The FOB Middle East ammonia prices average around $300 per metric ton, significantly lower below the last year level resulting in a material revenue and EBITDA impact. Higher natural gas consumptions due to startup and shutdown cycle. Lower incentive income due to GST rate cut along with elevated natural gas rates further weigh on the margin in this quarter. On an outlook front, ammonia prices have rebounded above $400 already. A plant shutdown in Q4 is expected to enhance capacity while the NG saving from infrastructure upgrade. Ongoing advocacy to strengthen incentive scheme and secure Equinor natural gas supply.
We are well positioned for a robust turnaround in the coming quarters. In conclusion, our performance this quarter reflects the strength of our diversified portfolio and the disciplined execution of our strategic roadmap. Each business segment is aligned with India's broader growth drivers: agriculture, infrastructure, mining, and healthcare, positioning us to deliver both near-term results and long-term value. We remain committed to operational excellence, capital discipline, and stakeholder value creation. Thank you once again for your continued support. Now I welcome your questions.
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 the Touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Bhavya Shah, an individual investor. Please go ahead.
Hi. Thanks for the opportunity. My first question is regarding the TAN business. In recent months international TAN prices seem t o have gone up by 20%. Have domestic TAN prices moved up as well? Right. Reason for spike in international TAN prices?
Your second part of the question is not clear. Can you just repeat it?
I wanted to confirm that. Have domestic TAN prices moved as well? Any specific reason for [audio distortion] spike in international TAN prices?
Yeah, this is-- We've had some challenges in understanding your question.
Sorry to interrupt in between. Sir, Mr. Bhavya, can you please come closer to your handset and then speak as your voice was not audible? No sir, you are not audible. Hello, Mr. Bhavya Shah, can you please repeat your question again? [audio distortion] I'm so sorry, sir. Your voice is not audible. I would request you to rejoin the queue. Again, the next question is from the line of Shubham from Asif Koticha Family Office . Please go ahead.
Hello, can you hear me?
Yes, we can hear you.
Can you please elaborate more on the IPA market?
Hello, we only hear first sentence on IPA market, nothing more than that.
What is the situation right now? [audio distortion]
I'm so sorry to interrupt in between. Mr. Shubham, can you please come closer to the handset and then speak. [audio distortion]
No, that's fine. We understood the question on IPA market. Now a couple of things which are, which is I say in progress when it comes to IPA market. One, there are few sanctions that happened. Can. -- Okay. There are few sanctions which has happened that has resulted in some form of prices of IPA in the domestic market. Second thing, a lot of this IPA disturbance is actually led by tariff which U.S. or Trump has announced and a lot of supply because of those tariff and anti dumping on China, the U.S. market has started supplying it back in India. That's where a lot of import of IPA has started coming to India from U.S.. Now with tariffs with China getting settled, U.S. China and U.S. India getting settled, things will expect it to go back to normal level and we expect again back to normalcy now. Yes, it may take a couple of months, definitely it will not happen immediately in this quarter. There are early signs of things going back to normalcy and we expect IPA to be back in business in coming quarters.
Second question is that we are doing so. We are expecting commissioning in Q4, FY 2026. How much, how much capacity utilization are we expecting for FY 2027 and FY 2028?
Yeah, normally the way we expect FY 2027 we expect around 70% capacity utilization and FY 2028 will be 80% plus and after that it will be a normal capacity utilization.
Okay. Thank you.
Thank you.
Thank you. The next question is from the line of Viraj Mahadevia from Manicure . Please go ahead.
Hi. Congratulations to the management team for staying on course. Quick question is with the lower gas integration into the manufacturing next year, how much do we expect gross margins to expand by in FY 2027?
Okay. Basically with our new LNG contract which will be effective from all the supply will start from May 26th onward. We expect the gas prices will come down. Now in terms of margin expansions, let's wait for some more time. We've still not gone and then communicated, but the cost saving is material in nature. It's not a small saving what we're expecting. If everything remains same where our gas prices are today, we expect significant reduction in our gas prices, basket gas prices to happen because of new contract, and that will bring down our breakeven EBITDA level for ammonia much lower. We expect this will be a significant impact in our turnaround of ammonia business in the coming year, apart from increase in ammonia prices for which early signs are already there.
Understood. Once this Capex underway is completed, is there any other Capex planned? Will cash flows from FY 2027 be used to delever the balance sheet?
At this point of time we are reaching in fact the current stage of CapEx cycle we started few years back now we are reaching towards completion of that CapEx cycle. Immediate if you ask me do we have something functions in light? No, nothing immediately. So there will be some cooling period, that's what we expect in terms of next CapEx cycle to kick in any good, but we are open any good opportunity if it makes business case we look into that.
Understood. The absence of incremental capex or any suitable acquisition, the cash flows will be used for debt pay down?
Yes. If there's nothing else then definitely this will deleverage our balance sheet more and more.
Okay, great. Thank you. All the best.
Yeah. Thank you.
Thank you. The next question is from the line of Arman from Blue Sky Fintech. Please go ahead.
Yeah. Am I audible?
Yes.
Yeah. First of all, congratulations on different set of numbers despite this volatility. My question is just on a broader perspective as we have been hearing that India and China getting along with talks of importing fertilizers. Also, on a broader contour with Russia, we are talking with import of fertilizers. How the overall broader scenario you are seeing for our company if the stocks go through, what kind of outlook you have, impact you could estimate of this meeting is going through.
Okay, now in fact the way we operate, our entire focus is on value add product when it comes to fertilizers. We are not in need to fertilizers in this market. Whether it's a Croptech business, which is a crop focus fertilizers, or water soluble business, or even the SmartTech, which is also not pure pure NPK. It's a nutrient coated NPK fertilizer. We don't have a fertilizers which is readily comparable in the market compared to other products which are available. We are creating our own niche space and making our journey, which is slightly more, I say, customized or bespoke for our kind of a portfolio, and this journey started not last year, a few, but we are on this track from last few years. It started now showing into the results and started reflecting into our bottom line.
What you are seeing in our crop nutrition business portfolio is actually the result of hard work or the product differentiation strategy which we started, as the Chairman says, from commodity to specialty. This is a journey which we started a few years back, started resulting into results. We will continue with that strategy, bringing more and more value-added products for the Indian market, for farmers, and creating our own space.
Just a follow up because few years back, some years back we had an issue with ammonia. Right? When Russia in COVID. I guess when Russia dumped in India. Now what's the cost, cost level, cost competitive level of producing what we are producing and what is being produced in Russia.
Okay. In fact I'll just pass on to Tarun. This is basically what the competition from Russia is, more on ammonium nitrate that's TAN business, Afghan, what we call it, that's what gets imported from Russia, which competes with our TAN business in India. Tarun, you want to start -- [audio distortion]
Yes. Largely as--
Because in COVID time we had a large impact. What is the reality now?
Absolutely. As Subhash mentioned, the only business in our group which does get impacted through material coming from Russia is the DMSL business, the mining solutions business. Because Russia exports ammonium nitrate into India and that has been a little bit controlled over the last six months or so of this financial year. Hopefully that will remain so because now government of India is slowly starting to realize that all the additional capacities of domestic capacities of ammonium nitrate that are coming up in a very short span of time from now will actually make India self-reliant in terms of its ammonium nitrate needs over the years to come. Therefore there is no need to import. Why waste foreign exchange reserves on a product which is in sufficiency in the country itself.
That good sense slowly, slowly is seeping in in the minds of the various ministries and hopefully over a period of time we will see further slowdown of modern united imports in India.
Just to add to what Tarun says, last few quarters or few years if we say okay, there was a time when Russia-Ukraine was started and all of a sudden there was a disturbance. After that, things stabilize. It's not Russia import is zero. No, we are still having an import from Russia, but the price war or a price disturbance is not happening. Things are normalized and business is going where everybody now is settled down in terms of the margin expectancy and the way things are happening.
Okay, got iy. Thanks a lot. Thanks. That's also my side.
Okay, thank you.
Thank you. The next question is from the line of Adarsh Jain , an individual investor. Please go ahead.
Thank you. My question is on ammonia plant. I think some shutdown is planned in Q4. So how much capacity can be, I mean can be increased for this plant in Q4?
Okay. We are expecting around 10% increase in capacity in this shutdown.
Okay. How long would this shutdown persist?
It will be a few weeks shutdown. Definitely Q4 we have planned for that. With that, it will bring capacity expansion and some efficiency or some of the efficiency things, which actions which we kept pending, will get completed during that shutdown. We will have far more efficient plant after that.
Okay, so 10% we are actually expecting the capability to be increased. Okay. Correct. Yeah. Another question is TAN export quota. How much we have exported till now on the quota? 50 metric ton.
So Tarun again here. Thanks for the question. The export quota was removed only in the month of June, which means Q1 was from an exports point of view. We started to, and this was after a long gap of a couple of years as one would imagine. If any company or any business is out of the international market for a number of years, certainly to get back to the market, international market, it takes time. We have made some good progress in Q3 and we have exported reasonable quantities as we used to do in the past and sorry, in Q2, I should say July of the September quarter.
We are very hopeful that in Q3 it will be a higher volume compared to Q2 as well as far as export goes.
We will be able to exhaust the quota by Q3 or it will take Q4 also.
See, if it was only to meet the volumes to satisfy the quota requirements, that is not a problem. As a responsible company, what we have to keep in mind is that, you know, as long as it makes financial sense to export compared to, you know, what we can generate in the domestic market, then so be it. It is always that balanced decision we make. How much to export and how much not to export. Also keeping in mind is one of the answers I gave earlier.
We have given commitment to Government of India that we are going to make India self-reliant for its ammonium nitrate demands. Obviously, domestic market is the first priority for us. Only if there is surplus left and if it can be, you know, sent out at a reasonable, you know, financial number, then we take those decisions as we go by. It is hard to say how many tons we will export at this stage.
No thanks, Tarun. I'll just add into that. Currently we are in short supply of TAN. In fact, whatever we produce, everything is getting sold in the domestic market. We don't have excess capacity available to supply anywhere else. Export quota and export market is important for us for the newer capacity which is getting added. That's what a lot of market development activity is happening currently to ensure we have that market available by the time we add up to the new capacities.
As was mentioned, one of the questions in Q2, we operated at 100% anyway, correct. [crosstalk]
Like that. TAN is operating at 100% capacity. We do not have anything left for any market we are doing -- [crosstalk]
Remember we used to. Actually we used to run the plant at 110% or 108% capacity, I think.
Okay, that's not always possible to run it. 110%, 105%, I call it that matter. Even in monsoon time, that's the time when TAN business is not its peak time. Always business slows down during monsoon. Always. Even in that period, if you're running 100%, naturally you can see the demand in domestic market.
Do we get any additional margin if we export TAN for the margin sale?
That's what we continue to explore. It's a margin maximization decision which we dynamically keep taking. Wherever we find better opportunity, we'll take that market in on priority.
Okay, and last question is about the collaboration which we had done with [audio distortion] What are the updates on that front?
No, that's an ongoing, in fact, collaboration with them. We continue to see what are the products which we can bring from their portfolio and introduce into India. We take their help on some of the product development activities in India. It is a long-term collaboration which we have entered with them and we are looking at market development in collaboration with them.
Okay, thank you. Thank you very much.
Thank you.
Thank you. A reminder to all the participants, you may press star and one to ask a question. The next question is from the line of Bhavya Shah, an individual investor. Please go ahead.
Hello. Yeah, thanks for the opportunity. Can you hear me?
Yes, now we can hear you.
Okay. So my first question is regarding the TAN business. In recent months international TAN prices seem to have moved up by 20%. Have domestic TAN prices moved up as well? Any specific reason for spike in international TAN prices?
Okay, yeah, Tarun .
Thank you for the question. I was looking at in front of me. Actually it is particular data and as I mentioned in one of the answers earlier that most of the ammonium nitrate coming into India from Russia which means the index that applies in our case is the Baltic Afghan index. If one were to look at the index price, I am looking at it now as we speak. When we started Q2 in the month of July, the average verticon index for Baltic FOB was $313 in July. Come September, end of the quarter, it became $275. It has gone down. It has not gone up. That is the first thing. Come October, because we are now sitting in November, it has gone down further to $246. Therefore, it is contrary to what probably you have as an information.
In other words, the international prices that apply to the Indian situation have gone down consistently, and yet we have been able to maintain our margins.
Okay, understood. Okay. My second question is regarding the upcoming TAN and nitric acid CapEx. We estimate to spend around INR 4,650 crore i n CapEx put together. However, our CWIP till now has b een around INR 2,200 crore. Both the CapEx being around six months away from commissioning maximum. Like why is there a gap between? CWIP and the total capEx? Can you explain this gap?
It's a phasing of payment. Payment doesn't happen immediately the moment things happen. It's in plan that way. We expect capex to get staggered even after commissioning. Certain payments remain as a performance guarantee of performance commitment, and that still remain on hold for some time even after operation gets started. I not say we will be spending everything at the time of COD. No, it's a phased spending happen and that's that as per plan.
On a cash flow basis how much do we plan to spend in FY 2026 and FY 2027, and what do you estimate to be the peak debt?
Okay. No, in fact we. This. This is something we always opened and shared with the street. Our peak debt to go up to INR 4,000 crore. That. That's what we expect towards end of this year. So you can see majority of the CapEx will get spent towards end of this year. Some 10%-15% will remain pending on hold which will be paid after certain amount of time after operations get smooth.
Okay. Understood. Thank you.
Thank you. The next question is from the line of Ranjit from IIFL Capital. Please go ahead.
Yeah, hi sir. Thanks for the opportunity. My question is on the ammonia plant. We had these state incentives that kind of an assured payback on this particular investment. Now with the GST rate being cut, how are we viewing this? We should also have one view on the returns on this particular plant.
No, Ranjit, that's right. GST rate cut has impacted the incentives which we were getting on this plant. With the revised rate, the incentive is much lower compared to what it used to be earlier. In fact, the reports, the number has been computed and everybody knows that number. Only thing, what we intend to do definitely, we are now seeing how can we do more cost efficiency, bring in things which make us more efficient internally. That is where the Q4 shutdown becomes important for us. A lot of activity we are completing in that will help us to make us more efficient in terms of consumption of gas. Naturally, the gas prices with Equinor coming in will help.
Ammonia prices are getting firmer because the last quarter ammonia prices are almost at the lower, lowest of many, many quarters. Once those started going up, we do see things coming back to normal and we should start making money in PCL. Other thing which is important because we do see when we made the investment we expected this investment will be paid back at an ultra mega plant. So. We are representing government and seeing we should not be penalized by GST rate cut. Government should support us, paying us back or incentivize, continuing incentivize in some way or the other to support this investment. That is a standby activity. We are not banking on that, we are ensuring our internal actions make us efficient to make money in this front.
I believe that this would be an industry wide issue. Whoever would have set up based on these things. What is the initial feedback that you have got from the government if you can share anything?
Nothing so far. In fact we are talking in the industry at this point of time. There will be representations. Too early to say, share these things, takes time. It is finally going back to the bodies and taking it up. Things take time in this slide.
Sure sir. Thank you. Second question is we have shared that we are again reinitiating exports in TAN. Any specific geographies that you are looking to tap?
Yeah, usually you know the geographies of interest to us would be where we will be cost competitive in terms of ocean freight. That would mean South Asia, Southeast Asia, and Middle East, definitely. With a bit of a stretch going up to East Africa and with a bit of a further stretch going up to West Africa on one side of the map, and then with a bit of a stretch on the other side of the map which we target once our new plant at Gopalpur starts to operate. That would be markets like Australia.
Sure sir, thank you very much.
Yeah, thank you.
Thank you. The next question is from the line of Shubham Dasmana from Asif Koticha Family Office. Please go ahead.
Sir. On the TAN side of our business, how much revenue comes from top two and top five customers?
Sorry, your voice is not clear.
Sir, on the TAN. How much revenue comes from top five or top two customers?
We could only hear TAN side of the business revenue, and then after that nothing.
Sir, how much revenue comes from? [audio distortion]
Can you pick up a handset? Can you pick up the answer to your wife as a echo? Actually it's not clear sir.
How much? [audio distortion]
The line for Mr. Shubham has been disconnected. We will move on to the next participant. The next question is from the line of Ritesh Bhagwati from Alpha Plus Capital. Please go ahead.
Thanks for taking my question. So I basically just wanted to understand, you know, what is the peak asset turn we can expect from these two plants that are expected to get commissioned and by when can we reach that peak utilization? Is it FY 2028 or FY 2029? And lastly like what kind of ROCEs do we see?
Okay. The three year is the normal time when we expect these plants to reach to normal capacity utilization. So 2027, 2028 and then 2029. That's what we expect. FY 2029 is the year when things will be realized in terms of capacities for us. Asset turn for this business is roughly around 0.5, 0.6. This is what we see an asset turn. This is normal for this industry and similar. We'll see for this also. ROCE is normal. We are expecting 20% plus. This is what we expect in this for the new project and it should deliver.
This asset turn you mentioned is for both the plants.
Yeah.
Fair enough. Thanks a lot. That's a domain.
Thank you. A reminder to all the participants, you may press star and one to ask a question. The next follow up question is from the line of Armaan from Blue Sky Fintech. Please go ahead.
Yes, I just want to have an understanding of our margin which we told before. It will be in overall in 18%-20% range. Are we still sticking for the overall year? That margin will be 18%-20%. Also for FY 2027, any broad estimation for our kind of revenue growth or margins we could see.
Okay. For FY 2026 we expect our margins to go back to a normal range definitely. That is some expectations and we are confident we should be able to go back. For FY 2027, I said too early for us to give you estimate. Things in terms of new capacities available and expected utilization we already spoke about, so broadly on those lines. Along with the improvement of PCL business, we definitely see FY 2027 to be a stepping stone here for us.
Thanks. Thanks a lot.
Thank you. The next question is from the line of Yash Gupta from Asif Kotecha Family Office. Please go ahead.
Yeah, hi. Good afternoon everyone. My question is on what's our t otal dependency on the top two or top five customer? What's revenue percentage we received from them?
It's not, I'll not say. We have a very high concentration in terms of business. Each business is separate, I call it. There's no point looking at broad version saying top two or top five. It's a diversified portfolio for each business and we are spread across.
Okay. The second question we have talked. About in the previous quarter about the value addition, value added product. What's your thought now, how much we are working on it, and what's the progress now?
We continue to work on that. In fact, if you hear the commentary, we are very clearly saying the B2C segment which is reaching directly to customer in our TAN business contributes almost around 14% of revenue. In our fertilizer business, the specialty product portfolio which is Croptek plus this contributes almost 35% of the revenue. That journey continues and now we started publishing. Every quarter that number gets published.
Okay, sir, thank you.
Thank you. The next question is from the line of Nupur Gandhi from Siddhi Technologies Ltd. Please go ahead.
Hello. Hello. Am I audible?
Yes, we can hear you.
Yeah, so I just wanted to understand the pricing of ammonia. You said it was averaging around $300 per metric ton as mentioned in the PPT. As of now, what is the pricing like right now? Currently ongoing.
it's $400 plus Middle East FOB.
Okay, sir. Thank you .
Welcome.
Thank you. The next question is from the line of Shail Kumar Shah from Samiksha Capital. Please go ahead.
Yeah, hi. Am I audible?
Yes, we can hear you.
I'm just looking at your console cash flow and there is a spike in inventories and other assets. If you can explain that.
Inventory, basically quarter two being season to build the inventory. This is normal, happens as in every quarter. Especially our two businesses, one is TAN business because of monsoon, we build the inventory for next quarter. Also for our CNB business, inventory gets built up. It is broadly impact of that.
Okay. Ammonia, on ammonia prices, what is driving the ammonia prices? Now, and do you think they are sustainable.
Ammonia prices? In fact, if somebody looking 10-year average, it remain $450 up higher. So $300 was abnormality, I call it. That's not the normal. Somebody should look in. So it's getting back to the right scenario, and that's how it should be.
Okay. How much volume did we lose? ` Sorry.
Sorry.
Yeah. How much volume, how much volume on the fertilizer side on manufacturing did we lose because of shutdown?
We have not taken a shutdown. We are expected to take shutdown in quarter four.
Our manufacturing volume was down right year-on-year .
In which segment you're talking?
F ertilizer.
In fertilizer, right?
Yeah.
No, that was down because we have one of the raw material was in short supply. So we could not take a production of fertilizers for some of the, some of the grade fertilizers could not come under production. So instead of producing we are gone with the trading option.
Okay. So I mean can you help us with the details which now material and what's the status now?
No, that's normalized now. We have coverage for this quarter and coming quarter. We don't see that shortage to hit us in this quarter or in the next quarter.
Okay. What impact do we see because o f the expected shutdown.
That is quarter four ammonia shutdown, not fertilizer shutdown. That will not impact any of the business because we'll then utilize that.
Understood. Thank you. Thank you so much.
Thank you. The next question is from the line of Ishan Daga from the investor. Please go ahead. Ishan, please proceed with the question.
Am I audible?
Yes, we can hear you.
Yeah. Thanks for the opportunity. I just have one query on the margins front. How much is the margin differential between the specialty products and normal products? What is the differential between the B2C i n TAN and B2B in TAN?
It's a material difference. We normally don't give a differentiated margins portfolio that way. If we are looking at general trend, definitely the specialty product and the B2C product, that gives us a differentiated margin. That's one of the margin expansion initiatives which we have. More focus and more growth on this will help us to expand margin portfolio, and that will continue.
What are the kind of targets. Internally we have set in, say, three y ears time frame and how they will b e accretive to the margins?
It is. -- we won't give you that, I said, color of that, farmers, but definitely this is the focus area, strategic area for us, and we'll continue to work on converting more and our portfolio more and more towards specialty in fertilizers. If you see last few quarters, the way we are moving. Our Croptek and specialty product portfolio growth will continue to be, and it will be material growth. The focus is to move more and more portfolio towards that. The B2C also, more and more, our entire TCO journey and downstream discussion is to go in that path and change the portfolio and go more towards B2C, so this journey is on. What number it will finally will be, I'll hold on for some time, and maybe at the right time we can have that discussion. Focus is to more and more business towards specialty and value added product.
Okay sir, thank you. Much helpful sir. Thanks.
Thank y ou. Yes. I think we can close down now. Thanks everyone for taking out time and making it happen. Thanks for your continued support and I wish all of you best of health and good time. Thank you. Thanks again. See you again next quarter.
Thank you on behalf of Emkay Global Financial Services Limited. That concludes this conference. Thank you for joining us today and you may now disconnect your lines.