Ladies and gentlemen, good day and welcome to the Q4 FY 2026 financial results conference call of Deepak Fertilisers hosted by IIFL Capital Services. 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 this conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Aakash Maji from IIFL Capital Services. Thank you, and over to you, sir.
Thank you. Good evening, everyone, and thank you for joining us on the Deepak Fertilisers Q4 and FY 2026 earnings conference call. Today, we have with us Mr. Sailesh C. Mehta, Chairman and Managing Director of the company, 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 will begin the call with opening remarks from the management team, followed by an interactive Q&A session. To begin, Mr. Sailesh Mehta will share views on the operating performance and the growth plans of the company, followed by Mr. Subhash Anand, who shall take us through the financial performance. I now invite Mr. Mehta to share his opening comments. Thank you, and over to you, sir.
Thank you. Is my voice clear?
Yes, sir.
Okay. Thank you. A very warm welcome, rather a hot welcome with this peak of summer to everyone, and thank you for joining us today. Our earnings presentation and press release were available on the stock exchanges and our website. I do hope you have had an opportunity to review them. As usual, what I will do is share some undercurrents and insights. Of course, the detailed financial analysis would be shared by Subhash and the team. Of course, they are available for all question answers also. As we saw Q4 pan out, we also like companies in India and globally had to operate in a very challenging environment, thanks to Mr. Trump.
We saw a sudden impact emerging from sudden shortage of LPG, and the refineries were also pushed hard to not reduce the supplies of LPG, and that impacted an LPG cut, which is propylene, which supports our IPA business. We also saw LNG cuts that impacted our fertilizer and chemical businesses because LNG vessels got stuck as you're all aware. Fertilizer prices went shooting through the roof, and we saw an inadequate and delayed subsidy coverage from the government. Somewhere we saw even skilled labor for our projects impacted by LPG shortage for cooking, besides a lot of them vanishing due to the West Bengal and other state elections. We also saw China bringing an export ban on some of the critical products. Conversely, we also saw India bringing in a ban on exports of ammonium nitrate. Now, considering these multiple challenges, I think we have navigated fairly well.
As we see things panning out now and the positive trends continuing over Q1, we are now seeing that there has been some respite we have got thanks to the Petroleum Ministry providing us some help to source LPG propylene. We are still having some challenges because they have indicated refineries which are far away from us. The landed costs are higher, but that is something we are navigating. On the LNG front, while there has been an improvement on the gas front, I am really happy to share that our maiden cargo from our 15-year contract arrived just a few weeks back.
Frankly, I might share that any relationship and such long-term relationship is truly tested during a crisis, and I am truly happy and grateful to share that our Norwegian suppliers bent backwards to ensure that the LNG supplies don't get impacted, thanks to the war holdbacks and all. Also, while Q4 saw a longish plant shutdown for our ammonia plant to also bring in some efficiencies and capacity improvements, and that brought in an impact of around INR 70 crores in Q4. As we speak today, the plant is performing very well and we are seeing not only an improvement in capacity but also efficiencies. As we see now, we are seeing the real benefits emerging of our value chain, that is LNG to ammonia to the complete downstream that is now gradually coming alive.
As far as our crop nutrition business goes, we did try to push for even higher premiums so that some of these higher costs could be passed on. Somewhere the subsidy support was not adequate to bridge this runaway raw material price hike. Also, as the government held the fertilizer prices, the urea and DAP prices to the farmers in view of the state elections, it put a little lid on how much premium we could charge on our NPKs. The quantum of premiums gives a very strong validation to us that the enriched specialty smart fertilizers that we have brought in have truly crossed the mindset of price boundaries in view of the superior value proposition that they give in terms of better yields and better quality produce.
I might also share that while we do hear about the El Niño impact likely to pull down the rains somewhat, we are still tracking for granular details and reports. Broadly, we have gathered that the impact could possibly be lesser in our crop geographies, but we'll need to wait and see the granular weather reports to come up. While the project execution is going strong, we do have a little time realignment due to severe shortage of skilled contract manpower, which we face with various states going in for elections, and suddenly there's a severe shortage with West Bengal, Tamil Nadu, and other elections. Also some impact that emerged because of lack of cooking LPG. Now we are again bounced back to full-fledged, full steam working.
On the other side, we completed the acquisition of an explosive unit and are now moving forward on our planned strategy from product to holistic solutions for our TAN and mining business. As we see the Gopalpur TAN facilities, we will be uniquely placed as we come into production because our TAN facilities will be based on stable and consistently available produced or imported ammonia and not based on constraints of government surplus ammonia policies for urea ammonia plants. Our Gopalpur facilities are advantageously placed in the midst of the key mining geographies in the east, and that way would enjoy good freight advantages.
I'm sorry to interrupt, sir. Your voice is not clear now.
Is it better now?
No. No, sir.
Speaking from the handset.
Okay, sir, please go ahead.
Yeah. Our Gopalpur facilities are advantageously based in the midst of the key mining geographies in the east.
I'm sorry to interrupt, sir. Your voice is not clear. I'll just call you back. Okay.
Okay.
Let me call you back. Thank you.
Yeah.
Ladies and gentlemen, please stay connected while I call back the management. Thank you. Ladies and gentlemen, the management has now been connected. Please go ahead, sir.
Okay. My voice is clear, right?
Yes, sir.
As I was saying, as far as Gopalpur goes, that our TAN facilities at Gopalpur are going to be based on stable and consistently available produced or imported ammonia and not based on the constraints of the government surplus ammonia policy for urea ammonia plants. Our Gopalpur facilities are advantageously placed in the midst of the key mining geographies in the east and would that way enjoy good freight advantages. Having TAN facility in the west and east will give our customers a strong risk mitigated supply consistency while allowing us to supply from the best freight economic zone. The other is having nine nitric acid plants, four ammonium nitrate plants, global best technologies and 45 years of customer relationships. These strengths obviously can't be easily replicated.
Lastly, with our unique porous prills, the mining knowledge base, BMD for the last mile connectivity to the mines, we will enjoy unique selling propositions for the premium segments of the market. All in all, as I see it, we are finding very strong validation on our strategies of number one, the investments we have made in the value chain. Now it will pan out very clearly right from the 15-year LNG contract, the world-class ammonia plant, the downstream capacities that we have added in terms of fertilizer, acids, ammonium nitrate. Last but not the least, the very strong strategic drive that we have brought in from commodity to holistic solutions. All of these we are going to see unfolding in the next year, obviously supported with the larger tonnages coming out of the two projects.
This is broadly the way we see things panning out. I now would invite Subhash to share with you the financials and the logics and of course help you on all clarifications and questions. Subhash?
Thank you, Mr. Mehta, and good afternoon, everyone. Let me take you through the financial performance and highlight the key drivers across businesses. At the consolidated level, we delivered revenue growth of around 12% for the full year with revenue at INR 11,506 crore. For the quarter, revenues stood at INR 3,011 crore, reflecting continued volume-led growth in mining chemical and crop nutrition, along with a sequential recovery in industrial chemical. On profitability, our full year EBITDA stood at INR 1,684 crore while Q4 EBITDA came at INR 354 crore.
If I step back and look at the full year picture, it was a story of two halves. In the first half, we saw a strong performance across businesses, supported by relatively favorable pricing and operating conditions. However, the second half was more subdued. This was largely due to sharp increase in input cost in fertilizer business, particularly phos acid and sulfur.
The pass-through to customer and the corresponding subsidy support lagged the cost escalation. At the same time, we also saw pricing pressure in chemical segment, especially in IPA, which further weigh on margin during the second half. It is also important to note that Q4 includes the impact of planned ammonia shutdown with a one-off effect of around INR 75 crore. Adjusting to this, the underlying operating trend is more stable, and we are beginning to see early sign of sequential movement. At the PAT level, full year profits stood at INR 739 crore. After adjusting the one-time tax credit in previous year, the decline is around 18%, largely driven by margin compression, partly offset by lower finance cost. Let me now briefly touch upon the performance across businesses. In mining chemical, the business delivered a strong recovery during a quarter after a softer Q3.
Volumes were up 12% year-over-year basis and 27% sequentially, with a full year growth of around 11%. The B2C segment continues to scale well, now contributes around 16% of the revenue compared to 13% last year. This is an important structural shift, improving both realization and customer engagement and will remain a key driver going forward. In industrial chemical, performance remained mixed, but with improving trend, nitric acid volume shows healthy growth during the year, while IPA performance were impacted by weak price and lately constraint in RGP availability, which continues to limit volumes. Now we are seeing an early sign of recovery in both TAN and industrial chemical segment with improving spread supported by tighter global supply conditions and lower import. In crop nutrition, the quarter was challenging.
The business impacted by lower farm gate prices, elevated channel inventory and sharp increase in input cost. Importantly, there was also a lag in subsidy realignment, which affected margins during the period. Despite this, Croptek delivered resilient performance and the overall product mix continued to improve. Specialty and Croptek now contributes around 33% of segment revenue, up from 30% previous year, which is a very important structural lever for improving margins over time. On the balance sheet, CapEx during the year around INR 1,569 crore as we move closer to the completion of our key growth project. As a result, the net debt stood at INR 4,824 crore and net debt to EBITDA is around 2.86x. This reflects the final phase of our investment cycle and is aligned with the capacity creation underway. On a project progress, both our key projects are now in advanced stage.
Gopalpur TAN project is around 95% complete. The Dahej nitric acid project is around 86% complete. The cumulative CWIP on both the project is around INR 3,050 crore. If we see a total spend including GST and advances, total cumulative spend is around INR 3,800 crore. Commissioning is expected in Q2 FY27, both projects remain within the approved CapEx envelope. These assets will significantly enhance our capacity, cost competitiveness, and operating leverage going forward. Another key milestone during the period has been commencement of supply under our long-term LNG contract with Equinor, with the first shipment already received in May. This strengthens our ammonia value chain by improving supply security, cost visibility, and integration advantage, which will support margin stability across downstream businesses. We have completed the acquisition at DMSL, which strengthen our mining chemical platforms and enhance our ability to deliver integrated value-added solutions to customer.
Let me now summarize. We have delivered strong revenue growth despite operating in challenging environment. Margins were impacted by input cost inflation, pricing pressures, certain one-off factors, but we are now beginning to see clear sign of improvement. Going forward, we expect quality of earning to improve, supported by three key levers: tightening global supply conditions, which are helping to improve spreads, better cost visibility, and stability from our long-term gas arrangement. A stronger business mix with higher contribution from specialty product and B2C segment. In addition, the ramp-up of new capacities in the coming quarters will provide further support to growth and operating leverage. Overall, with these levers coming into play, we are confident of progressively stronger performance in the coming period. Thank you. We would now be happy to take your questions.
Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Our first question comes from the line of Rohit Sinha with Sunidhi Securities. Please go ahead.
Hello. Yeah, thank you for taking my question, sir. First question is on the TAN volume side. This quarter, we did, I think, one of the highest volume on the quarterly basis. Although in last two quarters, there was some subdued numbers. Is this a new run rate for us or is there some backlog sales also in this quarter which led to higher volume?
Okay, thanks for the question. This is Tarun Sinha speaking. The reason for slightly better performance in Q4 on volume terms compared to Q3 is demand strengthening. As you know, as we get to the last quarter of the financial year in India, all the mining companies particularly have their targets of mineral production and rock production to achieve. That provides the impetus to the explosives demand, which then leads into the TAN volume. That would be the primary reason I would say for better volumes in Q4. This trend is likely to continue. Although we are getting into a soft season, as you know. We are getting into monsoon. Q2 is cyclically and seasonally weaker in terms of demand, but we don't see any long-term demand destruction for any reason.
Currently the volume what you are seeing is from our existing capacity. Once Gopalpur comes in, then definitely the new normal volume will be much higher where we are currently.
Got it. Sir, in terms of realization, if you could highlight how much benefit we have seen in this quarter, and how much is expected to be coming in the Q1, as I believe, still considering the kind of volume, revenue is slightly lower as what we have seen the kind of prices prevailing in the market.
No, let me start and then Tarun will add into this. Yes, as you can see on the international market, the prices of AN are firming up, primarily led by disturbance or distractions because of war in Russia, Ukraine. Some of the export got banned and some of the volume got, I'll say, since the import quantity in country got restricted. On top of that, AN prices started getting firmer. That is getting reflected on our realization or is visible at this point of time.
Yeah. Basically, what sort of realization would be there prevailing currently, if at all you can disclose?
No. In fact, it's a published number. I say if you're looking at AN prices, it's a published number and every month prices are going up. March AN international FOB was somewhere around INR 400 something. It has further firmed up during this quarter. Prices are firming up, although most of the time domestic prices broadly go in line with international prices, but correlation is not always one-on-one, but broadly trend remains similar, I call it.
Got it. Secondly, sir, on the Equinor supply side, as we have received the shipment, so just wanted to understand that how long we are secured in terms of natural gas supply from this shipment?
Now we are fully secure. When I say fully secure, the way we have contract, we have a minimum take-and-pay contract currently with our existing local supplier. On top of that, we have got now 15 years long supply. We don't see actually any shortage of gas at this point of time. Not just for next couple of months, we have few more shipment parcel already lined up in this year. It's not the first shipment and it's not the last shipment. With a gap of few months, we are getting new parcel. We are comfortably placed in terms of gas supply is concerned.
Got it. One last question before I rejoin in the queue. From the nitric acid side, could you throw some color on specialty grade nitric acid products that we are working on and how we are progressing and what kind of opportunity we have in this?
We are working on some of the, I call it, some of the special customer grade nitric acid product. They are in early stage this point of time. Most of them in, I say, commercial trial run phase, not yet fully commercialized. In terms of contribution, very, very small. Definitely they are the one which as a team we are focused and we are trying to take it to a commercial stage and then its ramp-up can happen. Currently it's too early on those product to contribute meaningful in our overall portfolio.
Thank you. Participants, in the interest of time and fairness to others, please restrict yourselves to two questions. For any more questions, you may rejoin the queue. The next question comes from the line of Shubham Dhasmana with Asit Koticha Family Office. Please go ahead.
Good evening, sir. Am I audible?
Yes, Shubham.
Sir, for acetone or IPA prices, what are our expectations, let's say, for next six months, and what could be the driving factors for the price recovery in your opinion?
Sorry, your voice is not very clear. If you can repeat the question.
Sir, for acetone or IPA prices, what are our expectations for next six months, and what could be the driving factor for the price recovery in your opinion?
Okay. Now, if you're asking current IPA prices, it's already very high. Reason for that is the propylene is not available or the governmental restriction because of LPG shortage. The prices have moved up. Is IPA available? Limited quantity of IPA available at this point of time because of RGP limited availability.
Okay
Will the price remain elevated for some time? Yes, price will remain elevated for some time, before the situation becomes normal, and then we'll have to see what will be the normal IPA prices once things go back. Will it come back to a similar level? Unlikely, but the new normal is expected post that.
Okay. Sir, for our TAN new plant, what are the capacity utilization numbers are we expecting for the full year FY 2027?
Okay. The way things look like, and since we are in TAN business and operating across various geographies this point of time on TAN, we don't expect us will take much longer time to ramp up and reach to a, I'll say, good capacity utilization level. We expect by end of this year, we should be at least touching 90%-95% utilization. It will be a gradual upstate, but yes, we should be able to reach there.
Okay. Thank you.
The next question comes from the line of Kushal Shah, an Individual Investor. Please go ahead.
Hello, sir. Am I audible?
Yes, Kushal.
Thank you. My first question is in terms of percentage of HDAN and LDAN that we are going to produce from Gopalpur facility and our current facility, and it is in the light of the fact that we are oversupplied as far as HDAN is concerned, and also as an investor rose a question in previous quarterly call. As far as LDAN is concerned, I think we are undersupplied and please confirm that assumption.
Thank you for the question. Again, this is Tarun Sinha answering this question. One of the benefits we have across our TAN plants, whichever location you look at, is all our TAN plants are fully fungible in terms of the product mix, which means all plants, whether three production lines in Taloja, one in Srikakulam, and the new one coming up in Gopalpur, they can produce any kind of product mix in solid and liquid form. Within solid, any mix between high density and low density. This benefit is passed on to the market because we produce to market needs. It is not inward or an internal decision that this is the ratio of the products that we will produce in different plants. We are here for customers and the market needs.
We keep changing gears in terms of the product mix as and when the market needs change. That's how we look at it, that's how we plan things going forward. There is no particular number or ratio anyone can give at any point in time in terms of the product mix.
Thank you. My second question is on the lines of that we acquired an explosives manufacturer. Could you please tell the long-term strategy of the company with respect to that particular explosives manufacturer?
This acquisition, as our chairman mentioned in his opening speech also, is consistent with and a very big enabler to the transformation strategy of DMSL, which is the mining solutions, mining services entity of the group. The business model that we are evolving in DMSL is that of being able to provide the productivity improvements in the mines and the quarries and the infrastructure projects. Simple definition of productivity improvement is cost of mineral extraction, cost of rock extraction. How can we impact that? Through a solution. For that, we need full range of products under our control, and that's one of the things we achieved from this acquisition as we build upon this journey of being able to have a full range of products to take it to the mines and end users to provide those solutions.
That's the strategic fit of this acquisition in the overall transformation journey of DMSL from being a traditionally AN producer and supplier to a holistic mining solutions provider.
Thanks. That were all my questions. Thank you, management, for answering them.
Thank you. The next question comes from the line of Sheel Kumar Shah with Sameeksha Capital. Please go ahead.
Yeah. Hello, am I audible?
Yes.
Yeah. My first question is on margins. How should we look at chemical margins because of backlog integration benefits and this gas contract kicking in?
Okay. If you're looking total, I'll say segment as a chemical, then yes, the margin improvement will happen because Equinor contract do give us benefit in terms of overall input cost. However, the way we look in the business, each business is being seen separately based on IPP transfer pricing, not based on cost plus. Each business on its own will show the profitability and Equinor gas contract benefit will finally flow into our ammonia business, which is PCL. If you're looking holistically, the margin improvement is certain, and that will get reflected in our consolidated chemical portfolio.
Okay, any quantification would help if you can.
No, that's the information you'll able to see once we come up with next quarter result. Partial reflection will be visible there.
Okay. My second question is on the cash flow. Our receivables and inventory days have gone up significantly during the year. How should we look at that?
Okay. This is basically as Chairman also spoke, fertilizers business has gone soft. The Rabi season was not, I'll say, towards the end of Rabi, we have seen uneven rain and then farmers getting impacted.
Currently, the inventory is slightly higher in that trade. Channel inventory is slightly higher. That's what is leading to higher inventory as well as receivable in our fertiliser business. Now reaching to kharif season, the actual pull is going to start from next, I say anytime now, we have reached to a stage. This is a temporarily built up for our kharif season. Maybe next month or two, we'll back to normal and this elevated working capital will not be there.
Okay. If you can give us a Capex guidance for FY 2027 and possibly FY 2028.
FY 2027 definitely CapEx continues to be, because we have two ongoing projects which need to get completed, both Gopalpur and Dahej. There is a CapEx spending. I already shared all project CapEx for that is around INR 4,650 crore. Currently, total CapEx spent is including GST and advances around INR 3,800 crore. There is almost INR 800 crore-INR 1,000 crore CapEx spending, including maintenance. This year will be an elevated CapEx. Next year onward, we should back to a normal CapEx because our current page of investment will coming to an end, and before the next wave start, it will be a normal maintenance CapEx, and that should be in line with what you have seen in last couple of years, not significantly different.
Okay. Thank you so much.
Thank you. The next question comes from the line of Parth Kotak with Plus91 Asset Management. Please go ahead.
Hi, sir. Thanks for taking my question. Most of my questions have been answered. Just a couple of questions. One, on the demerger front, any expected timelines? Are we expected to do it this year?
No, not immediately. We yet to take a call in terms of form and shape and timing of subsidiary listing and demerger, or a listing I call it, not demerger. How and when it has to happen. We'll come back once we have more clarity. Yes, we are committed and we'll walk that path.
Sure. Sir, just second question. In the opening remarks, you mentioned that we have adequate supply tied down for ammonia for Gopalpur. If you could probably give us some details on where this supply is coming from, how have you tied up the capacity, that would be helpful.
Okay. Couple of things when we say ammonia. Currently, if you see, we ourselves produce almost 500,000 plus ammonia from PCL. We also trade in ammonia. A large quantity of ammonia is being traded by us, which means we import and we sell. We do have an expertise of ammonia. That's what we claim, I call it, or we can claim, we are in this business for long. I say there's no disconnect in terms of we saying ammonia is being tied up. We have a contract in place, or we know from where the source is in place. Since we are already importing and selling ammonia, for us, this some more additional quantity need to buy and supply into that plant. That's not a challenge for us. That's what gives us the confidence we are ready for Gopalpur ammonia supply.
That's great to hear, sir. Going by your guidance, I'm assuming there is no trade or force majeure risk for procurement of ammonia. Just to add to that, do we have a long-term contract for ammonia as well, or it's just being traded on spot?
This point of time, long-term contract, no, I call it, but we have a contract with not one, but number of suppliers, and that supply is continuous supply. It's not we buy one-off. Every month we continue to buy, so that contract holds good. Yes, once we reach near to the farmer, if we feel there's a need for long-term contract, we are ready, and that can be done. There is no showstopper for that.
Okay, thanks. Thanks for answering all my questions, sir.
Thank you. The next question comes from the line of Ritesh Bhagwati with Alpha Plus Capital. Please go ahead.
Thanks for taking my question. My first question was on the Chardham Chemicals that we have acquired. Like we have paid around INR 120 odd crores for 100% stake. Now, can management just walk me through in terms of the valuation breakup, like what are we paying for it exactly? Is it the licenses, the assets, technology, order book? Also if you can give some guidance as to when this particular stake will get operational and what sort of revenue and EBITDA we can see over the next one or two years.
Thank you. A lot of questions in a single question. Tarun Sinha again here. In terms of the valuation, without getting into the numbers and the breakup, you are right in terms of the overall number, but what it is made up of is, it's the value of the land. It is the value of the licenses.
It is the value of some plants and equipment. It is the value of the location of the facility, which is the proximity to the market. Last but not the least, it's the get to market speed through this acquisition, compared to if we were to put up a greenfield site. All these factors have been taken into consideration for the valuation, and that's the number you talked about. That's the answer to the first part of your question. In terms of how are we going to set it up, our plan is to bring this facility to Deepak's standards. There will be a project team, which is going to be formed very soon, and they will work on the upgradation of the facility. Also, we will add a number of new plants to this facility to capitalize on the licensed capacity that we have invested in.
Once we are ready with all of this, there will be a point in time we will update all of you when we are ready to roll the products out in the market. These products will go out in the market not as products, not as commodities, but they will go in the form of holistic solutions, which is what I was talking earlier. These products will be supplied in a way and provided to the mines and infrastructure segments in a way that the products and associated solutions are able to improve the cost of rock and mineral extraction of the end consumers. That's the business model, and that's what this investment is aimed to achieve for us.
Okay. That's a great understanding that you have given. Lastly, on the CCDs that we have issued for DMSL, like that INR 800 crore. I just want to understand who holds these CCDs? Is it some third party or is it some promoter or related entity? I just want to understand as to what is the conversion price, the ratios, and what sort of trigger terms that we have finalized for that. What I want to understand is what is our stake eventually if such conversion happens.
The CCD was issued last year in quarter one, actually, and that CCD was issued as a mix of third party as well as a promoter entity participated in that. The split was INR 500 crore was issued by, subscribed by third party and INR 300 crore by promoter entity. Since they are CCD, so it has a fixed conversion ratio. No, it has a fixed conversion ratio. The number of shares are fixed at this point of time because this is how the CCD can be structured, and issuance is post roughly around 30 month when the conversion is due. It's just 12 months so far, so we still have time before the issuance gets converted.
Okay. That's it from my end. Thanks a lot.
Thank you.
The next question comes from the line of Adarsh Jain, an Individual Investor. Please go ahead.
Yeah, hi. Am I audible?
Yes, Adarsh.
Yeah. Thank you. Thanks for taking my question. My question is related to both the projects which are coming up now in Q2. Earlier, this was scheduled to be commenced from Q4 2026, but then it got delayed by one quarter, and now it is again delayed by one more quarter. Do we see further delays in implementing, starting both the projects further?
Currently, if you ask are we expecting any further delay? No, definitely not. Even this quarter delay, which got delayed from Q1 to Q2, was not led by any major factor. It was more led by non-availability of skilled workforce because of various factors which came and got impacted or got affected. We could not see a progress which ideally should have happened, and that's what has pushed us. There's nothing else otherwise which is there, which we see this project can be delayed or can push this further. No other reasons are visible at this point of time.
Okay. What was the last financial year revenue for Chardham Chemicals, which we have acquired? Before that I could see there was no revenue for three years, there were no revenues generating from the operations. For last year, was there any revenue from Chardham?
No, there was no revenue. As Tarun spoke, we are actually going to revamp this facility and bring it up to Deepak standard, and then revenue will flow from here.
Okay. Do we see significant amount of allocation again for ramping up the capacity?
In terms of CapEx, you're asking?
Yes.
No large CapEx expected in this for ramping up this facility or bringing it up to our standard. No major.
Okay. Okay then. Thank you very much. Thanks.
Thank you. The next question comes from the line of Meet Vora with Emkay Global. Please go ahead.
Yeah. Hi, sir. Thanks for taking my questions. I had couple of them. The first was on PCL. What would be our current gas cost, including contractual and spot from the existing mix? Also how will this change with the Equinor contract?
Okay, we don't share a very precise gas cost and pool gas price. Definitely, Equinor will give us two things very clearly. One, supply security or supply surety, which definitely was a challenge in the current environment. Second, it will give a cost optimization or cost benefit because of long-term contract and the way current gas prices are, the benefit is definitely there. Even the long-term rate averages, if we see, we do see the benefit continue to flow from here. How much it is? Yes, that's information still not available in the public domain. We'll come back once we feel this is the right time for us to share.
Sure, sir. Basically, what I was trying to understand, based on the current gas cost, even if we take Henry Hub or linked contracts which is available in the country in public domain, our ammonia breakeven or anyone who is manufacturing ammonia in the country, breakeven should come to around $550, $600. Whereas the current ammonia price is between $900- $1,000, or maybe slightly more than that in domestic market. Is it fair to assume that the spreads of converting gas to ammonia currently would be around $450, $500?
Okay. Without specifying on numbers, assumption is right. The ammonia price currently is trading at much elevated level. In fact, the last published number itself was almost around $800 Middle East FOB. That's the prices at which ammonia already trading. With gas prices of Henry Hub, broadly, yes, we do see a significant spread in the current market environment which ammonia will have.
Correct. Till the time these prices sustain, this should be fair to assume because we would be manufacturing somewhere around 125,000 tons kind of ammonia per quarter. Till the time these prices remain elevated, we can make roughly around INR 250-500 crores of EBITDA per quarter.
I-
That would be the current assumption.
I will not go with the number, but yes, our margin in ammonia business will be significantly better what we used to discuss or what we used to talk about.
Correct, sir. There were a lot of questions around the investment done in the ammonia plant, and I think this is the current situation where the ammonia investment is justified. Based on current spread, we can recover more than 30%-40% of our ammonia investment in this year itself.
No, you are right. This is the basic when we put in a business case for Ammonia, we knew Ammonia is a volatile commodity, there will be a time when Ammonia, having a manufacturing facility will give lot much higher spread, there will be a time when we'll squeeze on margin in terms of Ammonia. These are the business cycle, and business cycle will play both on positive, negative. This point of time, we are in a, I'll say, up cycle and definitely right time for Ammonia business to turn around and to make money.
Correct, sir. I think, just if you have any estimate of your debt number, because I think the ammonia plant will help us repay significant debt which is there on the balance sheet. Any estimate around FY 2027 and what could we look at the debt number?
Not yet I'll give a debt number this point of time because we do have two CapEx going on. We may need to balance it out and see where the debt number will be for this year.
Okay. Sir, second question was with regards to the TAN supply from Russia. Actually, we have seen disruptions in last couple of months because of the war prevailing over there. We have seen actually blasts in few plants which used to manufacture ammonia and ammonium nitrate, and this has also led to a sharp increase in AN prices. Just wanted your broad thoughts, how do you view the situation in the current context, and what is your expectation? Do you expect this to normalize in, say, one, two quarters, or it may take a longer period of time for the supplies to resume from Russia?
Thanks for the question. Tarun Sinha again answering this question. You're right, there was a temporary ban imposed by the Government of India on export of ammonium nitrate and fertilizers for some time.
Also import ban by Russia.
Also import ban by Russia. That caused a little bit of slowness in terms of product availability from Russia. Also, as you rightly said, one or a couple of their plants were impacted because of some safety, security reasons. That also caused a little bit of disruption, I would say, in the supply chain from there. The ban has been removed earlier this month by Government of Russia. Some supplies are expected to resume from Russia, although the cost levels and price levels will be different. Having said that, as capacities are getting created in India through the fresh investments, one of them being Deepak's in Gopalpur, there is a very strong case that Government of India might be thinking that once India becomes completely self-reliant for its ammonium nitrate needs, then maybe a different approach to imports will be looked at.
That's the latest I can share with you. Of course, things will evolve as we go along.
Thank you. The next question comes from the line of Nishita Shanklesha with Sapphire Capital. Please go ahead.
Yes. Hello. I just wanted to understand with the CapEx that we are doing and now ammonia backward integration turning around, what is the growth that we see in FY 2027? If our margins will be in the similar range that we did in FY 2026, or there's possibility for them to get better?
Okay. I'll not give specific numbers on margin, but in the current environment of global supply tightness, and also with the corner gas availability or gas surety and the cost advantage which we have, we do expect improvement both on growth as well as on, I call it, on our margin front. Growth will be led both value driven as well as volume driven. When I say value driven, because in the current environment, price has gone up or realization has gone up, so that will get reflected on revenue growth. Volume growth will come more with the new capacity when it gets added, both Gopalpur and nitric acid. That will give us a large volume growth coming in this year.
Thank you very much. Okay. Thank you so much.
Thank you. The next question comes from the line of Rohit from Sunidhi Securities. Please go ahead. Rohit, please go ahead with your question and kindly unmute your line in case if you are on mute. We move to the next participant. That would be Yash from Asit Koticha Family Office. Please go ahead.
Yeah. Good evening, everyone. Sir, my question is on the TAN business. What could be our utilization level for FY 2027 and 2028 for the Gopalpur facility? Along with that, there are some news that as Coal India is our largest client, Coal India is also working on this TAN CapEx. What's your thought on it?
On Gopalpur utilization level, I already spoke about this year ramp up will be there and we expect by end of this year we should be in the range of 90%-95%. The utilization level will reach to its optimum level and next year we should see a full capacity utilization or almost similar capacity utilization from exit level. That's how the number or the expectation what we have. Coal India, Tarun, would you like to comment?
Sure. Regarding the question about Coal India's ammonium nitrate plant, it's all in the public domain, so I don't think I need to elaborate too much on that. One can just read it. Since you have asked, so Indian coal is very rich in ash content, and there is no coal gasification technology available currently in India to produce syngas through gasification of this high ash content Indian coal. That technology is currently being developed by Coal India through some joint ventures, through some alliances. We do not know at this stage. We are not privy to that information, how far is the progress, and how long it might take to develop that technology. Then, of course, as things progress, there'll be more clarity which will emerge, and it will come in the public domain.
These questions are better asked in Coal India's conference calls rather than in Deepak's calls.
Okay, sir. Second question on specialty chemical business. What's your outlook on the specialty chemical segment over the medium term, particularly the context of the current pricing and environment demand? What factor could be critical for us for margin to recover toward the historical level?
You're talking about fertilizer business, right?
Hello?
Yes, sir.
Okay. We are committed, and that's what we continue to say. Our business focus is very clearly grow our specialty business in fertilizers. We continue to work in terms of, I said, on different dimensions when it comes to specialty business. One, keep looking and introducing new product on specialty side. That's the R&D divisions what we have in the company, works to develop those products. Also keep looking insourcing those products from our JV partners. That's the strategy. Second, we are also looking on key focus market where we know these products can help us to grow faster, where the farmer adoptions will be very fast. That's a focus. Very clearly, the way we look both working with R&D to improve product portfolio and also getting deeper into geographies, will give us significant, very high growth compared to the overall fertilizers.
The pie of specialty will keep going up compared to the overall revenue share. Definitely, you would have seen the margin profile of specialty business and subsidized business is different. More share coming from specialty will help us to do a margin upliftment. That's the strategy on which we are working and will continue to work on that.
Thank you. Ladies and gentlemen, we would take that as the last question for today. I would now like to hand the conference over to the management for their closing remarks.
Thanks everyone for taking out time and extending your support to Deepak. I wish all of you best of health and good time. Look forward connecting with you again, in between the pause or during the next conference call. Thank you for the same.
Thank you, sir. Ladies and gentlemen, on behalf of IIFL Capital Services, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.