Q4 23/24

May 22, 2024

Summary

FY24 was pressured by lower subsidies, shipping delays and weak industrial margins. FY25 targets 20% fertilizer volume growth and higher revenue and PBT, while subsidy policy and input costs remain key swing factors.

Ladies and gentlemen, good day and welcome to the Q4 FY 2024 earnings conference call of Gujarat State Fertilizers & Chemicals Limited. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Anuj Halakhandi from Anurag Services LLP. Thank you, and over to you. Good afternoon, everyone, and welcome to the fourth quarter and financial year earnings conference call for Gujarat State Fertilizers & Chemicals Limited. The call is being hosted by Anurag Services LLP. Present from the management team are Mr. V.D. Nanavaty, Executive Director and CFO, and Mr. Sanjiv Verma, Executive Director of fertilizer marketing, along with other senior dignitaries. We appreciate the management for granting us the opportunity to host this call, and we can begin with the management's opening remarks followed by a question and answer session. Thank you, and over to you, sir. Thank you, Anuj. Welcome to this earning conference call of GSFC. As you are aware of the economic and fertilizer industry situation in particular, the government reduced the subsidy rates for P and K fertilizers from October 2023, and that trend also mostly continues in April 2024 also, except the APS where some rise is given. In contrast to the reduction in subsidy rate, input costs have actually been rising and, of course, of late they have little bit softened. So the industry margins were under squeeze during the last 6 months, which is reflected in particular in this Q4 earnings of GSFC. The good thing government did was to announce subsidy rate for the FY 2025 well in advance, so that companies were able to plan raw material according to the cost economics of their various products, and take decision how to proceed from April onwards. That helps GSFC also in planning in advance, assuming that subsidy will continue or will be improved in H2 of 2025. So we are glad to inform that we are targeting 20% rise in fertilizer volume in FY 2025 based on the higher production at Sikka unit as well as higher production for the ammonium sulfate plant, mainly out of Ammonium Sulphate IV plant which was commissioned in January 2024. Subsidy receipts, as you all know, government has been regular in clearing the subsidy dues. We received around INR 4,143 crore subsidy during FY 2024, and outstanding is INR 1,106 crore. It has reduced from INR 1,760 crore from FY 2023. Cash position, as you are aware, we are a zero debt company and the total deposits are around INR 2,200 crore as on March 10. Subsidies has been cleared, everything for FY 2023 and some portion for April 2024 has also been paid. As you all know, government has good tax collection, direct and indirect. This indirect tax collection, GST, is making new records a number of times during the year. Government is equally fast in repaying the subsidy dues. Q4 particularly was a little suppressed because of the Red Sea crisis. Whatever raw material inputs were ordered, they came late because they had to take a long route to avoid the Red Sea route. That disturbed the production planning in Q4. Resultantly, production, sales, everything was affected and was not as per our plan or estimates during the year. However, we are taking care of the same in this current financial year. We are factoring in the long shipping routes into our procurement planning so that we plan in advance and are able to achieve the higher production that we are targeting. As far as the industrial products are concerned, though we were expecting things to improve in H2, it has not really improved. The capro benzene spread was lower than the last year. The details are given in the presentations uploaded on our website as well as the stock exchanges. Still, there are no immediate signs of improvements in this industrial product segment also. I think there we expect the margins to remain under pressure. Fertilizer inputs prices are in a range-bound manner. Phosphate feeds, ammonia, rock phosphate are behaving in a certain manner, including natural gas. We expect that they will be in this range during the year, and we will be able to make the fertilizers economically. Dividend, all you have seen, we have declared 200% dividend, mainly due to lower PAT. 5% of net worth would have led to a very high payout ratio, which is not good for any company. Plus, the CapEx plan that we have for the next five years demands that we retain the cash to meet this CapEx requirement. Salary expenses risen during the year. That was mainly because of the long-term settlement for the staff and officers done every four years. It will come down in the current financial year because the one-time effect will be eliminated. We expect a reduction of around INR 90 crores from the FY 2024 figures and going into FY 2025. Otherwise, all the projects are going on as per the schedule. As we discussed, we will be commissioning four CapEx plants during the year. One is a Sulphuric Acid V plant, then a FIX crystal plant, then a 15 megawatt solar installation, and last is the urea revamping to meet the energy norms as required by Government of India. That will be commissioned by March 2025. We expect these four plants to start this year. Of course, full effect will be seen next year. They will be helping in top line and bottom line or by way of cost cutting. Further details of the five plants are already given in investor presentation. You may go through the same. That is all from now. We can now take up the questions one by one. 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 the 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. We will take our first question from the line of Nirav Jimudia from Anvil Research. Please go ahead. Yeah, sir. Good afternoon. I have a few questions to ask. Sir, first is on the ammonium sulfate. What you indicated in your opening remarks that the subsidy rates were revised from October. What it seems like that the subsidy, which was INR 16,707 till September, has been revised downwards to INR 10,309. But sir, on the cost side, if we see sulfur prices which average around $156 in Q3, came down to $120. And even the ammonia prices which average around $600 in Q3, came down to around $465. But still we reported the losses in the fertilizer segment. Is this because further our conversion cost has gone up like freight or power or any other cost increases because of which these losses are reported? No. At Vadodara, we make ammonia out of natural gas. So we do not buy ammonia. Natural gas prices have been stable. In fact, they have not reduced. But subsidy has reduced, so that would be one major thing that was impacting the. Plus MRP also because of the competition, we had to either reduce MRP or give large discount to the dealers. Because ammonium sulfate is a, as you may be knowing, we and FACT are the only producers of, and steel grade ammonium sulfate is quite popular in Bengal and those side where steel plants are there. So FACT is operating with very few products and selling those volumes are kind of a survival issue for them. So they offer very good discounts, which we have to match it if we want to sell our ammonium sulfate. All those factors also affect the margin. That is the point. Of course, Q4 is not a fertilizer season. As you know, the current season starts from April onwards. So in a dry season, those who are listing our materials, they have a little upper hand in terms of asking for more demand, and discount, and all those kind of things. For Q4, of course, very long credit period because they pay when the sales start and farmers start paying to them. So we have a long credit period as well as some discounts to be offered to get them to list our products. All these factors comes into play for reducing the margins. Okay. Three things here. So one, I think the MRPs were close to INR 20,000, if I am not wrong. What sort of discounts do we offer on number one? Second, we serve the imported ammonia and our cost of production of ammonia through the natural gas. How much we have to sacrifice in terms of profit and margins? Third thing is, was there any spillover of inventories of those higher subsidy terms which we were carrying in our books or at the POS because of which those impacts in the Q4 results are reflected? Yeah. Our ED marketing will clarify on this. Yeah. Good afternoon. The discount part on ammonium sulfate or MRP of INR 20,000 per metric ton averages out to around INR 2,000 per metric ton. It calls for higher storage charges and also secondary sale during the off-season for placement. This was the first question which you asked. Ammonia price, I think Nanota Sahab has given the answer already in some details. I will just make one more remark. Ammonia price remains sharp for a very little short period of time during the year. Otherwise, it remains elevated. Comparing imported ammonia and ammonia produced from natural gas is not directly comparable. You cannot switch between the two. Once you decide that you will use natural gas, then all the natural gas contracts are long-term in nature. Then there are dedicated pipelines laid from the supply point to your factory, and then there are take or pay obligations. It is a very tight arrangement buying natural gas. Once you get into it, difficult to get out, and definitely not possible to compare ammonia with the imported ammonia. Plus, one cannot transport such huge quantity of imported ammonia for fertilizer production. Any ammonia purchase has to be through pipelines. Those kind of things are not still there. Only those who are having port linkage can only buy import ammonia. Those who are in the hinterland, they have to use natural gas, or their requirement should be less. Otherwise, large volume of ammonia cannot be transported through tankers. The one question you asked for the stock which was produced during the higher subsidy, this normal stock for ammonium sulfate is higher than other phosphate fertilizers because of specific use, mostly during the rainy season and for particular crops. There is an impact, but this is a regular phenomena which happens at both the sides, when our subsidy increases, when our subsidy decreases. They were more abnormal as such, stock levels. Sir, given the current situation as it is, as we stand now, would we making any profit at the EBITDA level for the ammonium sulfate business, given the kind of situation, what you explained? One thing is that the gas prices is coming down, and second part is the discounting thing, which you just explained to us. If these two things are eliminated, or let's say, if these things are not there, would the ammonium sulfate be reporting the profit? Or what one should take a normal level of EBITDA per metric ton given the current situation? Yes. As everybody knows, there are hardly any rainfalls during January, March of a new year, and the season starts from April onwards. So definitely in this full season for the fertilizer on the back of a good monsoon that is expected, we will have a better position from now onwards, say June to say up to November, December. Only during January, March, we stock up in this particular situation where production takes place all the time, 365 days into 24 hours, but consumption is limited to the season. Correct. And in between, as you said, subsidy changes, that inventory effect also takes place. That is also definite. Got it. So sir, INR 2,000, INR 2,500 is a fair assumption to take at this time? Yes. You can take 2005. Got it. Sir, second question is on the urea plant. I think based on the presentation, what can we observe is that we operated our plant at the optimum levels. Correct. As per the NUP policy of 2015, I think we need to bring down our energy consumption, because then we will need to pay some penalties also from the government. I think that was in policy document mentioned that. Two things here. One, is our fixed cost higher than what is compensated by the government? What is our actual energy consumption in Gcal per metric ton, and how much it government compensates us? Once we complete this project, I think the savings would be close to 0.75 Gcal per metric ton. So how much our profitability per metric ton could improve based on the energy consumption exercise, which we are going to complete by the end of this financial year? Right now, our actual consumption is close to 6.4 to 6.5 Gcal, which is mandated to be brought down to 6.2 Gcal. A few companies have been allowed to do it by December 2024 or March 2025. So that we will be bringing, but when we achieve that, we will be reaching around 5.8 Gcal instead of 6.2. There will be some savings once we achieve the new energy norms. But you know, India has committed in the Paris Agreement about the 2030 target, 2070 targets on energy reduction and 1.5C temperature and all these things. Government is constant exercise of pushing the energy reduction for urea plants. While we will be achieving or more than achieving the present mandate of 6.2 Gcal per ton, by the time we do it in March 2025, from April 2025, they will come out with new norms, reduced norms. This is an ongoing cycle, and hardly you can think of making any money in urea. That is the situation. But sir, at the normalized level, what sort of per ton margins we should take? Because currently we may be losing on the energy part, but there is some- Yeah, some fixed cost you said that is still more interesting. Right now, government is calculating fixed cost at the base of 2002-2003. They have not revised the fixed cost base since 2002-2003. Only in 2014, they gave one ad hoc rise of INR 350 per ton, and a further INR 150 for more than 30 years old plant. For us, we got one INR 500 rise in fixed cost from 2014 onwards. But that is an ad hoc exercise done. Fixed cost, everybody is losing heavily because you can imagine 2002-2003 and 2023-2024. 20 years old data they are using for calculating fixed costs. All right. If you see overall, there is hardly any urea plant is making any profit. Only when they have other products, urea being the most popular fertilizer, people are able to sell other products when they have urea in their basket. That is the only purpose that is served by the urea. Just to clarify, our fixed cost under absorption is close to INR 1,500 a ton or is it even more? No. Government gives INR 3,600 per ton. Ours is more than double, more than INR 7,000, INR 8,000. Okay. On the energy side, we may be losing close to what, INR 800,000 a ton? Yeah, it is a small loss. Really, the penalty because of not meeting 6.2, some few crore rupees we lose every year. Got it. Converting, meeting those norms requires INR 1,250 crores of CapEx. That is the flip side of it. Since government is pushing that you have to meet this norm, whether it is a viable proposition or not, you have to meet it. Otherwise - It also allows you to recoup also over a period of 3, 4 years. No, they do not allow. They mop up all the gains. Only if you go below their norms, then there is some saving which is allowed as per their calculation. Suppose if they continue 6.2 after April 2025, and we keep on producing at 5.8, then the difference will be compensated to us based on the method they set out for compensating the savings. Otherwise, all the reduction in energy norms are, all the savings are taken away by the government. Nothing is allowed to be kept with the fertilizer company. Got it, sir. Thank you so much, sir. I have a few more questions, but I will join back in the queue. Okay. Thank you. Thank you. We will take our next question from the line of Saket Kapoor from Kapoor Company. Please go ahead. Yeah. Namaste. Thank you for the opportunity. Yes. Yes, sir. Sir, firstly, when you spoke about industrial product margins to remain in this range. So for Q4, I think, we posted the profit under the industrial product segment, and the PBT margins also in excess of 10%. So in the current likelihood of what March exit was, can we keep this as a base for now? Or what is the trend post-March exit for the industrial product segment? No, you should look at the full year industrial product result for future forecast. March was a kind of aberration, you can say. What we show for the full year is a real picture. Okay. Post-March again, the margins have taken a hit. That is what you are alluding to? Because GSFC is an integrated complex. Yes. These industrial products and fertilizers are really forced segments, or forced diversification kind of thing. As you know, ammonium sulfate is produced from caprolactam plant. Whether I call that plant as capro plant or fertilizer plant, is a dilemma. We are forced to recognize between either of the two, maybe partly here, partly there. This is a unique situation for GSFC, and most of the fertilizer companies in this country don't have so much of industrial products in their portfolio, with this kind of integration of plants. When this NBS notification came for showing the segment result as per their method of working also. We have to remain in tandem with overall scenario, that for Companies Act, for CP, there is one method of preparing segment results. Now, DFO is saying, "I also want segment results presented in my own way, approved by the directors." All these things which are part of the costing principles are now being brought into accounting perspective. This has to be audited by the auditors, approved by the directors. This notification came in January, so its effect is seen in this Q4 result between industrial products and fertilizer segment results. Really, chemical per se have not performed so good in Q4 and going down in Q1 next year. It is not like that. It is consistently not showing good margins, and that picture is still not improved. Right. We should not look at this quarterly number. This is what the explanation you have given. It is all because of the integration that we have between the fertilizer and the chemical. Correct. Sir, then you explained that the INR 90 crore impact is one-off, and then we will be again back to our number of INR 175 crore, INR 170 crore for employee cost from the next quarter. One minute. INR 170, let me check. No, it will be more than INR 170. Right now it says 42, so you remove INR 90 crore from them. It is INR 750 crore. Okay. 750 divided by 4. 185, 190 should be the number on a quarterly basis. Sir, the other expenses part has seen an escalation because of the freight cost only from the rising on account of Red Sea issue? No, some marketing cost because of higher volume, around 6% higher volume, fertilizer sale has been done. Some part is because of that. Plus these PM Kisan Samruddhi Kendras were given to us for upgradation and modernization. So PMKSK upgradation costs were to be borne by the fertilizer companies, plus this Drone Didi scheme. So all drone and its training and all related expenditures, all these things increased the marketing cost. Plus we had some increase in stores and spares because we changed the catalyst store after a few years. So when catalyst are changed, the number goes up for the repair maintenance. And some rise in administrative cost was there because of the higher CSR spending, which is mandated as 2% of last three years' profit. So last three years' profit was high, so we had a higher CSR expenditure. That also led to a rise in this common expenditure, other expenditure. Sir, can you quantify a number? The run-off number would be, or is it difficult? No CSR, so this year it will be almost same, not little less. Volumes, we are going to boom say 20%, so marketing related, packing cost, freight cost is going to be higher. PMKSK is also a continuous program. Only stores and spares we can think of some reduction, maybe say INR 5 crores-INR 10 crores when catalysts are not changed every year. So some relief may be there. But since you know our plants are old, 40, 50 years old plants, and to run them at above 100%, we have to spend our requirements on stores and spares adequately. No shortcuts can be taken there. Right, Sir. So lastly, Sir, the only positive that we can factor in for this year is the 20% volume growth in the fertilizer segment that you are factoring in. That is what the only solace we have. Other than that, there are so many moving parts that it is very hard for investors to factor in what kind of earnings can be projected for this year. This understanding is correct, Sir, I think. Plus some rise in ammonium sulfate subsidy has been made, some ₹1,500 per ton from April 2024. So that will be a little bit helpful. And post election result, if they look at this industry's pain points and give some relief in subsidy calibrated to the input cost, then that will be further helping to improve the margins. Right. Other than that, Sir, this is what the sum and substance is, that the moving parts are there are various moving parts, so very hard to factoring in how to factor what the actual numbers are. Correct, Sir. Very difficult for investors. Tough time, Sir. Right. Yes. There are no large things that can be categorized and put numbers to it. We are taking so many steps, so cumulatively they will be helping, but to say this step will help like this, difficult to say. Broadly, to the subdued performance of industrial products, we will be going for the niche product value addition and commodity type, like caprolactam has become a commodity now. We will be producing more HX crystal, which is a specialized product and substitute API in the pharma industry from China. That will be industry niche product substituting imports, and that is a good value addition. Plus, some raw material we have been importing instead of making ourselves. So there also some margin improvement is expected. Like this, we keep on changing product mix to achieve higher realization and better margins. As I said, there is nothing, a one-off kind of thing that can be pinpointed. Our efforts are on, that is all we can say. Sir, just last point, this CapEx that will be commercialized in the current year, how many points of revenue do you see in it? What are the additional revenue we will be achieving, or additionally, it will go to the top line from the commissioning of the CapEx which you have outlined? Correct. So, directly, like solar panels will be helping in reducing the power cost, no top line as such contribution. Similarly, Urea-II revamp will be meeting the statutory requirement. There is no top line effect on the same. This Sulphuric Acid V plant will also be captively consumption of sulfuric acid and steam generation that will help to reduce steam made from the natural gas. So that will be helping there. Only HX crystal project will be directly contributing to the top line part of the year. Full effect will be seen only next year. So I think around some INR 100 crore top line effect is to be seen on full year basis from this plant. Mr. Kapoor, does that answer your question? Yes, ma'am. Thank you, and I'll join the queue. Thank you. We'll take our next question from the line of Vipul Shah from Sumangal Investments. Please go ahead. Hi, sir. Thanks for the opportunity. Sir, what is our CapEx for phosphoric acid and sulfuric acid plants, and what benefit those CapEx will bring in reducing our cost per ton? Yeah. The CapEx is around INR 1,500 crores at Sikka unit. Still, we'll be floating the tender for technical bids and all these things. It is difficult to say what exact benefit it will bring. But it will reduce the phosphoric acid procurement that we are doing from imports right now. Our own production will be definitely cheaper than the imported PA. That will be helping us to, one, produce more DAP and other NPK fertilizer. Secondly, it will be bringing down the cost of phosphoric acid. Even if I gain $100 per ton by our own production, it will be, say, INR 8,000 per ton of PA. I'll be producing around 2 lakh ton of phosphoric acid from this plant. It will result, bottom line, from INR 160 crores to INR 200 crores per year. But when is it likely to be operational? Because in your presentation, you have mentioned just that it is 2027, 2028. Yeah, because we will be trying to do it fast, but, being in the public sector, we have certain processes to be followed, and we cannot be so fast like private sector. That is the little constraint. But one should understand that we are giving opportunity to large number of entrepreneurs to participate in such projects instead of MNCs and large companies taking away work of such projects. That is the difference, why we take time and somebody is not taking so much of time, because we are here for wide participation. What is our annual requirement as on today for phosphoric and sulfuric acid? How much are they met by 100% imports as on today? Yeah. If we can produce 10 lakh ton of P&K fertilizers at Sikka unit, there we require 4 to 4.5 lakh ton of phosphoric acid. Right now, everything is imported. We have a joint venture with TIFERT in Tunisia. Some acid is coming from that JV. Otherwise, everything is imported. It is 100% import-dependent. With this new plant, we will be producing, say, out of 4.5 lakh, we will be producing 2 lakh tons. At least 50% of my requirement is captively met, and then some part is coming from my JV. Then import dependence will go down. Of course, we will be not restricting ourselves to the 10 lakh tons. In future, we will be expanding the finished product capacity also, and similarly, putting up a similar plant for same capacity also once this first plant is coming up on the stream. For Sikka, we have a long-term plans of expansion, and that will be kept. We will keep on doing as the time and everything permits. We will have another 4 lakh ton of sulfuric acid after this first phase is commissioned, and then we will have another facility for producing DAP and NPK fertilizer. Like that, we will keep on expanding. Just to give you some government long-term perspective, NITI Aayog had done the study on the food security up to Amrit Kaal, that is 2047, and there they have indicated that with the steady state of affairs, the fertilizer consumption will be same or little higher. But if we assume economy to grow, the fertilizer consumption will be still higher. So there is a scope to expand in fertilizer space. Okay. You said our annual requirement for phos acid is around 4.5 lakh ton. So even after this 2 lakh ton plant become operational, we will be importing still more than 50% for our requirement? Correct. Right now we are importing 100%. Of course, we are not able to get all the 4.5 lakh ton. So the Sikka production capacity, though the capacity is there, we are able to operate at 40%, 50%, 60% only. Because the process is either it is not available or it is available at higher cost, that do not permit cost economics of production. So at that time, we keep the plant down. So we are not able to achieve 100% capacity at present. So what is our capacity at Sikka for DAP and NPK fertilizers, and per ton of fertilizer, what quantity of phosphate do we require, sir? It is all flexible capacity. DAP, NPK, we are able to flexibly produce whatever is required. For DAP, for every ton of DAP, we require 0.46 ton of phosphate, that is P2O5. Almost half, little less than half. DAP has a 46% phosphate in it. 46% P2O5, that is required as phosphate is required. NPK, for different grade, different requirements are there. But they are lesser than DAP. Against 46%, some grade have 20% phosphorus in that, some have 25%, some have 32%. Different grades have different requirements. But generally, they are lesser than DAP. What is the capacity, sir, for DAP and NPK at Sikka right now? Nameplate capacity. As I said, nameplate is 7.22 lakh, but we can actually produce up to 10 lakh tons. Okay. Once your captive production plants are operational, you are planning to increase the DAP and NPK capacity also, right sir? Once this is done, then we will have similar plant of phosphoric acid and sulfuric acid for another 4 lakh ton phosphoric acid. Simultaneously, we will expand the DAP and NPK capacities also. You have the necessary land and infrastructure in place to support this. It is there in Sikka. When land is taken, it is taken with a very long foresight, because getting land is very difficult. When you plan for project and land, a very long view is taken and adequate lands are acquired at the first go. Okay, sir. Thank you and all the best for the future. Thank you. Thank you. We will take our next question from the line of Ketan Athavale from RoboCapital. Please go ahead. Hello, sir. Thank you for the opportunity. I just wanted to know your revenue and margin guidance for FY 2025 and FY 2026. Revenue, as you know, the subsidy government keeps changing, so what we plan does not turn into reality. But as of now, it will be little more than INR 10,000 crores revenue for the next year. And of course, we plan for profits also higher than what we achieved for the full year this year, PBT. We plan for higher revenue, higher volume, and higher PBT for FY 2025. Okay. Can you give the same numbers for FY 2026 as well? Yeah, it will be still higher because of the CapEx that we will implement in this year. They will have full year impact in FY 2026. Hopefully it will be still higher, and with new government in place and the modification in this whole agriculture policy to make Indian agriculture modern. Whatever steps are taken, we are fully geared up to take advantage of those steps. We keep on marching ahead in terms of top line and bottom line. Okay, sir. How much incremental revenue could we say we will get from our this year's CapEx, assuming that it will be utilized in this year? Right now, as I said, revenue side CapEx is only HX crystal project. That increases the yearly revenue by INR 100 crores. This year it may be having some 50% or 40% impact. Next year, it will fully contribute INR 100 crores to the top line. Okay, got it. Thank you so much. Thank you. We will take our next question from the line of Nirav Jimudia from Anvil Research. Please go ahead. Well, thanks for the opportunity. Just wanted to know, we require sulfuric acid for our phosphoric acid, ammonium sulfate, and ammonium phosphate sulfate. Given the current situation in terms of the prices of sulfuric acid, are we still competitive in terms of the cost of production vis-à-vis what is available from the market? Secondly, I guess our capacity is close to 796,000 tons. How much we produce and how much we actually require? Sulphuric acid has an advantage in terms of producing steam. We require a lot of steam in the process of making fertilizers and chemicals. If I do not have sulfuric acid, I will have to use natural gas for making steam. Compared to natural gas, sulfuric acid plant is much cheaper. In fact, if you give comparative study, I would say there is a zero cost of making sulfuric acid for us because of the steam credit. Anything we buy from outside, it will have still some price, but captive production is almost zero cost. That is the logic. As we expanded the ammonium sulfate plant in January, we commissioned Ammonium Sulphate IV plant. We are commissioning sulfuric acid fifth plant in this year also, maybe by November. That will fulfill the further requirements of sulfuric acid, I mean, captive requirement. Also, as I said, it will produce steam that will replace my natural gas. It's a complicated working, but for a user of steam or power, sulfuric acid is a very good product, I would say. So sir, our capacity post this expansion would be close to 10 lakh tons of sulfuric acid. Oh, I don't have 10 lakh ton. One minute, let me just check. Yeah, it will be around 9 lakh ton. Got it. Our requirement is also closer to that, or do we still need- You know, we are the largest sulfur-based producer of fertilizer in India. Nobody has these quantities of fertilizer which contains sulfur. Got it. Sulfur is deficient all over India. There is no region where there is no sulfur deficiency. Got it. We are the largest buyer of sulfur in India. We are the largest producer of sulfur-based fertilizer. These things, 9 lakh tons are now being consumed for producing different sulfur-based fertilizers. And sir, secondly, what is our total requirement of power across both the complexes? Because now we are focusing more on the renewables and consuming the power through the captive use. What could be the expected savings in the power cost, which could happen to us given the 20% production increase which you just talked about? One, what is our total requirement of power, if you can give us some understanding? Second, with this captive source of power getting implemented, how much we would be using power through our own captive source? Sikka, I am not exactly aware, but at Vadodara we consume 72 megawatt power per hour, and we are at 40% on renewables already. Which is a big achievement. Many companies are still less than 5%. In this situation, we achieved 40% is a big achievement. With this new 15 megawatt solar installation coming in, say by September 2024, it will further improve the renewable portion in our power consumption. We are still tying up with GIPCL, which we approached 30 years back. They will be coming up with another 75 megawatt power plant, which they will be selling to us and GACL on 50% basis, which is likely to commission maybe by June 2025. Further with this 15 megawatts plus GIPCL 37.5 what we get on sharing basis, our renewable power, I mean breakup or portion of the renewable power will reach to around 57%. It is a huge saving because against INR 10-INR 11 per unit, that state electricity or utility charge, this power remain around INR 5 per unit. Correct. So despite our production going up, our power cost in absolute amount will not go up. Right. From next year onwards when this GIPCL would start operations, probably our power cost would start trending downwards. Yeah. Hopefully. Yes. Got it. And sir, just a last clarification, you mentioned about the ammonium sulfate we discussed at the first point. Correct. Does the subsidy fixation happen based on the prices of imported ammonia, or it happens based on the availability or the cost of gas in the domestic market? As far as ammonium sulfate is there, I should not share a secret, but since you have asked. You see, FACT is the only large industrial undertaking in the state of Kerala. So it is of prime importance for them. And they have limited products. Ammonium sulfate is one of their major products. So subsidy is fixed in such a way that they get some cushion. Correct. I do not require so much of subsidy. Correct. And, sir, one thing what you mentioned on that we expect the PBT to be better in FY 2025 vis-à-vis FY 2024. Correct. So would these incremental profits be coming from the fertilizer division? Because, one, you mentioned that the MRPs have been raised, or the discounts have been taken back. Secondly, our production is going to go up by 20%. And thirdly, with the commissioning of these backward integration projects, there could be some savings accruing to us on a staggered manner over FY 2025. So the PBIT of close to INR 325 or INR 330 crores, what we have reported for FY 2024, this number optically should be showing upward trajectory in FY 2025. Is my assumption correct? Yeah, mostly it will be coming from fertilizer only because the margin pressure, I think, still continues. So with mainly China dumping a lot of their output in India because their economy is sluggish. And they have a very large capacity. Like caprolactam, if you compare, we have capacity of around 90,000 ton production, which is partly consumed from Nylon 6. But against that, they are going to recently commission four caprolactam plants. Apart from already capacities they have built up, further four lactams will be set up. So this is the kind of scale they go for, and then they sell all over the world at a very competitive price. So their price structure, state support, nobody is able to understand how they are able to produce it at a cheap cost. But whatever it may be, they are able to export it at a very low margin, so it disrupts everything in India. So that situation is going to be there in FY 2025 also. Sir, last question. Out of the total CapEx of INR 1,600 crores, what you mentioned on the phosphoric acid and sulfuric acid, apart from that INR 450 crores on the urea, so I think on a combined basis, we are spending close to INR 2,200, INR 2,300 crores of CapEx. How much of this has already been spent and is there in our FY 2024 balance sheet, and how much is still left to be spent? We have spent around INR 230 crores up to FY 2024, and this year, FY 2025, we will spend around INR 800 to INR 900 crores. Okay. Balance payments would happen in FY 2026. It will take some time because our total CapEx is more than INR 6,000 crores for a period of five years. What you counted is only INR 2,000 crores. INR 4,000 crores in Dahej we are going to spend over this five-year period. Maybe from next year, some part will start in this year itself after we have the DPR and all completed. That is another major chunk. In Baroda, we have our hands full, and no land is available for carrying for new plant. All major expansion will now happen in Sikka or Dahej. Got it, sir. Thank you so much, sir, and wish you all the best for the next financial year. Thank you. Thank you. As there are no further questions, I would now like to hand the conference over to management for closing comments. Over to you, sir. Yeah, thank you for the patient listening and joining the call. As we said every time, GSFC is a growth story, and we don't have any one-off kind of promoter who wants high dividend or part of the pie. Most of our profits are plowed back in setting up new plants and the company is growing. That picture will continue, and we will have better days ahead. Of course, 2023-2024 was not a good year from IP and fertilizer segment, but I think the better sense will prevail and things will align with the reality, then we are able to perform better. Thank you and let us see how the Q1 pans out. Of course, we have a volume growth in Q1, but looking to the subsidy and all, the top line, bottom line will emerge. Thank you till then. Thank you. On behalf of Anurag Services LLP, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.