Q2 23/24

Nov 8, 2023

Summary

Q2 sales hit a record INR 3,000 crore, with fertilizer volumes up 52% YoY. Lower subsidies and rising input costs are expected to weigh on Q3 margins, while management hopes for improvement in Q4.

Ladies and gentlemen, good day and welcome to the Gujarat State Fertilizers & Chemicals Limited investors con call meet to discuss the financial performance for the Q2 FY 2023-24 earnings conference call. 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 touch tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Nitesh Vaghela from Anurag Services LLP. Thank you, and over to you, sir. Thank you, and good afternoon. Welcome to the quarter 2 FY 2023-24 earnings conference call of Gujarat State Fertilizers & Chemicals Limited, hosted by Anurag Services LLP. From the management, we have Mr. V.D. Nanavaty, Executive Director, Finance and CFO, and other senior members from the management. I would like to thank the management for giving us the opportunity to host this call. We will begin the call with opening remarks from the management, post which we will have a question and answer session. Thank you, and over to you, sir. Good afternoon and welcome to all the participants. Thank you for joining this GSFC Q2 post result con call. To give some brief about the agriculture and economic scenario prevailing in context of the Q2 performance, I would request our Executive Director, Marketing Agribusiness, to summarize the situation, please. Good afternoon, all. Just to give a brief on the agriculture. The monsoon was onset a little delayed by a week's time, but the sowing is same as last year. The area of sowing is the same as the last year, this year also. We saw a drier spell in August, where the rainfall was very scanty. This is the driest spell in last five years' time. Our business stayed where the rainfall was less, was part of Bihar, U.P., West Bengal, and Karnataka. In Gujarat, which is our prime market, we were fortunate to have 18% excess rain, so there was no dry spell. August was a concern which resulted to shifting of the crop to soybean a lot. Agriculture started, the kharif started with a positive note of agriculture, with MSP increased by 7%-10% for different crops by government. MRP of most of the fertilizer remains as last year, except where in case of ammonium phosphate sulphate, which is again a prime product for GSFC, the MRP went down to INR 1,200, which was lower than the DAP MRP of INR 1,350. Overall the sowing, as I already said, was nearly the same as last year, only 1% change. But there are changes in the cropping pattern, both across the country and in our primary market of Gujarat. In Gujarat, we have a shift to soybean, I said, and some bajra because these two things, which are, let us say, a drier spell, can sustain these crops. Pulses have got reduced. There was a slight increase in cotton also of 5%. So consumption of fertilizer also remained the same during this period. Like for GSFC also, we were producing phosphate fertilizer, APS, urea, and ammonium sulphate or Baroda, and the plants were running at capacity. Our Sikka plant were also running and producing DAP and APS. We also have imported DAP to fulfill the need of the country. The prices were stable till late August. Thereafter, there were sudden rises in international price of fertilizers, like DAP went up from $450 to $590. Even urea went from $280 to $400, which has resulted into hike in net prices to all the company because raw material has also increased. Like, phosphoric acid has increased from $850 to $970 and $985. Ammonia today is at $540, which was in the range of $280 to $370 in August. So, within this scenario, we could perform better because of the good rain and support to agriculture from the government. Over to you, Nanavaty, sir. Thank you. With this background, now we will have a company specific summary. As you have seen the numbers, there was our highest quarter 2 sales of INR 3,000 crores, and fertilizer also sales was at the highest level. If we talk about the volumes in Q2 over Q2 last year, 52% rise in volume terms occurred. Production that was backed by the higher production also in our plant. In value terms also, the fertilizer sales increased by 35%. Reduction in all major raw materials during Q1 and Q2, like phosphoric acid, ammonia, sulfur, natural gas, all these things help in improving or sustaining our margin. So they may seem less compared to last year. But as we have said number of times, last year was the highest result for the GSFC historical years. So sustaining that kind of performance is difficult. So there was expected to be some reduction in turnover and margin. As far as subsidy collection are concerned, their government is regular in providing the subsidy support. We have received subsidy up to September 2023. Fertilizer volume, as far as we are concerned, we have seen the H1 volume. For the next H2, and overall for the year as a whole, we hope that we will touch 15% growth in volume as compared to last year, supported by higher production at Sikka unit and some trading whenever the opportunity arises for DAP and other fertilizers. You must have seen the balance sheet and cash flow. Cash and bank balances are at around INR 2,300 crore, and this is after the dividend payment of INR 400 crore in late September, early October. Capro benzene spread remained low during the quarter, but it has started some improvement, more than $700 from October onwards. On yearly basis, we see $700-$750 of average spread throughout the year. As you might have noted in the notes to our accounts, that reduction in subsidy from October onwards has been provided by the company so that H2 do not suffer because of the stock that was lying with us on 30th September. We have also provided INR 100 crore for salary revision, which was due from 1st January 2023. So this quarter has accommodated a large provision. Still, the results are comparatively good. As you are aware, as for government of Gujarat GR, companies have increased their dividends. So we had a good dividend income in Q2 of INR 147 crore, which is almost INR 95 crore higher than last year. Similarly, with the comfortable cash position, we will continue to have better interest income in H2 also. So that will be additional support for the profitability of the company. CapEx we have been talking regularly. We have total CapEx of around INR 4,000 crore at different stages. That will give, whenever they will be working at 100% capacity, they will provide good top line and bottom line support going forward. Thereafter, we also have plans for expansion at Dahej, for which DPR is on the way, and we hope that detailed project report will be available by March 2024, with some identification of technology supplier and all. So we will take the matter forward in a concrete way thereafter. So the growth story of GSFC remains intact, and we are poised to grow in top line and bottom line together for years to come. Thank you. Thank you. We will now begin the question and answer session. Anyone who wishes to ask 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. The first question is from the line of Vaibhav Sheth, retail shareholder. Please go ahead. Yeah, I'm Vaibhav Sheth from Jamnagar, Gujarat. Okay. Thank you for this opportunity, and good afternoon to all. I would like to ask two questions. First question is that, after the announcement on GR of Gujarat government in the month of April, there are rumors in market that looking at the cash of GSFC and stand-alone company, holding company plus GSFC stand-alone cash, GSFC can give INR 35 to INR 50 per share dividend, whether it is correct or not, over a period of time? The second question is, in the AGM, Mr. Chairman, sir, has informed that board is looking for various corporate actions for the GR of Gujarat government. What is the status for the same? Thank you. Yeah. As you heard him during AGM also, and you will be knowing that Gujarat Narmada Valley Fertilizers, for which we are promoters, GSFC, is having board meeting today to deliberate on the buyback offer by the company. That will be the first PSU to start exercising the option of mentioning GR. They have already declared good dividends and paid in September. Now they are deliberating the buyback offer today. All the PSUs will be taking up this exercise at the appropriate time. GSFC will also be doing that exercise. Once GNFC goes through, that will be a kind of a torchbearer for us. Rest assured that we are here to follow government GR for higher dividend and other capital restructuring options. Dividend, as you said, there is a formula for minimum dividend distribution. That will be followed in any case. As far as we are making profits, the net worth will keep on increasing. The 5% of net worth is one criteria. You can assume some dividend going forward. Rest is rumor, as you rightly used the word. Sorry to interrupt you, sir. I would like to add something. As you said, at the appropriate time, all the convertation will be coming. Can we expect by this financial year, we can expect it? I do not know, but there has to be some time bound exercise. One cannot say that I will think over it after three years kind of thing. It will be taken up one by one. Okay. No unnecessary time will be spent for delaying it. Thank you. Thank you very much. Before we take the next question, we would like to remind participants that you may press star and one to ask questions. The next question is from the line of Mayur Liman from Profitmart Securities. Please go ahead. Yes. Good afternoon, everyone, and thank you for the opportunity. Sir, I just want to understand about the market share about the chemical fertilizer. Could you please help me in that? For different product, we have different share. Like fertilizer, as far as urea is concerned, we are a very small player. More than 3 crore ton of urea is sold in the country, while we produce 370,000 tons. It is around 1% in the country's demand. But we have a good hold over ammonium sulphate, which is produced by FACT, that is based in Cochin, and GSFC, only two producers. Government don't give subsidy on imported ammonium sulphate. So there our market share is more than 50%? 60%. 60% market is enjoyed by GSFC. For DAP and NPKs, we have around 8%. 8% market share in the whole country. Of course, we have strong share in our primary market of Gujarat, Maharashtra, Madhya Pradesh. But speaking the demand for the country as a whole, so this is the share. Chemicals also, we produce monopoly or oligopoly type of production. Caprolactam, GSFC and FACT are only two producers. So most of the market is enjoyed by us, and rest is imported from various countries. Similarly, melamine, we are the only producer, so we cater to 40% of the Indian demand. Rest is imported. Other also, we are the only producer in the country. After we sell out our quantities, the rest is imported into India. So from market perspective, we enjoy a good share, and we don't have any problem from the demand side. Okay, sir. Sir, now the government is moved to the nano urea side. What do you think about it? I just want to understand the company perspective about the government initiative. Just to answer your question, yes, government is promoting move towards the nano fertilizers, nano urea, nano DAP. They are still in the market development stages. Because you know the country is a large country, large agriculture base. These are the foliar things which can be sprayed only once you have the leaves. They have a limited usage. Time will just tell the usage because in the basal still the farmer fertilizer, the fertilizer goes away. Yes, it is a good move going ahead and let's see how the market takes away its thing. As far as GSFC is concerned, GSFC is currently not in nano, but in many other liquid fertilizers. So we have quite a good hold in the market of liquid fertilizers. Thank you. Okay, sir. Sir, my next question is about the El Niño. Now we are seeing the huge effect about the El Niño. Now there is some rumors going on the Super El Niño which will come next year. What do you think about it? Does it have some effect on the company performance? See, as you said, India is an agricultural economy which highly depends on the rainfall. Last year also, similar rumors were there, and today the rainfall is normal as a whole across the country, except deficit in some of the states. Fortunately, Gujarat being our prime market, it is 18% higher, and our share in Gujarat has also increased during H1, and we are hoping to maintain the same in the coming quarters also. As rightly said, it is a rumor at present. Yes, there is a delayed monsoon. Also, the cropping pattern has changed little. But we are prepared because we have a basket of products which helps in all the cases. Okay, sir. Thank you so much. That is all from my side. Thank you so much, sir. Thank you. Thank you. Before we take the next question, we would like to remind participants that you can press star and one to ask questions. The next question is from the line of Shrenik Mehta, retail shareholder. Please go ahead. Mr. Nanavaty. Yes, sir. Myself, Shrenik Mehta. Yeah. Senior citizen from port city of Jamnagar. By profession, an advocate, and I earn my bread and butter from dividend income from the share market. That is my short introduction. Good. Nanavaty said I am the founder shareholder since the inception of our company. Okay, good. At present, I am presiding over as chairman of Expert Committee on Capital Market, Jamnagar Chamber of Commerce & Industry. Okay. Very good. Sir, shall I ask all the questions at a time or shall I ask first question, then you reply, and then I will ask second question? What will you prefer, sir? No, I would like to reply one by one. I mean, you ask question then I- Okay. I will also like that. Sir, first of all, Nanavaty, I would like to know what is net worth per share of our company, GSFC? Please let me know. Yeah. The total net worth as on March 23 was around INR 7,800 crores, and we have some 40 crores shares outstanding. For simplification, we can say 8,000 crores divided by 40 crores. It is INR 200 per share. That is the net worth. Yes. Good. My next question is, sir, there are major changes in fertilizer subsidy policy of the central government. Actually, what are the changes and how negatively it will impact on the profitability of our company and how we shall match with it? Please throw some light. Yeah. For urea, it is a pass through subsidy mechanism. All costs are borne by the government, and just some profit is allowed to fertilizer companies. For making urea, there is no danger or any problem with up and down in the input cost. But phosphoric and potassium fertilizers are borne under Nutrient Based Subsidy scheme. For that, they declare subsidy at the beginning of financial year, and it is mostly fixed for six months or one year. Whatever price changes happens during the year, subsidy remains the same. They also control the MRP of fertilizer so that no farmer don't have to pay more. Any increase in the input cost has to be borne by the fertilizer companies most of the time. This time also from October they reduced the subsidy because they look at the past import and cost data. During April 2023 to September 2023, input cost like ammonia, phosphoric acid, natural gas, sulfur- Yeah they were quite low. Using that data, they reduced the subsidy from October 2023. But really, price of all these products have increased from October 2023. Government will have to think something going forward, say from January 2024. Yeah. They have to increase the subsidy or input prices should come down. Something or the other should happen otherwise, in a This election year, government cannot afford a shortage of fertilizer. If the companies don't make looking to the cost economics, government can be in trouble. And government has already saved a huge subsidy as compared to last year. Their subsidy budget, their actual spending in 2022-2023 was around ₹2.5 lakh crore. Now, they may wind up this year, I would say ₹1,50,000 crore or ₹1,75,000 crore. Nearly a saving of ₹75,000 crore to ₹1 lakh crore is expected by government. But their revenues are rising, as you must be reading, GST collection highest and income tax highest. Government has a double benefit. Their revenues are rising, and their subsidies are coming down. Yeah. So sir, what is the future expansion plan of GSFC? Sir, you mentioned INR 4,000 crores, and Correct some newspaper we say expansion plan is about INR 8,000 crores. So what is correct, and when it is going to start, and when it will get completed, sir? Yeah. So INR 4,000 crores will happen in three, four years. Yeah. Those projects are at various stages of implementation or technology tie-up or design stage, like that. So they are kind of a firm project, INR 4,000 crores. And another INR 4,000 crores is planned at Dahej because in Vadodara, most of the land are now occupied. So it is in the city, so no more expansion is possible. Yeah. Another 4,000 crores will come in Dahej, for which detailed project report work is going on. In March 2024, it will be submitted. Then board will take a further call, which product are profitable and should be taken up for setting up this plant. This is how the two 4,000 crores of each are different stages. Sir, now regarding finance. September 2022, profit was about, say, INR 285 crore. Correct. September 2023, profit is around INR 309 crore. Correct. But profit during June 2023 quarter was ₹112 crore. There is wide variation in the profitability. Market, I think since last 4 days- Right price of our company, share company in market are going down and down. Can you throw some light on it, sir? We explained during the quarter 1, this Q4 season con call, that this was not a normal performance. It was a kind of lower performance for GSFC than normal. We had some plant shutdown, then subsidy reduction effect and all those together. We promised at that time that Q2 will be much more Yeah higher performance, better in terms of top line, bottom line. That we have already achieved. Yes. Q2 kind of performance is normal. INR 106 PBT in Q1. I mean, PAT of Q1, it was a lesser performance, I would say, exceptional kind of thing. Mm-hmm. And sir, GNFC is about to declare buyback today. Still, I think it has not come. Yeah. Is our company going to participate in buyback, or GSFC is not going to participate in buyback? When the GNFC board meeting is over, they will declare that to SEBI. Yeah. We have our one board member in GNFC board. Yeah. Our MD, GNFC board. Yeah. Looking to the deliberation because GNFC has not so far declared at what price they will do buyback. Yeah. How much share they are offering. Yeah. Without that, GSFC also cannot decide whether to participate or not. Those both things will come together, what GNFC share price or quantity of shares. Yeah. Plus promoters participation. All answers will come together by evening. By evening, can we get these answers, sir? I think, yes, they will have to submit to SEBI and stock exchanges, isn't it? Yeah. Correct. Sir, last, when can shareholder of GSFC will expect buybacks, split, bonus? So now GNFC is taking the lead in buyback, so other companies will have to examine either buyback or bonus. How split- Because our earlier share was ₹100. Yeah. It was split to 10, then it was again split to ₹2. Now much scope is not there for splitting. Yeah. But bonus and buyback could be on the table, maybe going forward. Nanavaty Sahib, thank you very much for the nice reply. As a minority shareholder, I am quite satisfied with your answer. Sir, wish you best of luck, and as a shareholder, we expect our value of share to go up as and when our performance grows up. Thank you, sir. Correct. Thank you. Thank you. Before we take the next question, we would like to remind participants that you may press star and one to ask questions. The next question is from the line of Saket Kapoor from Kapoor & Company. Please go ahead. Namaskar, Nanavaty Sahib, and thank you for the opportunity. Our company secretary is ready to give answer to your questions. Yes. Thank you, ma'am. Hope all is well at your end. Thank you. Sure. Sir, firstly, as you yourself mentioned, in your opening remarks that this quarter has also many of one-offs. If we take the higher other income that is getting negated with the higher employee provision, then there is a net of also the subsidy negative impact has also been built into. So on the subsidy and the inventory front, can you quantify the number for this quarter in terms of the impact of that lower subsidy amount which we have taken in this quarter? It is around INR 300 crores. Okay. This including the reduction in the month of October also? Yeah, that is mainly October because even if we have booked September sales with the approved September subsidy, but when we are going to do sale through POS machine from October onwards, it will get us a lower subsidy only. All the stock inventory that you are talking, I am not talking of inventory not sold, but with inventory which is already sold, as a first point sale by us to dealer and other stockists. But, when they really sell it to farmers through POS machine, that machine will throw up lower subsidy amount. That I have to provide because if you have waiting sale to happen in October, November, December, and I am providing lower subsidy at that time, all companies are providing it upfront, right away in the September, so that the next quarter remains clean and don't come under shadow of lower subsidy. GSFC has also done the same. Is that what has been our volume growth for the first half if we compare this H1 with the previous year? Volume growth in terms of quantity sold? Yes. One minute. Yeah, it is around 34% on quantity H1. Okay. As you mentioned earlier that we are expecting a 15% growth over last year numbers, what should we expect in terms of the volume for H2 going forward? Same. We did some 10 lakh some odd sales during H1. We will do 10, 11 lakhs again in H2. Okay. Similar numbers we will have. Yeah. But last year was 18 lakh, so this is around 21 lakh. Okay. Last year full year numbers were 18 lakh. 18 lakh, yes. Okay. We have done 10 lakh for H1. Yeah, we did INR 10 lakhs for H1, so similar INR 10 lakhs-INR 11 lakhs for H2. Okay. That translates into a 15% growth. Now, sir, with the factoring of the lower subsidy rates and the losses on account of that, what should be the margin, EBIT numbers that we can look for the fertilizer segment? As I said, Q3 will be impacted margin because subsidy adjustment reduce when the prices are high. This situation cannot last long. So we expect that either prices should come down or government should increase the subsidy. Otherwise, if there are lower production, particularly P&K fertilizer, then this financial year may be okay, but then going forward when the next kharif season starts in April, May 2024, there will be very low inventory in the channel. So that can impact the next year availability of fertilizers in the market. So that cannot be tolerated. Fertilizer production, imports, everything has to be consistent. You can't allow that, "I have stock, so I don't mind producing," or, "If people don't produce, I don't care." Government cannot have that kind of approach, because even if you don't suffer till March 2024, your suffering will start immediately from April, May 2024. These are all irreversible things. The volumes are so large that you cannot think of importing say, a lakh or one crore metric ton in 2 months' time. It will increase the price, very high international market. Logistically, it is also not possible. So things have to move smoothly on month-to-month basis. The government knows all these things. Hopefully from Q4 we should have a reasonable margin again in place. Sir, when you mentioned prices are up, you were speaking about the raw material price. I mean, if you could clarify. Yes. Like ammonia, as Mr. Varma said, ammonia was $280 to $350 in, say, H1 period, based on which government reduced the subsidy from October. But the same ammonia is $550 now. Similarly, phosphoric acid was lower. Now it has reached to $985. So on one side, government reduced the subsidy, but other side, input prices have gone up. So this is contradictory situation. One correction either on input price or on subsidy front. One correction has to happen to sustain production, domestic production. And we have updated the government about these changes in the raw material basket, or we have made any presentation to the Ministry of Fertilizers? No, they themselves collect all the data. They have more data than us because- Yes, correctly. They have direct connection to the Customs, I mean, Commerce Ministry. So they get all the data of imports and prices directly, I mean, the actual prices. Plus, they also subscribe to various magazines, international magazines. So they themselves compile monthly data. Right For various price, volumes, prevailing price in other countries. So many data they have with them, so nobody needs to tell them anything. Correct, sir. Sir, when we look at this key input cost movement part on slide number 8, therein we see a strong declining trend for ammonia prices, I think so from 43 to 24. Correct. What are currently the prices, sir? Now 48,000, double. Okay. What could have led to this doubling of prices just in a month's time, sir? We have prepared this for closing prices as on September, and we are in the month of November, first week of November. Yeah. These ammonia prices were abnormally low. I mean, because they were very high up to March 2023. All the input prices crashed from April 2023 onwards, natural gas, ammonia, phosphoric. Because these very high prices were not sustainable they reduced drastically. But those drastic reductions were also not sustainable. Prices have to be at reasonable level for anybody to produce and sell. The prices remained for three, four months at those low levels. Again, they have started rising. Plus some plant shutdowns during this COVID and this Ukraine war and so many geopolitical situation, some plants get shut down. So the immediate effect on trade quantity is there, and that shoots up the prices. Right. Sir, a small point. When you mentioned the INR 300 crore impact, that is net off from the revenue from operation itself? Yes. The subsidy income is a part of my revenue, so I reduce revenue as well as profit. Right. Sir, now coming to the industrial product part, sir. Sir, the segment has reported negative numbers to the tune closer to INR 35 crore. So if you could explain the contribution, sir, which product have. Also, do we have any inventory impact also, sir? When we look at the volume data on a QOQ basis, that have gone up for caprolactam, melamine, Nylon-6. All the products, we have produced and sold more sequentially, and we have incurred losses on the same. So if you could explain the reason. Sir, secondly, sir, thank you for the presentation change. Now we have the volume data for the preceding quarter also. Thank you, ma'am, for adhering to the requirements. Yeah. Now continue. Please reply. Yeah. Unlike fertilizer, industrial products are IPP linked. Whatever international price changes occur, they get immediately reflected in the next month prices. So there such inventory losses are frequently occurring because I produce something at a higher cost and then prices go down. But I don't keep inventory to get better price. I'll get something better next month, so I don't sell this month. We don't do like this. Ups and downs in inventory, sometimes profitable, sometimes not profitable. That is a frequent happening in industrial products. Fertilizers price, the MRP are quite stable, except for if you talk of DAP. DAP price from January 2023 are same, INR 1,200 per bag, and INR 1,350 per bag since last six months or more than six months. And subsidy also remains more or less stable for at least six months. There are inventory losses occur once in a while, particularly when the finances have changes or when the subsidies change, of course. But in industrial products, this is happening very frequently. Sir, earlier we used to also provide the revenue line item along with the production and the sales. But this time, I think in the presentation and in the press release, we have omitted the line of the revenue part. So kindly- Okay. Provide that. That will give us the realizations, how the realizations have shaped up. Anyway, sir, just to conclude on the industrial segment, could you provide which product has contributed to the negative EBIT? With now the crude prices currently in a declining mode, the situation has turned more grim for the industrial product segment for the current quarter also? Yeah, some improvement from October it started. But all the crude price coming up or going down. In fact, the raw material, like benzene is a direct derivative of crude. So if crude goes down, benzene also sometimes goes down. But our finished products like caprolactam, their price won't move in line with crude prices. They are not directly correlated. Benzene may come down, capro also may come down. Benzene may go up, capro may remain stable. All these things happen. Most of the major products, as you know, the whole chemical business, not only GSFC, all over country, chemical industry is not doing well. So GSFC also is not an exception. So that was the picture so far. Some improvements have taken place, but not worthy or sustainable kind of thing. Sir, in your presentation, you have mentioned 1545 as the closing prices for caprolactam as of September. So what are the current price trends? I think it is around 1700 or so. Okay. The prices have moved up from INR 1,545. Yes, it has improved in October. Okay. And sir, do you have the figures, sir? If you take the breakup for the INR 35 crore loss for the industrial segment, which products have contributed out of the major three, caprolactam, melamine, and Nylon-6? If you could give me- All are contributing to this loss because Nylon-6 is a further in the value chain of caprolactam. So when caprolactam is costly, then Nylon-6 will also be costly in terms of cost of production. They go together. Melamine also prices are subdued. We sold as high as more than INR 250,000 per ton last year, or year before last. Now it is less than INR 100,000 per ton. This keeps happening. Hope it will improve in future. These are the Nylon-6 prices. They are currently lower to INR 100,000. No, melamine prices. Melamine. What are the Nylon-6 prices currently? We have so many varieties. Okay. Some 30, 40 grades of Nylon-6 and compounding grade Nylon-6. Around 1.70 lakh to more than 2 lakh premium grades. That is the per ton price. Right. Last point in the power and fuel mixture, you did mention that currently the ammonia prices have moved up or doubled, that is, in a month time. If we take the raw material consumption and the power and fuel, how are these two line items going to shape up, sir, going ahead? If you break up between for the cost of material consumed, if you could give me percentage-wise breakup. And how are they trending currently? Natural price are quite stable. They rise little bit here and there. Sulfur prices are also now, they are directly derivative crude, so they are range bound. Rock phosphate prices are also range bound. All prices are flying within some range. There is no likelihood of major increase in the raw material, at least that we use in Baroda. That is sulfur, natural gas, rock phosphate, benzene, sulfuric acid. All those prices are range bound, not likely to increase substantially going forward. Only what we import, phosphoric acid and ammonia for Sikka, they have gone up high. So that is affecting the Sikka production and Sikka economics. Otherwise, for Baroda, things are stable. Okay, sir. For the power and fuel mix, the natural gas is the major component there? Yeah. Natural gas is stable. Power and fuel, as you see, there is reduction in cost. That will keep on happening, and when we set up more solar power plants and all, it will keep on coming down. Just to conclude, sir, on the fertilizer part, since this is the major segment that will contribute both to the top and the bottom line. Taking into account, since we have taken the reduced subsidy impact in this quarter and also going ahead, since the raw material prices are also on the upward trajectory. For the first quarter, our PBT numbers were INR 100 crores. The second quarter, after taking into impact, was INR 224. Taking all these impacts, what ballpark numbers can we expect the fertilizer product segment to behave going ahead for the coming quarters? Yeah. Right now we don't have the number, but Q3 will be little impacted because as I said, input prices are high and subsidy has been reduced. Q3 will have some impact, but hopefully Q4. Government acts with a lag. Government don't act real time manner. They have a lag of a quarter before they take any corrective action. Right. That will have effect in Q3, but hopefully Q4, normal kind of situation should come. Okay. Going ahead, what should be the quarterly employee benefit expense number, sir? We have made INR 100 crore provision this quarter. Correct. What should be the run rate going ahead? This year, 2023, 2024, being the first year of wage revision, it will have more impact. But it will taper down. We have four-year settlement period. It is 2023, 2024, 2025 and 2026. From next year it will taper down. The one-time effect will not be seen. But we had INR 656 crore employee cost last year for the full year. Maybe some INR 850 to INR 900 crore may be the employee cost. Mm-hmm. 656 was for the first half, I think, sir. For the year, I think- For the year 2022, 2023. Full year, sir, we had this 1,200, I think, sir. Oh, sorry. It is 668. So 668 will go up to? 668, around INR 800 crore on a normal year. Okay. The first half we have done already INR 409 crore. So now it will be the run rate will be INR 200 crore quarterly basis? Yes, sir. Quarterly basis INR 200 crore. That is significant jump, sir. Yes. But to run all this whole plant, we need to pay good salary to employees. Mm-hmm. Right, sir. Thank you, sir. We can conclude that Q3 will be negative, since the industrial product segment is already in bad shape, and also the impact of the subsidy and the raw material input prices running in inward direction will impact the profitability for the next quarter or so. Yeah. Some pressure on margin. Yes. Okay. When you mention, sir, some pressure, if you have worked out some numbers, give a ballpark, sir. Understanding that this 224 can go to 160, 170. That should be the likely numbers? No, really we don't have worked out the numbers. Okay. So Right. Thank you, sir. We hope for the government resolution part of the, to be GR implemented and how the board behaves, what understanding the board takes on the today's GNFC's buyback. Yeah. And lastly, sir, on the P2O5 prices, sir, what are the current phosphoric prices, I missed your number, you mentioned, post the September quarter. It is $985. Okay. And September quarter end was? 850. 850. Correct. Thank you, sir, and all the best. And we hope that this revenue line item would be included in the presentation, sir, going ahead. Sure. For the next quarter, we will have all the three quarters data in the same presentation so that we can do a comparative number easily. Yes, sir. Thank you, madam. Thank you, sir, for all the detailed answer, and happy Republic Day entirely. Thank you. Thank you. Thank you. The next question is from the line of Madhur Rathi from Counter Cyclical Investments. Please go ahead. Thank you for the opportunity, sir. Sir, our solar power plant that is coming next year, so what percentage of our power and fuel cost that will serve us? Sorry, if you can repeat the question. Sir, the solar power plant that is coming up next year- Correct. What percentage of our power and fuel cost that will help us from the captive solar? What percentage that will serve us? This is a 15-megawatt power plant and it is 20% PLF factor, so it will provide 3 megawatts of power per hour. To that extent, some INR 4 or INR 5 differential cost between utility power and solar power, that will be the saving to us. And sir, what percentage of our power requirement will that be? Right now we use 70 megawatt hour of power, and we are already having some 40% power from renewable sources. We will try to increase renewable power to more and more going forward. Okay. Thank you, sir. All the best. The next question is from the line of Rohan Gupta. Rohan Gupta is not answering the call. As there are no further questions, I would now like to hand the conference over to Mr. V.D. Nanavaty for closing comments. Yeah. Thank you for the participation and patient hearing. As you are all aware, in business, ups and down keeps coming, that is what Q3 is representing. But on overall basis, company will keep on growing on top line and bottom line. We will also be implementing government GR at the appropriate time, rewarding the shareholders in different manner. Thank you for joining and keep association with GSFC for a long time to come. Thank you. On behalf of GSFC, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.