Q1 23/24

Aug 9, 2023

Summary

Q1 turnover was ₹2,062 crore, with margins pressured by a ₹120–125 crore one-time subsidy and inventory impact. FY24 fertilizer volume growth of 15%–20% and turnover near last year's ₹11,368 crore are expected, while record FY23 profit is not.

Ladies and gentlemen, good day and welcome to the Gujarat State Fertilizers & Chemicals Limited investor conference call meet to discuss the financial performance for Q1 FY 2023-2024 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 Waghela from Anurag Services LLP. Thank you, and over to you, sir. Thank you, and good afternoon. Welcome to the Q1 FY 2023-2024 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, Ms. Nidhi Pillai, Company Secretary and Vice President Legal, 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, after which you will have a question and answer session. Thank you, and over to you, sir. Yeah. Good afternoon, everybody. Thank you for joining this GSFC Q1 post-result conference call. All are welcome to the event. Hope you have seen our results and the other presentations uploaded on our website and as well as the stock exchanges. This was a mixed quarter. We had the highest sales in last 10 years Q1, second highest sales. Last year was the highest sales. Though the margins were under pressure. There were two main factors leading to the margin being down. One was the subsidy adjustment. As you know, government reduced subsidy from January 2023 as well as April 2023. So all the inventory lying without POS sales, the lower subsidy impact was felt, and it was accounted in Q1. So it was a one-time impact and we hope now this will not be repeated. Similarly, for the industrial products, high-cost inventory built up at the beginning of the quarter when petrol was sold at a lower price because of the international price parity. The margins were affected in IP also. This was also kind of a one-time event, and we hope it will not be repeated. As far as subsidy collection is concerned, government has been very prompt in releasing the subsidy. So for P&K fertilizers, we have got subsidy up to 15th of July, and for urea, it is up to June end. And it is reflected in our healthy cash flow. As you all know, we are a debt-free company, and we have good amount of liquid cash in our hand. Physical performance was okay, except the shutdown of urea and some other plants during Q1. So as far as physical performance as well as the market demand of the products are concerned, there is no issue in this quarter. As I explained to you, only subsidy effect and inventory write-downs kind of things that affected the financial performance. Along with the reduction in the end product prices, the cost of input also went down. So ammonia, phosphoric acid, natural gas, sulfur, benzene, all major raw material prices were down during the quarter, and now they have kind of bottomed out or stabilized. Benzene, sulfur are all, as you know, the derivatives of crude. So crude has improved between $80-$85. So that price is reflected in these crude derivatives. Industrial products, we see some increase in the margin and the realization, but I think better picture will come in the H2 only. As I said in the morning, we are expecting 15%-20% rise in volume in fertilizer sales this year. So Q1 being not a rainy season, like every year, the sales volume were little subdued, but it will pick up and overall yearly growth of 15%-20% is expected. Sikka unit, particularly, we are increasing the production. In these 4 months, it has reached almost the last year's level. And with good price support and subsidy levels at cost economics levels, we will have a good margin in Sikka, and we want to continue production of DAP and NPK there throughout the year. Project details are there in our website. All those projects are going on as per the schedule. We will be commissioning ammonia 4 project by December 2023, and other projects will be coming up as per the timelines mentioned. So on overall basis, we feel that Q1 is not really the reflection of the coming period, and GSFC will be performing much better in terms of top line and bottom line throughout the year. And we also hope that looking to the economic scenario, government will calibrate the subsidy from October considering all the relevant factors, and so much reduction in subsidy may or may not take place. So with these remarks, thank you for the patient hearing. Now we can take up the question and answer session, please. Thank you. Ladies and gentlemen, we will now begin with the question and answer session. Anyone wishing to ask a question may please press star and 1 on your touchtone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants, if you wish to ask a question, you may please press star and 1. The first question is from the line of Ashish Agarwal, an individual investor. Please go ahead. Hello, am I audible? Yes. I wanted to check. Last time in the concall, we were informed that something is going on the restructuring side, which guidelines had come from the Gujarat government. I understand that it is price sensitive and you might not be able to tell much, but at least can we know is something happening on that? Has some meeting happened so far or not? As you may be knowing, being a government guideline, we will be examining those restructuring proposals. There is no exemption to that. Dividend, as you know, we have already declared the other three, a bonus issue, buyback, and splitting of shares. Those will be examined and in due course, suitable announcements will be made. As I said, for those who are bound by the circular, they have to do this exercise. GSFC has no exemption. But the only thing is, sir, can we have some timeline? Because it is already four or five months, I think, that circular is out, and if we are still examining, can there be a timeline, like a quarter, two quarter, something can happen like that? No, unfortunately, I am not able to give any timeline because these are all sensitive issues and involving a huge amount of money. But one can expect some action, right, because there is no exemption, as you rightly said. Right. So it will come, whether we are doing or not doing, that will come in suitable time period. Okay. Second question. Got it, sir. I understand that you will not be able to say much on this issue, but I just wanted a clear thing that at least something we will get to know in some time, which you are saying, yes. That is enough. The second question is, basically, there was something around shutdown. So what was the shutdown number of days in this quarter? Shutdown was for the ammonia plant, urea plant, and caprolactam plant. Different period as per the requirement. It ranges from, say, 15 days to 30 days, depending on how big the plant is. We do not take shutdown every year. Some we take it every alternate year, some it is taken every four years. Depending upon the term of the plant, the annual shutdown is taken. This is not something accidental shutdown or like that. It is a planned shutdown. It is a routine. Normally you take every 2 years, the shutdown? Generally, yes. Okay. Only thing is, how much was the loss on account of this? If had the shutdown not been there, what would be the situation of EPS or PAT for us? Because ideally, I understand that last year was too good to be true, and thus the current period looks a little bit lower. But what would be the ideal number for this quarter had this shutdown not been there? No, that is not a rightful angle to look at, because if you don't take shutdown, then no plant will not work in a safe condition. Then anything can happen. No, I understand. But coming quarter, what can one assume? Yeah. So if you want to see this impact of shutdown, we have put the volume numbers on our website. So whatever reduction in quantity that you see in sales quantity, that is on account of shutdown. As I said, we don't have any demand issue at all. So whatever we are producing, we are able to sell. So whenever there is a reduction in volume, main reason is this plant shutdown. What was the operational expense on account of the shutdown? Basically, repairs and maintenance that you would have done in crores. It comes to around, say, 25, 30 crore rupees. Okay. But it depends if we want to change major equipment, then it can be more also. And sir, last time when we had this conference call, you said that gas prices have come down. So what is it for last quarter and what is it today in terms of the input cost that we are getting on account of gas? It is more or less the same. Not much difference. It has reduced compared to Q1 last year. It is more than 25% reduction. But as of now, it is stable. Last question from my end, sir. We have heard that melamine prices have improved in the month of July and so have other chemical prices. Yes. Is that true? How much time does it take for GSFC to take pricing? These industrial products are priced on an import price parity basis, IPP. When in line with international prices, we have to change our price. Otherwise, people will import if our domestic price is more. People will import and use it. We can't work like that. It is in parity. As you rightly said, it is improving somewhat from July. As I said, full impact will be seen in H2. It is improving in this quarter, but not so much. Okay. Thank you. That's it from my side. I'll join the queue with another question. Sure. Thank you. A reminder to the participants, anyone wishing to ask a question, may please press star and one. The next question is on the line of Saket Kapoor from Kapoor & Co. Please go ahead. Namaskar, Nanavaty Ji. Namaskar, Saket Ji. Yes. Thank you, sir. Sir, I missed some bit of your opening remarks, so if I am repetitive, kindly pardon me. Sir, you did mention to the fact that Q1 numbers and the Q1 operations should not be extrapolated as the annual, and we are progressing ahead. The numbers are going to improve both on the operational as well as on the financial front. So this should be the summing substance, firstly, on the reported number for this quarter? Yeah. Just repeat the last sentence. Sir, this should be the summing substance on the performance, that this performance should not be annualized. Correct. There are factors that has led to the lower numbers, and our numbers are here to improve from here only, both on the operational terms and thereby also on the financial terms. Correct. Sir, as you told last time that you would be giving the EBITDA margin, the number for the fertilizer segment, post Q1 number. So what should we now expect from the fertilizer segment going ahead from Q2 onwards, sir? And also on the utilization levels, post the plant shutdown, what are we anticipating going ahead? Yes. I promise, but still I am not able to make up any number because government subsidy behaves in a very erratic way. Because say, whatever I produce even now, say in August, if I will sell it in October, it will fetch reduced subsidy. When we will be able to know, farmer will take the fertilizer from retail point. It is very difficult to predict. Still, I will come back to you later on with some number can be formed up for part on unit level for fertilizer. Okay. On the volume front, sir, what are we looking, sir, if we take the last year number? Correct. The growth we should look at also, depending upon the types of fertilizer we sell, what should be the volume growth we can anticipate? Yeah. So we anticipate 15%-20% growth in fertilizer volume against last year's Q2. Which basket are you referring to, sir? Because we have a traded component also here. Yeah, it will be total. As I said, we are increasing production at Sikka unit. That is the main reason for growth in volume. Last year we had a very low production there, but with new cost economics, stable subsidy, and lower input prices, we are able to run Sikka unit in a fairly more than 50% level. So that will contribute to the growth. And of course, we will have a carry in urea as well as DAP in this growth story. Sir, Sikka numbers, sir, can you give the volume data? What was the production and sales production number from the unit last year, and what are we emphasizing for the current financial year? Last year I will just give one minute. Sir, then your comment on the raw materials also, sir. I think this time we have an improved investor presentation. Thank you, sir. I hope that the descriptive information provided in the presentation, we will continue with the same. Your thought on how the RM basket is likely to behave. Sir, then there is a P2O5. What does that stands for, sir? If you could explain. One minute. This is a production. All the products together were 273,000 tons. Okay. Up to July, we have crossed 2 lakh tons. In this August, we will cross last year's actual production. We hope to reach our installed capacity of 722,000 tons. That is 100% production of installed capacity. That is our target this year. Okay. Here, sir, what are the product profiles there for us? What are we producing from the Sikka unit? DAP, then Ammonium Phosphate Sulfate, APS, then NPK 10:26:26 and NPK 12:32:16. Four products. Okay. Sir, with this increased production, there is no issue in the marketing side on selling on the same? No, we have a good brand recall amongst the farmers, so selling is not a problem. Depending on the requirement, we cater to the whole country, so our market is quite wide. Even if there are issues in some states, we can go to the other states. Our ED marketing will throw more light on marketing aspects. Good afternoon, Saket Ji. This is Sanjeev Varma here. Good afternoon, sir. See, marketing is not a problem for us in case of fertilizers, because if you know, consumption of India is quite high, and we are very small in this if you see the overall consumption. Sikka, like you said, our product mix will be based on the market requirements, with DAP the highest, then APS, and then NPKs. We are targeting our home market of Gujarat to the tune of 50%-60% of our total sales, and that will be the prime market, Maharashtra, M.P., Karnataka, Rajasthan. So there will be no issues because our products are of good quality and as required by the farmers. Right. Sir, now coming to the key input cost movement. Firstly, I think P2O5 is for the rock phosphate, that's mentioned there. What does imported P2O5 stand for? No, that is phosphoric acid. Phosphoric acid. From rock phosphate, of course, but at Sikka, we import phosphoric acid, and their prices have come down, and all price analysis is given in our presentation on our website. Earlier, what was the price last year in Q1, and now what is the price. You can look at the major raw material prices there. Okay, sir. Sir, how are the power and fuel prices, and the raw material mix going to trends are going, sir, especially on the power and fuel front, I think so. If you could throw some light. Yeah, power and fuel cost will also be low because most of our power is coming from gas-based power generation, and we also have our own co-generation plants. Since gas price is lower compared to last year, or the whole of the last year, or Q1 of the last year, whatever period we see. So the power cost is going to be lower. We are putting up new solar power plants, I mean, solar panels. Of course, it will take some time for commissioning. So with such green power, the overall power cost will further go down. Correct, sir. Sir, was there any impact of the cyclone also on any of the plants? The last, the one which we- The cyclone did come, but it did not affect us. I'm sorry, go ahead. Without doing any damage to us. Sir, I missed your comment, sir. I mean, cyclone had no adverse impact on us. Some windmills and those power transformers were affected, but except that, nothing more has happened. Okay. We don't have any insurance claim or anything on cyclone. Right. I'll wait for the EBIT numbers once you can come up with the same. Yeah, I will send you those numbers. Okay. If you can spell them out also, sir, that would be good, sir, over the call. No, we have to be quite careful in giving you numbers. Okay, sir. Last point is, sir, if we take the impact of the extraordinary line item that has affected this quarterly profit, what should be that figure be, sir? Had this been a normal quarter in that prevailing case, what should have been our normalized margins? No. As far as the subsidy impact is concerned for P&K fertilizers, there is a 97 crore impact, one-time impact. Whatever sales we booked in last year, but when it was sold through POS machine this year, they reduced the subsidy from April onwards. That impact in Q1 was ₹97 crores. Otherwise, inventory impact and all this, these are all continuous process, but that impact was also around ₹25 crores. That is, we write down the inventory to net realisable value. Whatever is produced at high cost and likely to be sold at lower price, has to be brought down to the actual realization as per the accounting standards. That impact was around ₹25 crores. In all, around ₹120, ₹125 crores could be said to be one time effect, not really pertaining to this quarter. ₹125 is not for the entire June quarter. That is your telling. Yeah. So it is out of my whatever physical activities I did. This is just a financial thing that has come up, otherwise it is not relating to my operation during the quarter. No, sir. What I was asking is, this INR 125 crore entire impact has been felt for the June quarter itself, or has it percolated for the Will percolate for- No, this is mainly in June quarter. June quarter only. Any further. Yes, sir. Please. Not in the subsequent quarters. Yeah, it will not repeat in subsequent quarter. The subsidy revision downward was last in the month of April only. Yeah, it was done in April. It was done in January 2023 also. It was done in April 2023. Again, it is likely to be done from October 2023. Okay. At that time, again, for that quarter, we may face these inventory losses. We will take care in September quarter itself, so that the spillover is avoided as far as possible. This INR 125 crore impact is what will get negated going ahead. That will be going back to the bottom line. Right. Sir, on the raw phosphate prices, how are our contracts being there for price trends there? I think so we have made some investment in one of the JVs also in international geography. Right, sir. How was the uptake there? What is our plan for this year? No, the JV is for phosphoric acid in Tunisia, that is TIFERT. It supplies phosphoric acid, but there are no pricing advantages. The international price applicable to India during the quarter is applied for whatever supply they make from Tunisia. There is no price advantage there, only supply security is there. That plant is also not operating at optimum capacity, around 30%-40% only. They have some technical and social issues. Hopefully from next year, 2024-2025, it should improve the performance with all whatever steps they are taking for plant improvement. We should be able to see the results next year with improved supplies from them. Okay, sir. Total requirement, how much will we source from there? We have an agreement to take 180,000 P2O5. 180 is assigned to Coromandel. The total capacity is 360,000 tons. We and Coromandel share 50% of the output. With 180,000, if it is coming, we can make around 400,000 tons of DAP in Sikka with that P2O5. Balance 3,400,000 production, we source the P2O5 from open market. Okay, sir. The pricing advantage on this 180,000 quantity, is it at arm's length market price or It is an arm's length, there is no price advantage. Only quantity advantage. The others don't give you. This is a sure source of supplies. Correct, sir. On the rock phosphate, sir, last point on how are the rock phosphate prices currently trending. For last quarter, what it was, and what is the contracted price for the future? We source most of our rock phosphate from Rajasthan State Mines and Minerals company. Okay. There it is a steady price. Maybe once in a year or so, they change the price according to their costing. Right now, it is around ₹15,000 per ton. We source one or two consignment that is totaling 60,000-70,000 tons from import sources. Those prices are quite low now, in line with the phosphoric acid price. Imported rock is also in that range only, ₹15,000-₹17,000. Okay. For phosphoric acid, what is our contracted price for the next quarter, sir? That trend is lower only? This quarter price is expected to be around $850, July to September. October onwards still prices are not decided. This quarter, like the last year, October to December, it was $1,700. Now it has halved to $850. It is half now. Okay. What was factored in for the April, May, June quarter, sir? April, May, June was $970. It has reduced by $120 in July to September. Correct, sir. You gave the outlook for industrial products to be flattish to slightly on the upper side. This is what we can look forward for the industrial side. It will not go lower, at least we can say, but it will improve only going forward. Okay. Thank you, sir, for all the elaborate answers, sir. All the best, sir, to you, sir, and to the team, sir, also. Thank you and namaskar. Namaskar. Thank you. The next question is in the line of Madhur Rathi from Counter Cyclical Investments. Please go ahead. Good afternoon. Thank you for taking my question. Sir, can you just explain regarding the buyback? Sorry to interrupt. Mr. Rathi, we are unable to hear you clearly. Am I audible right now? Sir, you are sounding very soft. Hello? Yes, sir. Please proceed. Yeah. Sir, can you just explain regarding the buyback that we had considered with the Gujarat government. So where is the process on that? Yeah. So as I previously said, the buyback, bonus, and splitting of shares, all those proposals will be examined by GSFC board. And whatever outcome or decision is there will be announced whenever it is known and decided some concrete course of action. But as I said, as per the government guidelines, we will be examining those restructuring proposals, and there are no exemptions to any state PSU in this matter. Okay. Sir, is there some kind of timeline when you think that this will happen? No, there is no fixed timeline. Everything will be done during this year. Whatever alternative is possible will be examined and something decided during this year. That I can say. So most likely in FY 2024, we will see some kind of outcome from that, right? Hello. Sir, so most likely in FY 2024 we will see some kind of outcome from this, right? Yeah, at least we can expect, I think. I hope so. It is the board's prerogative, so I am not able to comment much. Okay, sir. Thank you. That was very helpful. Thank you. The next question is in the line of Ankur Sanwal, an individual investor. Please go ahead. Thank you for the opportunity. Does company expect a positive revision in subsidies in October for fertilizers? No, it will be lower because input prices have come down, so subsidy will go down. Sir, can you also give a detailed analysis of what industrial production is performing and what will be the future trend? As I said, our products are caprolactam, melamine, Nylon-6. They are monopoly or semi-monopoly products of GSFC, and our plants are quite old. The plant capacities are built up as per the past demand considerations. Compared to that, today's demand is much more. We don't have much issue on selling of our chemicals or industrial products. We have steady markets, large customers tied. Really, we don't do any kind of retail trading or small lot trading. It is most of the B2B segment that we cater. As I said, the prices are just international price parity basis. Every month when price is changed, we calibrate our price in line with international prices so that local buyers don't have incentive to import instead of buying from us. As you know, all chemical industry is going through the low ebb right now, and all chemical companies have shown subdued performance. Our chemical segment was also no exception. The margin was under pressure and some inventory built up had happened. From July onwards, we see some improvement in realization. Going forward, we expect prices to improve. Along with that, margin may also get improved. That is the picture that we see in FY 2024. Thank you, sir. Traditionally, sir, our margins from industrial products are pretty less. Are we working on modernizing the plants or debottlenecking them? Which product, you said? The industrial products. You told caprolactam, melamine. Those are all cyclical in nature. The melamine gave us a huge profit 2 years before. The prices were all-time high. Plants are up to date, and all they are working beyond 100%. All plants are working on more than 100% capacity. Thank you, sir. Fifth plant in Gudur. Thank you, sir. Thank you. A reminder to the participants, anyone wishing to ask a question, may please press star and one. Participants, if you wish to ask a question, you may please press star and one. The next question is in the line of Ashish Agarwal, an individual investor. Please go ahead. Hello. Yes. Please. Any thought? Yeah. Or nano fertilizers for that matter? Yeah. Our ED marketing will reply on this. In case of your question for nano urea, it's still in the lab scale at our end for manufacturing. But we are looking out for the DAP also, and other nano fertilizers like DAP or NPK, it's still in the lab scale status only. So once lab scale is over, we'll be having a test marketing, and then it will be commercialized. We are working on that. When can we expect something positive on that side? Just a tentative timeline. I think the urea and DAP can be in this financial year, most probably, because they need a six-month period for test also, and we have to go for the reports for 2 years seasonal this thing. So it will take little time for commercialization, but we will be able to know the test result by six months' time. Okay. Thank you. Thank you. Hello. A reminder to the participants, anyone wishing to ask a question, may please press star and one. The next question is from the line of Ashish Agarwal, an individual investor. Please go ahead. Hello. Only one last question to be answered, which is on subsidy receivable amount. What is it right now in the books, and what is cash in hand currently in the books? Subsidy in the books, to be received from government is a very small amount, maybe INR 200 crore-INR 300 crore. In books, it remains small because government considers subsidy payable only after post-sale when farmer buys the fertilizer. When we book the subsidy, when we do the first point sale, but government obligation arises much later. Real subsidy receivable is very small. As I said, for P&K fertilizers, they have paid subsidy up to 15th of July. Okay. For urea, they pay up to 30th June. A very small amount is outstanding on subsidy account. As you may be noticing, government has huge funding flow in form of good GST collection, good corporate tax, and individual income tax collections. They are equally fast in paying their subsidies and other debts. Okay. Like in past years, we don't have much subsidy outstanding. What would be the cash in hand in terms of both FD or ICD or any bank balance put together? We have around INR 2,000 crores cash in hand or FDs. Of course, we will have a big obligation of dividend payment of around INR 400 crores in September. That will use up some cash. Ultimately, when large projects are implemented, the real utilization will come into play. Still, you are saying that INR 400 crores netting of that also, we have some INR 1,600, INR 1,700 crores of cash, right? Yes. Okay. Where have we invested this? In fixed deposits and some government schemes. What would be the yield, sir, currently? Rough yield. It depends upon the cash requirement, but it is between 6%-7%. Great. Thank you, sir. Okay. Thank you. A reminder to the participants, anyone wishing to ask a question, may please press star and one. The next question is in the line of Sunil Kumar Gupta, an individual investor. Please go ahead. Yeah. Good afternoon, gentlemen. Only one question I have. Yes, sir. Turnover that has gone down from INR 3,000 and odd crores in the last Q1 of 2022, 2023 to INR 2,062 crores in June 2023, which is around 25%. Is it only because of subsidy reduction, or is there a lack of demand or something? No, there is no lack of demand. Mainly subsidy reduction and some price reduction in industrial products. Okay. That is- On overall basis, we expect that we maintain this last year turnover in this year also. That means last year your turnover was INR 11,368 crore. So you will come to that level for the full year, 2023-2024? That is what we expect. Okay. And the profitability, will it also come to that level, or there will be some reduction? No, last year was the historic profit for GSFC. Yeah. That is not achievable. Okay. We will have a good profit for the year. Okay, because last time your profit was something around INR 1,265 crores. Yes. Net profit was around that, correct. Okay, so it will be less, but whatever has been lost in the June quarter obviously cannot be recouped. That is what I assume. You may be knowing that we talked about these government guidelines. Yeah. Various issues. First guideline was on dividend. Okay. GSFC holds shares in various state PSUs and other companies. Yes All are mandated with declaring higher dividend. GSFC will be beneficiary of that large dividend declared by various companies. Yeah. Which were reflected in this Q2, because most of the companies were AGM-ing by September. Yeah. We can account for dividend in this Q2 result. Okay. That dividend income will be substantial in quarter. It will be around INR 80 crores to INR 90 crores. Last year also, if I compare Q1 of last year and Q1 of this year, your other income will include dividend also. So that other income is going up from INR 30 crores to INR 48 crores, INR 49 crores. Other income will have dual component. One, the cash we talked, so it will earn good interest, and other will have good- No, the incremental, because the INR 30 crores of income last year was with very poor dividend from other companies. That will balloon to around INR 80 crores, INR 90 crores in the current year. No, it will be much more. It will be INR 140 crores. INR 140 crores. Okay, sir. Thank you very much. As a shareholder, I wish all of us the very best. Yeah. Thank you. Thank you. The next question is on the line of Dinesh from Karvy Investments. Please go ahead. Okay. Yeah. I think I am audible, sir. Sir, can you hear me? Yeah. Please speak it loud. Okay. Sir, I had only three questions. First, just a follow-up question of the previous one, what is the change in volume we are seeing, sir? Is it positive or negative? Also, the changes in the price which we have seen, how is it corresponding to the revenue this quarter? No, there was some reduction in volume in Q1 versus Q1. But as I said, volume mainly pertains to fertilizer segment. So we expect on overall yearly basis, a growth of 15%-20% compared to last year. FY 2024, we expect a growth in volume, fertilizer volume. Price, yes, some price corrections were there, but as I said, we expect some improvement in prices of industrial products in Q2 and a little more from H2 onwards. Correct. Okay, sir. Sir, certain competitors are also filing with the Gujarat government, requesting them not to revise the subsidies retrospectively. Do GSFC have any stand on that, or we are just following the Gujarat government? No, these policies come after sort of deliberations, then it is difficult to have any say in that. But government ultimate objective is the direct subsidy transfer in farmers' accounts. So they are also be working on pilot on this line. If they find it feasible, then we will be released from all the subsidy issues. We will be charging full amount from farmer, and government will be paying subsidy to farmers' account directly. So we will not have to worry about subsidy claims and delayed payment and this and that. Correct. Sir, what is your outlook on the agriculture this year, the season this year, agriculture season this year? Season we see is good because now there's a widespread rainfall as well as reservoir levels are good. That will augur well for Rabi season also. Based on that only we see a rise in the volume. Otherwise, with bad season, we would not have been able to project growth. Right. Sir, and the inventory which we are holding, what is the rotation of that inventory? Every 3 months are we rotating once, or how is the inventory ratio going on, sir? Fertilizer, it is seasonal because, say January to March, whatever we produce do not get sold till maybe May, June, July. Fertilizer, it is a little longer, depend on the season. But when we produce from in the season, it gets immediately sold. We do not have such a long inventory thing. It is less than one month in industrial products, and fertilizer, on an average, it can be two months. We do not have much outstanding, as well as we do not have much inventory blockage. Good. Sir, initially mentioned by you, one of the participants had asked a question regarding that Gujarat is at 50% of our business and rest of the states are 50%. Are we planning to change this ratio or the proportion which we are concentrated on Gujarat in India? Fantastic. Thank you very much. Hello. This is Sanjeev Varma here. Gujarat being our home market, we are concentrated to have it to minimum 50% of our share here. The reason is because this is the most economical zone for GSFC to deal in fertilizers, and that is why we are concentrating here. We have our own network here of 272 depots run by our 100% subsidiary GATL. The rest of the country, we deal with the dealers only. So we will be concentrating on Gujarat a bit more. Our production will be increasing, so we will be reaching the other states also effectively. Sir, which is our two top export markets in the world? Export for the fertilizers? Yeah, fertilizers. The fertilizers in India, since this is covered under subsidy, there is hardly any export except we needed permissions. India is importing 50% of fertilizers, approximately our total requirement. So export becomes a question mark still. Okay. Sir, what is your view? India is totally lifting the bans on import and reducing it, and that is totally reflected in the subsidy prices as well going forward. So do we envisage these exports to be in higher number? What is the traction of these imports coming into India? Not able to understand the question. Yes. Sir, I am asking, sir. Followed by reduction of subsidy, as government has lifted the ban on imports of fertilizer also. Government is appreciating imports of fertilizer. How are you seeing this traction? Do you think is it completely open for countries or there is certain restriction like among 10% only we have seen remaining 90% has to come, or how is the traction going forward? Is it totally coming full-fledged coming in India, or is it just the trailer of the picture which is going to come? See, restriction on the fertilizer in case of imports, the need-based imports are done effectively by the industry as a whole. Yes, government is coming in between of controlling the prices because what I said earlier, India depends highly on import, nearly 50% of requirement. If there are no controls on the prices, it will be a big blow to the country as a whole. Except Indian requirement is met. We are one of the biggest consumers. Another is Brazil. It becomes on season. Importers are keen to supply to India. Yes, India is keen to buy at a price which is reasonable to this. Correct, sir. What is the price parity, sir? There might be some price parity. What is the price parity of imports and our domestic price? If you see the prices of trade across various country of fertilizers, India is the cheapest country. We are taking on the cheapest prices. If you go to Bangladesh also, they are still $100 more. I'm giving you average figure to you. If you go to Brazil, it is $200 more per ton on average basis. India is sourcing very nicely the fertilizers. Fertilizer market. As we have also planned our CAPEX of INR 4,000 crores, which will be laid out in 2 years. Do we envisage because we have focused more on sulphuric acid, potash. Sir, how much is a backward integrated chain? Are we fully backward integrated or how is it? How much percentage are we backward integrated? How much self-sustained as a company GSFC is? In Baroda, we are fully backward integrated. In Sikka, we are in the process of getting backward integrated to some extent, not fully. It will be a phased manner. But yes, in Baroda, we are 100% backward integrated. What is the volume of Baroda's? Pardon? What is the volume of Baroda in proportionately to the company volume? Both produce nearly 10 million tons each. So it's a 50%-50%. Okay. 50/50%, sir. Yeah. Okay. Just a follow-up and a final question. Agriculture is depending on fertilizer. What do you envisage going forward 2024, 2025 to be not just price, but the volume as well? What do you envisage in the volume growth for GSFC? Like AS4 said, we will be envisaging some 15%-20% growth in the volume. We are not talking on the total values. We are talking on the growth in the turnover and also. Are we fully equipped to meet that growth, or are we seeing an expansion going forward in case needed? You see, at present, expansion cannot come in one year time. We will be utilizing the capacity to the fullest extent. AS4 will add to some 10% volume, one way coming with a small plant. But yes, we are expecting 15%-20% growth. Bigger expansion are not planned. It is a small expansion and the debottlenecking going on. Okay. Sir, what is the purpose, will those cash reserves being held in the company after dividend be used for these expansion or we plan to raise any funds going forward also? One more will say default, but But the requirement is there. Do you feel the requirement is there apart from cash reserves? No. Only thing I can say is that there will be consistency in dividend in line with the earnings. If there are earnings, I think management will not hold the dividend belonging to shareholders. Okay. In line with the earnings, the dividend consistency may be expected. With this conference call, I heard one thing different from other previous conference calls. You are little confident about nano urea, first time. What do you feel? There are certain conclusions come on nano urea and other nano DAP, because this type of positivity I've seen first time in GSFC. Because you are saying at the end, we'll be completing our test and probably commercializing in 2 years' time. I'm seeing a positivity. How do you see it as a business going forward? See, in case of urea is the most preferred fertilizer by the farmers of India because of the prices and subsidy, as the prices are very low. This is the most preferred fertilizer. Second come the phosphate or DAP, is what you are talking. Indian farmers are highly dependent on this thing, but slowly, different companies, including GSFC, is trying to have a balanced nutrition amongst the various states, which is a 4:2:1 ratios. Therefore, GSFC is mostly promoting sulfur-based fertilizers like ammonium phosphate sulphate, ammonium sulfate, and we get an entrance- Actually, sir, just three things that I wanted to know in this. Is one, whether the news are hyped or not, whether it will be costing one tenth of what the actual fertilizer is costing today. Is it true, sir? What is your view on the prices? Will it reduce the burden of farmers and the Gujarat government too? Prices of urea? Yeah, nano urea, if it comes. Nano urea is already there. Nano urea is already there in the market in a big way, and the prices, both of them are nano urea, one bottle of 500 ml is cheaper than one type of fertilizer, but still it is in initial stages, because consuming this or applying that to the field is a different way, and slowly farmers are getting used to that thing. Once that comes in full play, even if we able to replace 25% of this granular urea, prilled urea with the nano urea, it will make good achievement for the country as well. Okay. Sir, just one thing, just your judgmental answer I want on this, and forward-looking, it is very subjective. Going forward, will GSFC see a huge traction in the Gujarat government's eye also, not just as a fertilizer company, but as a chemical business? Because we also plan to enter into chemicals rather than just being fertilizer. As rightly pointed out last investor call, we are slowly moving to chemicals. Will the Gujarat government appreciate this step, and also whether the business model is fit to get into chemical business? Not just to be a fertilizer company, but to enter into the chemicals business as well. What is your view, sir? Yeah. As everybody is aware, fertilizer is highly controlled segment from different angles. To run a company in a businesslike manner, you need to get out or have a reduction in those kind of business. We are having a vision to shift from just fertilizers to being a chemicals business. Is it on our track, sir? Are we on that track? Yeah. Last time, it may have been mentioned that in Dahej, whatever we are doing is only for chemicals that we will be starting. We do not have any plan for expanding in fertilizer space at Dahej. Correct. Right now, we are receiving a further investment of INR 4,000 crores in Dahej for chemical business. Whether this is appreciated by the government, sir, because we are partly owned by government. No, this is all board-driven company, and government do not give us any instruction. So all the directors together, whatever they feel best for the company, we are free to do. Government don't advise us on any of these things. Okay, sir. All the best. Thank you. Thank you. A reminder to the participants, anyone wishing to ask a question, may please press star and one. And press one. As there are no further questions, I now hand the conference over to Mr. P. D. Nanavaty for his closing comments. Yeah. Thank you all for the participation and asking 11 questions. As I mentioned, the growth story continues, and this was some kind of aberration on the financial numbers, and we'll iron it out during the year. We'll be aiming for matching higher and higher in top line and bottom line. There is no stopping anywhere. I request you to maintain your trust in GSFC. Thank you. Thank you, members of the management team. Ladies and gentlemen, on behalf of GSFC, that concludes this conference call. We thank you for joining us, and you may now disconnect your lines. Thank you.