Ladies and gentlemen, good day and welcome to the Q2 and H1 FY25 earnings conference call of Chambal Fertilisers and 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 touch-tone phone. Please note that this conference call is being recorded. I now hand the conference over to Mr. Rishabh Barar from CDR India. Thank you and over to you.
Good day, everyone, and thank you for joining us on the Chambal Fertilisers and Chemicals Q2 and H1 FY25 earnings call. We have with us today Mr. Abhay Baijal, Managing Director, Mr. Anand Agarwal, CFO, Mr. Anuj Jain, Assistant Vice President Finance, Mr. Tridib Barat, Vice President Legal and Company Secretary, and Mr. Ashish Srivastava, Vice President Sales and Marketing. Before we get started, I would like to point out that some statements made or discussed in the conference call today may be forward-looking in nature and must be viewed in conjunction with the risks the company faces. Chambal Fertilisers and Chemicals does not undertake to update them. The statement in this regard is available for reference in the presentation. We will begin this call with opening remarks from Mr. Baijal. I would now like to invite Mr. Baijal to share his views. Over to you, sir.
Thank you, Rishabh. Good day to everybody and a warm welcome to all of you participating in this call. During the quarter, on a standalone basis, the company has achieved an EBITDA of INR 834 crores as against INR 697 crores last year, which is a growth of about 20%. Our profit after tax of INR 500 crores as against INR 672 crores last year, which is a growth of 34%. For the half-year, the company achieved an EBITDA of INR 1,776 crores as against INR 1,475 crores last year, which is a growth of about 30%, and a PAC of INR 1,053 crores as against INR 842 crores, showing a growth of 35% YOY. At consolidated levels, also, the company has performed well during the quarter, registering a PAT of INR 536 crores as against INR 381 crores last year, which is a growth of 41%.
For the half-year, there was a PAC of INR 965 crores as against INR 720 crores last year, which is showing a growth of 37%. All our Urea manufacturing units operated at optimal capacity. Production stood at 9.34 lakh metric tons against 9.88 lakh metric tons last year YOY. Urea sale was 9.65 lakh metric tons against 8.38 lakh metric tons YOY. Subsidy receipts do continue to be timely. We received INR 4,713 crores in subsidy in quarter two FY25. We have great pleasure to inform you that the quarter earnings growth was also led by volume and margin growth in the CPCSM segment. During the quarter, CPC & SN revenues stood at INR 289 crores as against INR 245 crores last year, showing a growth of 18% YOY with contribution of INR 83 crores against INR 61 crores last year, showing a growth of 36% YOY.
For the half-year, the revenue was INR 632 crores as against INR 542 crores last year, showing a growth of 17% YOY with a contribution of INR 164 crores as against INR 119 crores last year, showing a growth of 38% YOY. During the quarter, two new CPC products were introduced, primarily comprising fungicides. We have added to our specialty nutrient portfolio with the introduction of the nano biophosphorus with Tempranom. We have sold till September cumulatively about 2 lakh bottles, and in the last quarter, 142 lakh bottles. Some of the products are Generation 1X , that is, products which are of the latest chemistry in collaboration with our esteemed partners. The performance in the quarter is notable, despite late and unseasonal rains and sun deficits in some crops such as corn.
Our strategy continues to focus on creating partnerships and alliances for introducing better chemistries and improving the width of our offerings in our channels. Today, we have a CPC product portfolio of almost 62 products of distinct chemistries covering fungicides, weedicides, and insecticides. Geographic diversification has also been part of this strategy, as we've successfully executed. Biologicals are increasingly gaining importance in the crop protection space. Biological nematicides will be introduced shortly to address the farmer's pain point for nematodes control, for which internal field tests have been successful. The other product lines and biologicals will gain importance as green and sustainable technologies become increasingly important. We intend to do broad spectrum in this field from bioactives, biostimulants, to biocrop protection. Alliances in this field are also being worked upon, including sponsoring research activities. Including emphasis on water-soluble fertilizers is also a part of this strategy.
Water-soluble fertilizers are currently low-penetration fertilizers that we feel that with the growth of precision farming via polyhouses, drip irrigation, and increasing crop diversification from cereals, oilseeds, and cash crops into the fruit and vegetable segment, this is poised to grow faster and create a pathway for quicker growth. In short, CFCL is now focusing increasingly on sustainable technologies, which bring benefits in terms of improving farm yields, improved soil health, and provide better product outcomes. They are also value for money, and moreover, these products are also the fruit of high-quality research. Our new focus area in the coming quarters will be to enter the hybrid and research variety seeds, which will substantially complete our agri-input product profile. We expect to start sales and marketing of these products from Q25 onwards. This growth shall be followed with increased vigor.
In P&K fertilizers, the volumes were low due to availability constraints, and we continue to follow the portfolio approach. Our Farmer Connect seed-to-harvest program is now gaining momentum. We are also placing a great amount of emphasis on communication and reaching out to all our stakeholders and partners. Through social media, we have now extended our reach to 30,000 people. Besides, our Hello Uttam experts at four locations received more than 10,000 calls and queries from field asking for doses of the products, weed control, insect management, and in-house crops. As part of the seed-to-harvest program, a key focus area for Chambal, we undertook more than 3,800 farmer meetings, conducting over 3,000 demos in four soil sample days to collect over 2,000 soil samples. We have now tested a total of 58,000 soils for macro and micronutrients.
Our Technical Ammonium Nitrate project is progressing as the planned strategic approvals are in place, and we have spent around INR 388 crores till September end 2024. The overall progress achieved is about 37%, and things are on track. Our joint venture in IMACID has also performed well with higher production and better margins, and we continue to look forward to create more and more value for our shareholders. With that, we will now happily take your questions. 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 their touch-tone telephone. If you wish to withdraw 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'll take a first question from the line of Prashant Biyani from Elara Securities. Please go ahead.
Yeah, thank you for the opportunity. Sir, how much is the additional EBITDA contribution from the 3% energy efficiency improvement?
I would say that it's in healthy double figures.
Sir, can you quantify the number?
When I say healthy double figures, it is about INR 35-40 crores.
Sir, by when is the next leg of the energy efficiency initiative going to be implemented for Urea Plant?
Prashant, we have a roadmap stretching out to 2028, and there are various projects which are under consideration. Some have been awarded to consultants for doing the necessary engineering work. We shall be awaiting the replies, and then there is a cycle of ordering the equipment and then putting them in place during the turnaround. So this will stretch up to 2028. We have a plan going forward, and it is being developed even as we. What I want to assure you is that energy efficiency remains a very key focus of the company, number one. And number two, this is a we are looking at good efficiency projects going forward, and we have a plan in place. There will be at least three to four such plants that we will implement, which have been generated in-house, and they have to be vetted by the various engineering consultants.
Okay. Sir, how much was the additional subsidy on DAP pertaining to Q1 POS savings?
I think the government had announced a number of 3,500. We have accounted a little less than that.
Okay. And sir, your subsidy outstanding has reduced dramatically in the last few quarters, and especially in Q2 as well. Sir, does it also include subsidy pending on fertilizers sold but are yet to achieve POS savings?
When we are accounting it into the books, then it becomes at the point of first point of sale, it becomes a kind of book debt. So it will include both what is billed to the government and unbilled to the government.
Sir, in that case, is it that your fertilizer sales at retail level happen within the first 70-75 days of the quarter itself, which is why you get subsidy before the quarter closes? Is that the case?
No, it is not like that. The sales for fertilizer is a continuous process. Now, it could be in higher intensity or lower intensity as time goes on. So first 75 days and all that, I think, is an artificial distinction. It is going on. There are some territories where it will be a little late. For instance, it may be due to climatic conditions. It may be due to soil conditions. So those things keep happening. And we are fortunate today that the government has got substantial amounts in terms of its budgets to pay to the companies. And if you efficiently raise your bills, they are getting paid on time.
Right, and sir, I mean, good efforts on that part for reducing the subsidy outstanding. Sir, coming to the domestic crop protection business, while even the industry has seen subdued growth due to missing of sprays because of continuous rains, we have managed to outperform industry growth. How have we been able to do that? Some color on that, and how is the liquidation also happening in your crop protection business? Some highlight on that as well.
So my understanding from my sales team is that between 60%-65% sale is on cash. So that is instant liquidation. As far as how we have done better and why we have done better, well, it's a little involved subject. I would like to put it across to you when I made the point that we have about 61 products in the three segments: weedicides, fungicides, and insecticides. And we have always tried to marry the requirement of the farmers to what is the emergent and current requirements. And to that extent, we have a very strong and solid planning process, sourcing process, evaluation process for the value for money. And I think that's the reason why we are able to have a range of options for the farmers instead of being stuck in one or two verticals. So that makes the difference, that is one.
Secondly, our strong alliances and relationships that we are building on. Some of them are Gen 1X, and they are patented combination stuff, which is now coming up. So I think those are creating the value drivers for our business.
Okay. Sir, one question on TAN. We are also setting up 210,000 tons nitric acid plant. How much of nitric acid will be used in TAN?
I don't think we are setting up a 210,000. We have not announced. We are setting up a 240,000 tons technical ammonium nitrate plant, of which the precursor chemical is WNA, which is weak nitric acid. I think you're referring to that part. Weak nitric acid can be sold as weak nitric acid. Weak nitric acid can be forward-converted into technical ammonium nitrate also.
Okay. So there's no plan.
The plan is to convert that nitric acid into technical ammonium nitrate.
But there's a separate TAN plant for that.
No, no. There are two plants within the TAN plant. One is the weak nitric acid plant, which then is used to use further ammonia to convert it into technical ammonium nitrate. It's a two-step process. There are two plants in one.
Right, and sir, what is the update on CAPEX plans for IMACID?
My understanding is that the board has closed or more or less approved, subject to one condition, of the 200,000 tons expansion of phosphoric acid.
This should come on stream by when?
My understanding is that the engineering work has been awarded, and normally these kind of projects take about two and a half, three years to come to fruition. Subject to they are achieving zero days. And in this case, of course, there is no problem in terms of finances. It's only a question of how quickly the technical parameters and other things are decided and closed.
Lastly, sir, how much is the gas price for the quarter?
I think for this quarter, people have been contracting DAP between $620-$645.
Okay. In terms of $ per MMBtu?
Is this a gas or DAP?
Gas. Gas.
Okay. Okay. Gas has been around, I think, about $16.7-$17.
Okay. Okay, sir. That's it from my side. Thank you for the questions and congrats on a good set of numbers.
Thank you, Prashant.
Thank you. Before we take the next question, we'd like to remind participants to press star and one to ask a question. Next question is from the line of Phalguni Datta from Mansarovar Financial Services. Please go ahead.
Good afternoon, sir. Sir, very good numbers. I just had one question. I joined a bit late, so maybe I would have missed. What led to the significant increase in owned manufactured fertilizer profits other than this energy efficiency, which you mentioned about INR 40-odd crores?
Not only we have sold almost 1 lakh tons more.
Okay. Okay, sir. Thank you.
Thank you. We'll take a next question from the line of Ashok Jain, an individual investor. Please go ahead.
Yeah, Abhay Baijal. I'm Ashok Jain from Mumbai. First of all, congratulations for wonderful results. Now, I would like to ask on operations and then balance sheet items, and then I mean, future projections. So one first question is that if I see this complex fertilizer revenue has come down drastically. It has come down to INR 261 crores, as against the June quarter of INR 1,111 crores or INR 1,972 crores previous year June quarter, I mean, September quarter. But if I see that the HRS segment liabilities are concerned, that has gone to INR 772 crores, as against the INR 567 crores in the June quarter. So it looks something unusual. First of all, why the, I mean, this revenue has come down? And second, how the liabilities has gone up?
I'll give you in two parts. First of all, I think if you refer to my opening remarks, it says that there were availability issues. Therefore, the sales were restricted. Therefore, the revenue came down. We sold out of stock and whatever we purchased. Number two, you asked about we had also contracted some amount of fertilizers at six-month kind of tenor terms. What is coming out in terms of the accounts payable side? So how it has gone to INR 770, I mean, this is INR 205 crores increase in last one quarter, whereas the sale is not there. So does it mean that we have added inventory out of proportion? Some stock has been carried forward, and that stock will be sold in this quarter as well as the next quarter.
Yeah, because the overall stock level is at static level. I mean, so that means we are having this inventory item, used item of this complex fertilizer. I feel that we will be able to sell it in due time.
Yes, we'll be able to sell. Not, of course.
Yeah. And now coming to crop protection chemicals, here I see that the revenue has come down from June 2024 quarter from INR 342 crores to INR 289 crores. So no doubt, I mean, profitability is good. So I just want to know why revenue has come down this quarter. And this is the area where I think we should give more focus over the UMSB doing it. Yeah
Ashok Jain, the poi nt is I made a mention of the fact that there were late rains, unseasonal rains, and the fact that some of our territories had a problem in terms of abs orbing these chemicals in terms of the sales part, so this will be made up as we go forward.
But do you feel that there is a good, I mean, because this is a good profitability business. So obviously, you are giving focus to it. So do you think good chance of, I mean, good growth in it?
I would say that if you look at the quarter to half year to half year, that would be a more correct analysis of the matter.
Okay.
See the numbers that you have said. It should not be seen quarter on quarter, but you should see Q1 to Q1 and Q2 to Q2. Typically, one should see it half year to half year. From half year to half year, you see it was from 542 to 632 crores, which is 17% value. The profits are from 119 crores to 164 crores.
Yes. That's good. Yeah. Now, coming to this joint venture which we are having with Indo Maroc Phosphore , so here our profitability has gone up. It's quite good. So do you feel that the same growth can continue that I have?
This company has a production capacity running to about 40,000 tons per month, and so the two things that profitability depends upon are the contribution levels and the sales that are achieved, so as of that, if you were to look at the current situation and possibly looking a little bit into the future, things are on an even keel. I think they should be able to continue this performance.
Okay. Now, coming to the balance sheet item, here if you see on page number five, trade payables.
Yes.
Hello? Yeah. If you see that page number five, trade payables, you will find that the total outstanding dues of creditors, other than micro enterprises and small enterprises, it has shot up to INR 2,012 crores. And secondly, the other financial liability has also gone up to INR 690 crores, as against INR 406 and INR 761 crores. So this is a huge liability that has gone up. So I am unable to understand why it has, I mean, like this. What happened?
I can tell you in very short term, this is money that we owe to the government.
Okay.
There is a process called escalation and de-escalation. Fortunately or unfortunately, we were receiving a little bit more subsidy from the government than was eligible. To that extent, this is a payable.
Oh, that's wonderful.
Over a period of time, maybe in the next month, two months, three months, we will be paying that off. So this will normalize.
Yeah. And now coming to that investment part, obviously, it has gone up to, I mean, INR 2,783 crores. So if I see revenue coming out of it, that is obviously seems quite low. I mean, first of all, I could not make out where it has been shown in the P&L, but still, I feel if it is, suppose, part in other income, then it is low. I mean, this is what I feel.
Mr. Jain, it is like this that this part which we owe to the government is actually converted into cash and placed as mutual fund investments. To that extent, there will be interest income on that. That will be part of other interest.
Now, coming to the future, I mean, this expansion plan, I mean, if I see the balance sheet of last year, annual report, we are saying that 240,000 MTPA Technical Ammonium Nitrate plant and 210,000 that WNA plant. So here I just wanted to know how much the approximately cost we are anticipating in it and how much we have spent, and when do you think it can be completed?
Could you repeat that? I couldn't get you said.
Yes. I mean, if I see the annual report of last year, March, here it says that 10 MTPA Technical Ammonium Nitrate plant, we are thinking of 240,000 metric ton per annum expansion, and the second is 210,000 MTPA WNA plant. So my question is, how much do you feel that approximate cost of it, and how much we have already spent, and when do you think it can be completed?
Okay. So you want to know what is the project cost? I think the board-approved project cost is about INR 1,600 crores.
Okay. Both the plant?
Crores.
Sorry? Is the INR 1,600 crores for both the plants, am I right?
Yes, yes.
Yeah?
We have spent about INR 400 crore.
Okay. And when do you feel that this will be completed?
We will be completing it by October 25.
October, yeah. Okay, okay. But this 400 crores is not showing in capital work in progress. Anyway, you are saying because capital work in progress is around 200 crores or so. So you feel that by October 25, it can be completed?
Yeah, yeah. Not at all.
Okay. And this.
These are milestone payments. This is an LSTK contract to Larsen and Toubro. They draw down on the basis of whatever work they have done, and that is as for the milestone payments, and it is according to schedule. The major payment will start happening once the equipment start arising. At the moment, it's only advances and so on given for the major equipment and construction activities.
So that, I mean, sales from the new that can come, I mean, after one year. We can expect that.
No, no, no. Sir, Mr. Jain, the payment is no indicator of progress because equipment orders are already placed. So as for milestone payments, the payment to the vendor will be made. They will draw the payment from us. So when the equipment arrives, the majority of the payment will happen. So suddenly, we'll see an increase in capital work in progress.
Okay, okay. Good, good. So, I mean, Abhaydeep, I mean, overall, I can say that the company has done extremely well, and we are very happy. And I would like to remain in touch that, obviously, I will, I mean, follow the due process. Thank you very much.
Thank you very much, Ashok Jain .
Thank you.
Thank you. We'll take a next question from the line of Harmish Desai from PhillipCapital. Please go ahead.
Good afternoon. Thank you for taking my question. Is my voice audible?
Yes, Mr. Desai, yes.
Yeah. Thank you, sir. So first question, on the TAN plant, you have given the update in the presentation that the amount spent up till September. Can you give an update of what is expected amount to be spent in FY25 on the TAN project by the end of FY25?
Cumulatively, about INR 600 crores.
Understood. Sir, coming to the crop production segment that you guys have been reporting, the performance has been consistently good in the first half. Can you, in brief, give an update of what could this be attributed to?
I think you just answered this question when I was asking.
I'm sorry. I joined a colleague for that. I'm very sorry for that. Yeah.
So there's reputation that we are actually a company who are creating value in the products through matching the expectations of the farmers, timely placement, good communication and terms of usage, and giving quality to the farmers. That is one part. Secondly, we have a range of products. Instead of, I think you had mentioned in my opening remarks, we have 62 products across all the three categories. So there is a range of crop. There's a range of the insecticide or insects or the weed or the fungus which needs to be addressed. So all of that goes through a process of our first testing it in our fields, understanding the value proposition, placing the value proposition properly to the farmer, and then convincing him to buy our product in comparison to others. Plus, our price points are very reasonable. We have always wanted to be value for money.
And that support has helped us. That's why the growth is there.
Got it. Thank you for the detailed explanation, sir. Sir, some of your peers have reported some amount of product returns because of inconsistent monsoon season in the 2Q. Did we face anything like that?
No.
Okay. And so we have been consistent in terms of our product placement. That is the reason why we did not face such problems?
I think, first of all, we assess the market, I think, more accurately. We understand what the farmer is needing. We don't pump up the channel just because we want to achieve numbers. And as I said, the range of products that we have creates that flexibility with us. We have a continuous discussion with our supply chain backward and forward. We take only that quantity which we want to do. So those are the things I think the management of the whole process of serving and providing product to the farmer. That is the most important issue.
Understood. Understood. And sir, any update on MR6 performance? The performance in the first half has been really good. So do you expect this to continue in the second half?
Again, I would say that this question was answered by me earlier also. The company is on an even keel. We are producing about 40,000 tons per month. And given the situation and contribution which it is in, I don't see any negatives coming up in terms of repeating the performance.
Got it. Got it. Sir, can you give us the volume of Gadepan 1 and 2 and Gadepan 3 for the quarter?
I would ask Mr. Anand Agrawal to give you the numbers.
Yeah.
For Harmish, for G1 and G2, our numbers have been 5.71 compared to 5.51 last year, and G3, 3.62 compared to 3.57 in the last year.
Understood, sir. Sir, are there any plant shutdowns to be taken this year?
Yes. Gadepan 3 plant turnaround taken for turnaround in the month of March 2025.
Understood, sir. Yeah. That is all. Thank you so much. Thank you so much.
Thank you. We'll take a next question from the line of Phalguni Datta from Mansarovar Financial Services. Please go ahead.
Sir, I had one more question on nano DAP. So what was the value of the sales for that in H1?
We have sold about 2 lakh bottles.
Okay.
And that is not Nano P. That is Biophosphorus.
Okay.
Please understand that it is not derived from a chemical process. It is derived from a biological process. That makes it a unique product.
Okay. And this is a part of which of our segment?
This is part of our specialty nutrient segment in the CPCSM segment overall.
Okay. And obviously, this is outside subsidy, right?
Yes, it is.
Thank you, sir. That's all from my side.
Thank you. Ladies and gentlemen, to ask a question, please press star and one on your phones now. As there are no further questions, I now hand over the conference to the management team for closing comments. Over to you, sir.
So thank you very much for a brief and sharp exchange of views, I would say. Thank you very much for listening to us, and we hope to continue to create value for you going forward. Thank you so much.
Thank you, sir. On behalf of Chambal Fertilizers and Chemicals Limited, that concludes the conference call. Thank you for joining us, and you may now disconnect from the.