Ladies and gentlemen, good day and welcome to the Chambal Fertilisers and Chemicals Q2 and H1 FY2026 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 call, please signal an operator by pressing star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Rishabh Barar from CDR India. Thank you, and over to you, sir.
Good day, everyone, and thank you for joining us on the Chambal Fertilisers and Chemicals Q2 and H1 FY2026 earnings call. We have with us today Mr. Abhay Baijal, Managing Director; Mr. Narinder Goyal, Business Head, Manufacturing Operations; Mr. Anuj Jain, CFO; Mr. Ashish K. Srivastava, Vice President, Sales and Marketing; Mr. Tridib Barat, Vice President, Legal and Company Secretary. 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 the 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. To quickly recap our numbers for the quarter and the review on a standalone basis, revenues amounted to INR 6,413 crore. As against INR 4,346 crore of last year, and the company achieved an EBITDA of INR 882 crore against INR 834 crore last year. Profit after tax of INR 602 crore as against INR 500 crore last year, which is a growth of 20%. For half-year FY2026 on a standalone basis, revenues amounted to INR 12,110 crore as against INR 9,279 crore last year. The company achieved an EBITDA of INR 1,812 crore as against INR 1,776 crore last year. Profit after tax of INR 1,240 crore as against INR 1,053 crore last year, which is a growth of 18%.
For the quarter, production volumes were at 8.81 lakh metric tons compared to 9.09 lakh metric tons last year. Urea sales for the year amounted to 9.34 lakh metric tons against 9.65 lakh metric tons in the previous year. Urea volumes are lower mainly because of an unscheduled short stoppage of Gadepan 3 plant. Subsidy receipts continue to be timely. As of September 30, 2025, our subsidy receipt was INR 6,347 crore in half-year. Our P&K Fertilisers revenue increased due to higher volumes and prices. This has been driven by prudent and strategic sourcing strategy and enabling subsidy framework. Traction in volume growth for our crop protection and specialty nutrient business continues to be strong at 28%. In quarter two, the crop protection and specialty nutrient revenues stood at INR 374 crore as against INR 289 crore in the corresponding quarter, which is a growth of about 29% year-on-year.
Contribution was at INR 114 crore in quarter two FY 2026 compared to INR 83 crore in quarter two FY 2025, which is a growth of 37%. During the quarter, we introduced six new products, which included three crop protection products and three new specialty nutrient products, including biological new variant of water-soluble formulation of our flagship Suprophos. A total of 22 products were launched in half-year FY 2025-2026. Today, our CPC portfolio comprises 76 products of distinct chemistries covering fungicides, weedicides, and insecticides. These are well accepted by farmers across India and our territory. On the biological side, we have achieved a revenue growth of 80% as compared to last year. Half-year FY 2025-2026 total revenue stood at INR 73 crore as against INR 40 crore of last year. CFCL is now focusing increasingly on technologies which bring benefits in terms of improving farm yield, improved soil health, and provide better product outcomes.
Uttam Pranam, our bio-nanophosphorus offering, launched in June, is showing promise. During the quarter-end review, we introduced a hybrid variety of mustard seed. We also launched a research variety of wheat seeds now in quarter three of fiscal year 2026, which now complements our agri-input portfolio. Our seed-to-harvest program continues to contribute towards improving farmer awareness and showcase product efficacy. During the quarter, Chambal conducted over 1,820 farmer meetings, 421 demos, and have analyzed about 38,000 soil samples. We have also significantly expanded our use of social media to reach out to a large number of stakeholders. Our technical ammonium nitrate plant is progressing in line with stated timelines. All requisite statutory approvals are in place. We have spent about INR 1,052 crore till September 25, and we are likely to begin operations as planned in January 2026. Our joint venture, Emisit, is performing well with better margins.
The increase in the phosphoric acid capacity from 5 lakh metric tons to 7 lakh metric tons is expected to be implemented by December 2026, which will optimize its operations and increase profitability further. With that, we are happy to take your questions. Thank you.
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask questions may press star and one on the touchstone 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 questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from Prashant Biyani from Elara Capital. Please go ahead.
Sir, good morning and congrats on a good set of results. Sir, out of INR 953 crore of recovery on de-escalation of urea subsidies, is there any element of it in PNL also?
Could you repeat that? I didn't get. What did you say? CDR?
Out of INR 953 crore of recovery on de-escalation on urea subsidy, which you have shared in your presentation, is there any element of it in P&L as well, or everything is in balance sheet only?
No, no, no. Let me tell you, we account for subsidy on the basis of what is the income accrued to us. This is the gas prices and all that. In case we have received extra or we have received less, income remains the same. This is only a cash flow event.
Right. Sir, based on the current NBS policy, what would be your outlook on your traded volume for H2?
We have placed quite a bit of material already. We have contracted post, although you know that the announcement of the policy was pretty late. It was more or less at the end of the middle end of the season because for us in Chambal, working in the northern part of the country, mostly our sales are done by mid-December. Therefore, that means that our kind of purchase and placement has to happen at least a month earlier than what it should have been. Nevertheless, we had some stocks of both NPK, DAP, and we have contracted some more DAP, almost 100,000 tons. I think that we are well covered for our position in that situation.
Right. Sir, when are we commencing the trial run for the TAN plant?
As I said, that somewhere in December or so, we will start trialing out the first part, that is nitric acid, and then proceed over to the next part, which is in January. More or less, we would meet the timelines.
Sir, the revenue recognition or sales should start from Q4 itself?
Yes, to some extent. We are hopeful that by mid-February or so, our product should start hitting the market.
Sir, lastly, before I jump back to the queue, how much is the current cash on books?
I will ask Anuj Jain to give an answer to that.
It's about INR 700 crore.
Okay, sir. Thank you so much for your time.
Thank you. Next question is from Rehan Syed from Three Nature Asset Managers. Please go ahead.
Yeah, good afternoon to our team and thank you for the opportunity. My first question is around your month end. So your P&K fertilisers have done well in this quarter with strong volumes and margins I've seen here. How sustainable is this performance in the second half? Do you see any potential policy or pricing that could impact the momentum on the industry side or on the competitive edge side?
I couldn't get your question completely because it's a little garbled. If you could speak a little slowly and clearly, I will get through.
Sure, sure. I want to understand regarding your NPK fertiliser side. Your NPK has done well in this quarter with strong volumes and margins. How sustainable are you seeing this performance in the second half? Do you see any potential policy or pricing changes that could impact our momentum going forward?
Okay. As I said, in the second half, our half basically is the third quarter only. The sales in the fourth quarter are not to that extent because it is off-season for the agricultural production. Now, as far as the third quarter is concerned, we will carry forward the momentum forward. As far as the policy is concerned, it is more a continuation of what it was in the past. There are no new initiatives. The advantage/disadvantage policy for DAP and TSP carries forth. The numbers that are there in terms of the per kg subsidy, they are more or less in line. They could have been better, but definitely what the government has to also look at is its fiscal position. To that extent, we will have to see how we can market it better places in the channel and so on.
To that extent, I think we are more or less covered for the third quarter. That is. Beyond that, we will have to see how to stock now for the next season. The real activity in quarter four is to plan for the season beginning quarter four 2026.
That's the reason that our receivables have increased in this quarter because of higher P&K sales, right, sir?
This higher P&K, could you please repeat? I couldn't get exactly what you're trying to ask.
Yeah, yeah. I'm saying that that's the reason that our receivables have increased in this quarter because of higher P&K sales.
I still can't get.
Your voice is not.
Your voices are coming very garbled. I think if you would rejoin after redialing, maybe it will be better.
Now it's clear, sir?
Mr. Syed, if you're using a handset, we request you to use the handset.
Yeah, I'm using handset only. Now it's clear?
Yeah, somewhat better.
Yeah. I'm asking, sir, that's the reason that our receivables have increased in this quarter because of higher P&K sales. That's what's my ask.
What's the higher P&K?
Receivables increased, I'm asking.
Yeah, receivables increased, I think.
Yeah, receivables increased, yes, because naturally we have put in more sales. As you see from last year, our sales are higher by about INR 21 billion. Most of it is due to the P&K fertilisers.
Okay.
That will take its time to play out. We have to liquidate it through the channel, liquidate it through the POS, and then only we get eligible for subsidy. You will be aware that under the advantage/disadvantage mechanism, the per ton subsidy of DAP has been pretty high. It is close to almost INR 58,000 or INR 59,000 a ton, which is why there is a little accumulation, as you can see.
Thank you. Next question is from Keshav Garg from Countercyclical PMS. Please go ahead.
Sir, actually, I'm new to the company, so please pardon my ignorance. Sir, I'm trying to understand that our purchase of traded goods has increased to almost INR 3,000 crore in this quarter versus less than INR 700 crore a year before, same quarter. Sir, are we doing some trading business? Sir, is this pertaining to the complex fertiliser segment? Sir, are we manufacturing or are we trading? Sir, I can see the capital employed in this business has also jumped approximately 10 times year on year. Sir, if you could just explain what exactly is happening over there.
Yeah, we internationally source these fertilisers. We don't manufacture them. Then we market them through our channels. Because of the increased volume that we wanted to do, we purchase and then we sell. This is the stock that we would be carrying, or rather the purchasing that we have done. Then we are selling this. There is a cycle, the working capital cycle, which is why you would see the capital employed also having gone up.
Sir, is this increase in capital employed to INR 3,000 crore temporary and will it again come down to roughly INR 1,000 crore, or is it here to stay at these levels?
No, no, it will come down because once we liquidate, it will first transfer from stock to book debt and book debt to. Then convert back into cash. This is the cash-to-cash cycle. We will be liquidating most of our stocks by the end of December. Thereafter, there is maybe some outstanding on account of subsidy. That's all. That will get trued up by the fourth quarter.
Sir, and in our urea business, sir, are there plans to expand capacity or we will use this division as a cash cow to increase our rest of the business?
No, we are always looking to expand our offerings in all segments. Subject to the fact that the government has a very clear-cut policy or different policy for urea as compared to what is it in the NPS policy for NPKs. Here, we have to go through a process in which there is either a selection by the government for units who have applied for expansion, or there is a general policy wherein everybody has to qualify on certain parameters. As of now, there is talk that we know of in terms of the government thinking in terms of doing a policy, but nothing on paper to suggest that that policy is there. The fundamentals in terms of demand and supply do point to an increasing requirement for production, at least three to four plants in the country.
That is for the government to decide in its wisdom as to when they will bring the policy. For our part, if the opportunity presents itself, we shall be quite honestly evaluating it for doing this project.
Right, sir. And sir, regarding our 104A, sir, is this plant expected to break even? Since the beginning or for the initial few quarters, some initial losses are expected until the capacity utilisation reaches some decent level?
No, I hope not. We have confident people running the plant. That is production, I do not think is an issue. Marketing, you know that this product in balance, there is a lot of imported material that also comes in. Actually, the market is a little short at the moment. We should be able to sell subject to our quality and consistency of performance. I would suggest, I would rather be quite optimistic and think that yes, we should be able to start breaking even quickly enough. I will not hazard a guess how many quarters, but we should be able to break even quickly enough.
Sir, for FY 2027, sir, at what utilisation can we reach full capacity utilisation at least for the second half of FY 2027?
I would hope so. I do not think I am not pessimistic on that.
Sir, at current realizations of 10, sir, what kind of revenue can we generate if we operate at full capacity utilization approximately? Sir, what kind of EBITDA margins can shareholders expect from this 10?
I will not name a number, but I can give you two pointers that you can calculate yourself. One is that the plant has a capacity of about 240,000 tons per year, which is a run rate of almost 20,000 tons per month. On top of that, if we do production and sales are equal and that we are able to sell what we produce. If you see the current numbers, and the cost of ammonia that we have, it is a healthy four-digit, five-digit margin is there in this business.
Sir, so what kind of IRR do you expect from this INR 10 investment that we have made approximately?
Chambal always invests in businesses with a payback. I do not know very much about IRR that you would be able to understand, but. It is something like between six and seven years we want a payback.
Great, sir. Thank you very much.
Thank you. Next question is from Viraj Kacharya from SIMPL. Please go ahead.
Yeah, thanks for the opportunity. Just continuing on the TAN part. Correct me, what you said is we should be able to see a scale-up to a full utilisation in the year one itself, given how the current market conditions are playing out. Did I understand that correctly?
Yes.
Just an extension to this, if you see there are a few other players also looking to add their capacity into the market. There are some players like Deepak who are focusing more on value-added solutions as a way to differentiate and capture a larger part of the wallet share. How are we approaching in terms of the go-to-market for TAN and what gives us the confidence that we will be able to scale this up much quicker?
Our initial discussions with potential buyers is encouraging. That is number one. Number two, in terms of we have three actually product lines in this. One is nitric acid, WNA. Second is AN Melt, and third is HDAN. That is the high-density ammonium nitrate. In addition, the company is always exploring other opportunities, like low-density ammonium nitrate, which is LDAN, which is a more kind of a premium product. We are continuously looking at doing the engineering work for that. It is an adjunct of the same main plant. We are in discussions with technology suppliers to look at the other product lines or other value-added lines in the TAN project. That work is ongoing.
Right, but in terms of the, so will price be a play for us to scale up materially faster given that we have the advantage of in-house captive ammonia feed? So the 10,000 plus.
That is. Since we have an ammonia-backed plant, definitely that is a major strategic advantage that we have. Second part is that the way this product is moving at the moment and the requirement and demand, the way it is linked to infrastructure and production of power, coal production, and so on, we are quite hopeful that we can look at expanding this activity further in the future. Of course, we have to establish our credentials in the first round that we are now at the moment executing. Should we be able to do that successfully, I'm sure the board will get the confidence to do expansion activities in this, whether in this location or some other.
Okay, just one extension on this and then move to other segment. See, you talked about LDAN and other value-added products which we are evaluating. If we decide to go ahead with the project, then typically the timeline would be similar to what we underwent with TAN, the existing three product spaces, or the timeline would be much shorter. Can you give some more perspective?
My impression by talking to the technology suppliers is that if we choose to do it at the same location, co-located, then definitely it has a much shorter timeframe than what the initial project took to. In fact, we have provisions made in terms of foundations, etc., for the establishment of the second line in terms of LDAN. That was planned during the project itself.
Okay, got it. Now, in the urea business. You talked about unscheduled stoppages from G3. Was that the only reason for the drop in spreads and volumes, or is there any other element in, say, the energy norms for G1, G2, or anything on G3?
No, G3, as the moment as is running its course, the policy is not yet run its course. So there is no question of energy norms, etc., in that. The incident that you have referred to and we have referred to is basically at the fag end of the production. There is a drilling activity that happens. I mean, there is more a kind of a material handling issue which has to be then swept into a conveyor and then taken out. That is a large kind of structure, about 24-25 meters, in which this arm moves and got broken. So we had to stop the plant for some time and repair it. Now, that is one part of the story. The second part of the story is that you would have noticed unseasonal rains happening during the September quarter.
That had some disruptions in distribution and supply. Sales were a little bit affected, but that we have made up in the first month of October itself.
Okay. Any update on the energy norms for G1, G2? What kind of an impact do we see? In urea?
I think last time we have told you it is a low double-digit number per quarter. I think that continues.
Thank you. Before we move to the next question, a request to participants to please limit your questions to two per participant. The next question is from Riju from Antique Stockbroking. Please go ahead.
Hello, hi sir. Thanks for the opportunity. My question is regarding the agrochemical business. During the quarter, there was an unseasonal rainfall, due to which most of the companies have registered a negative kind of growth. In that context, we have seen a strong YOI growth for the agrochemical. How have we been able to generate that kind of strong double-digit growth in the agrochemical portfolio? Could you explain that?
I will leave that question to Mr. Ashish K. Srivastava, our Vice President of Marketing.
Okay. Riju, we have a different strategy of placement in sales. We can't reveal much on that, but we are aligned to taking stocks of the inventory of competition as well as ours while placing the product. It might be that gives us a little bit edge. I can't go beyond that.
Yes, sir. Correct. So that I can understand. As per our understanding and as per the other, like our Channel Chiefs, I think there was a limited window in terms of spraying of agrochemical by the farmers due to heavy to very heavy rainfall. In that context, we have seen a significant growth. Just wanted to understand, it was driven by the geography expansion or new geography where we have inroads our products. How the growth was?
Yeah. So basically, during the extended monsoon season, both paddy as well as cotton crops, farmers had to skip some sprays because they were not able to go to the field. There were pockets where the rains were slightly earlier or were slightly late. It was not one geography where the sprays did not happen. We were able to catch on the opportunities in the locations by shifting stocks. That is the reason.
Sir, a second question in terms of the biological portfolio. The biological portfolio, is it 100% biological, or is there bio-stimulant as well?
No, it's a 100% biological portfolio. We are still not started. We have still not included biostimulants in our portfolio. We are in the process of doing that. That, again, would be through a biological route. When we say biological, it would be biological.
Understood, sir. In terms of the DAP supply for the rabies season in India, if you could indicate how much DAP imports or how much DAP availability for the rabies season versus the last year rabies season?
If you look at Riju, the imports during the first half in Kharif, the DAP imports were 106% higher than the last Kharif. NPK's imports were higher by 5% over the last period.
Understood, sir. Thanks for clarifying all the questions. Yeah.
Thank you.
Okay.
Next question is from Meet Mehta from Prasoon Exponentials. Please go ahead.
Yeah. Thank you for the opportunity. Am I audible?
Yes, you are. I would appreciate if you spoke a little bit more clearly.
Okay. Just one question. I just wanted to ask, how does gross margin change for DAP business from any sense on that from quarter on quarter or year on year?
For the NPK business, the margins depend upon purchases and, of course, the sales pricing that happens. Now, we have seen a situation where the prices have generally risen on account of sympathy with DAP. You recall the DAP was at around $650 levels to begin with at the beginning of the year, I'm talking calendar year. And it has gone up to a level of $850. That means almost a $200 price swing. In sympathy, even the NPKs and other grades also went up. Naturally, the extent of what we can pass on to the farmer is limited. Going forward, for those who import and provide companies as Chambal itself, there will be a compression in margin. As far as the volume is concerned, I'm happy to tell you that so far, the tonnages that we have done, we would be touching almost.
1.1 million.
1.1 million tons or so of this, which is quite a growth from last year, which is almost from 5.5 lakh tons to almost 11 lakh tons. That means that Chambal is back in the format that it used to be, being enabled by a policy which we have appreciated from the government side. That being the case, of course, these kind of pluses and minuses will continue. At this business, this is back to its volume levels.
Okay. Thanks. Thank you.
Thank you. Next question is from Sandeep Mukherjee from SKP Securities. Please go ahead. Mr. Sandeep, please go ahead with the question. There seems to be no response on the line of Mr. Sandeep. We move to the next question. Next question is from Dhruv Muchal from HDFC Asset Management. Please go ahead.
Yes, sir. Thank you so much. You mentioned the urea volumes were lower because of some maintenance issues. Can we get these volumes in 2H because you anyways have some buffer capacity that you can use, or that would not be possible?
No, we would largely make it up. Between the three plants, except for the 2.2 plant which will go into turnaround by February. Between one and three, we would make up what we lost in the past.
Okay. So particularly on three, what you lost, say, for example, because of maintenance, that you can offset it by the production in 2H, so the overall number, at least from 3.3, remains broadly the same on an annual basis?
Broadly, yes. It will be a minor, say, 7,000-8,000 tons negative kind of number.
Okay. Sir, secondly, is on the DAP subsidy. Earlier the government had an additional subsidy until at least the last revision. Does that still remain, or just wanted to understand on DAP? I think INR 3,500 is what you mentioned.
DAP is now a kind of a 4% margin on MRP business, which means that the government is saying that you bring it at any price. But we will recognize that price through a certain other mechanism other than NBS. That is an overlay on the NBS. There is a basic NBS price. On top of that, there is some special package of INR 3,500. And then there is an advantage/disadvantage clause, which means that if you have purchased beyond a number, then the difference between that number and your bill of lading price on ship-to-ship distance is then reimbursed separately. So it means that you are now operating in a fixed MRP floating subsidy regime, more or less akin to what is happening in urea.
Urea. It is effectively a fixed spread on your cost that you get irrespective. It does not matter if your cost versus, say, for example, somebody else who is importing the DAP at, say, for example, a different price. Everyone is reimbursed at its own cost, not at different costs. For example, I have continued.
Dhruv, the government does not leave it that simple. The fact is the matter is, to not show efficiency in purchase, you will get a rap on the knuckle. Chambal is sensitive to the fact that we should not allow this kind of a put option to be exploited by the suppliers elsewhere. Chambal has been very careful in purchasing how and where and what time it is purchased. In fact, in the last two deals that we did, we were at the lowest number for the period or a fortnightly period. Of course, this is a fluctuating market, but we have brought at the lowest levels that could be possible. It shows. Maybe negotiate.
All right. Sir, last question. I was a bit off the call in the middle, but you were mentioning about there could be a shortage in domestic urea availability in, I think, a few years. There could be probably some discussion of a policy for domestic self-sufficiency that way. I am just trying to understand, what is the extent of deficit that you see over the next few years, and what stage are we in this policymaking decision?
I'll just tell you like this. See, this year, we are expected to top 400 lakh metric tons. That is 400.
42 meters.
Tons consumption. The production in the domestic side is close to 308-310 lakh metric tons. That leaves a shortfall of about 90 lakh metric tons. The growth pattern that we are seeing is because of intensive cropping, application in maize, hybrid maize, and so on, for ethanol purposes and so on. We are seeing a regular 3% kind of growth, 2.5-3% kind of growth. That means we should compound. If you compound it for three years, we are talking somewhere close to 425 lakh metric tons or 430 lakh metric tons by 2029 or 2030. That would leave, if there are no new plants, almost 1 crore 20 lakh metric tons. Plus, one of the things about the urea dynamics is that most of it, almost 55%, goes in rabi. Rabi is a short season.
Of almost 93 days, 94 days. The drawdown of stocks is very, very high in rabi and at a very fast speed. It will touch close to 2.5 lakh metric tons per day. Nowhere are we there in terms of continuous supply in terms of production. Therefore, the more you keep the gap open, the supply disruptions in rabi become more and more difficult to manage. I am sure that the government is quite cognizant of this. Apart from the fact to locate almost 1.2, 1 or 13 million tons of material, then buy it, then bring it to place, and then the impact on international prices and the subsidy outgrowth. These factors do weigh heavily in the minds of our policy planners. There is therefore a very serious case for allowing further production in India through the policy, which I am sure they must be.
Cogitating and thinking about. As far as I know, there have been some discussions. When and how they will come to this situation, I do not know. Should they do so, Chambal is willing to look at the policy and think about doing another plant.
All right. Sir, will there be a scope to expand in the existing facility? Probably Gadepan 4, or it will be a new, it will have to be, if, for example, if it happens, it will have to be a new plant.
No, we have capacity in the current location.
I mean, just trying to also understand the degree of capacity that you can expand. I mean, quantum of capacity that you can expand in the existing facility.
No, I think the plant sizes are standard. It will be like the Gadepan 3 plant.
Okay. Got it. Sure, sir. Great. Thank you so much and all the best.
Thank you. Next question is from Suyash from MBAPL. Please go ahead.
Hello.
Yes.
We can hear you, please. Chambal, congratulations on the good set of results. As you can see, we have grown for our manufacturing quarter-on-quarter manufacturing results. Still, comparing to the last six months, this kind of result is still deficit. Is this due to some internal working going on, or what is the result for, or what is the reason for not matching the capacity?
Are you talking about urea production or something else?
Yeah, the manufacturing operations, sir.
Yeah, yeah. In the manufacturing operations, in the six months, as you would have noticed if you went to the past quarters, on call, we had about 55,000 tons or so shortfall in Gadepan 2 plant because of some limitations in the syngas compressor. Thereafter, we have had this in this quarter issue in terms of Gadepan 3 plant for about a week, which lost us some 17,000-18,000 tons. Almost 60,000-70,000 tons is the shortfall. We are clear we are not happy about it, obviously. Sometimes these things do happen in the plants. As far as the next part of the year is concerned, I am assured by Mr. Goyal, who's our Head of Manufacturing, that these kind of instances are not likely to happen.
Yeah. Hoping the best for that. Secondly, moving on the complex fertilizer part, sir, as the industry is seeing a shift towards NPK fertilizers, specifically the NPK fertilizers. The increase from the last financial year, if we see, there is almost a four-times increase in the half-yearly fertilizer sale. Is it only to capture the momentum of the market, or is Chambal seeing forward to have a shift in NPK fertilizer also?
No, NPK fertilizers, Suyash, is a very important component of the agri-input and nutrient market. Since we want to be there with all product offerings, all the grades, all the types. You see, if you see our strategy, we are there in agro-nutrients, which is fertilizers. In fertilizers, we have to be on all grades, which is not only urea nitrogenous, but also the NPKs. We are there in potash, single. That is a straight fertilizer as potash as well. You see that in terms of the specialty nutrient, which is sulfur, zinc, manganese, and other micronutrients which are there, plus water-soluble fertilizers, we are there as well. We went into the biological segments. We have gone into the crop protection segment. We are going into the seed segment. We are complementing our entire offering in the agri-input space. To that extent, being in.
NPK fertilizer is definitely a very, very important thing for us to do, and we are totally committed to it.
No, sir, my question was, is it temporary, or are we looking forward to seeing more of complex?
I will ask Mr. Ashish Srivastava to repeat the commitment. Yeah, yeah. Suyash, what has happened is Chambal was primarily in a DAP marketing area, and then over a period of time, we have expanded to geographies which consume a lot of NPKs, like Maharashtra and West Bengal. The additional volumes of NPKs would definitely come from these geographies. Also, the northern geography, some farmers have started using some NPKs in comparison to DAP. It is not a temporary thing. I think it is going to continue this way.
Thank you. Next question is from Ankur Jain, who's an individual investor. Please go ahead.
Hello. Hi. Am I audible?
Yeah, Mr. Jain, you are.
We received a GST notice in September. Can you please give us more detail on it?
You said something about DAP?
GST notice, which.
Oh, GST notice. I would ask Mr. Jain to give an answer.
See, this GST notice is the, basically, on the subsidy component. An officer in Bihar has levied the GST, which is, as you know, subsidy is exempted from the GST. I mean, it is very clear. It is as per the law. We are taking, we are initiating the action through rectification application, and of course, we are expecting the positive results. That has come recently, so we have filed the rectification application against that.
I'll just add to this that, Mr. Jain, I don't want to use the word nonsense, but it is actually a frivolous kind of an action by the officer. The law is very clear that GST is applicable on the maximum retail price printed on the bag, and it has nothing to do with the GST, with the subsidy. In fact, one of the reasons why the entire industry is up in arms with this arrangement is that it results in accumulation of GST credit in the books of mostly the importers and sellers. This is a continuous problem, and the entire finance ministry is seized of the matter at the moment. This part that the officer has applied is absolutely frivolous, I would say, in terms of how the notice has been given. It will not stand in the case.
Understood. Sir, did we notice, did we inform the ministry that it's an industry-wide problem how they treat the GST on the subsidy or not?
No, no. This fact is known to the, I mean, individual cases, the ministry does not respond to. It is left to us to.
Right, right.
Agitate it in the court of law. As far as the accumulation of subsidy GST in the books of many companies, that is a continuing issue which both the Department of Fertilizer and the Department of Revenue are well seized of, and maybe a solution shall come.
Okay.
There's no bearing on the results either now or in the future.
Okay. My second question is regarding new capex. I know previous participants, they asked about if we want to expand into urea, which definitely depends on the policy. Because since we are generating a significant amount of cash, do we have a plan for next one or two years to deploy it?
Yeah, definitely. Apart from the remnant of what we will expand in 10, which is the balance amount that we have to spend, the second part is we are continuously going into capital expenditure for energy efficiency projects or replacement of items and so on. That is a kind of a routine matter. Urea, we have said, dependent on policy, but there are other options that we are looking for, and I think we have had been discussing this for the last three or four quarters. We are reaching somewhere, some conclusion, I think, where we are developing a certain kind of a plan. Should the board approve it, which therefore then maybe in FY 2026-2027 kind of time frame, we could have something on that.
Okay, okay. I think we need to have a, we are generating a significant amount of cash, so we need to have like a, I'm sure you guys are thinking it, but we need to think about long-term, like three to five years, seven years plan, because if we have INR 2,000 crore, INR 3,000 crore each year, then we should be just ready to deploy it, right?
Yes, Mr. Jain, we are very conscious of this, and we are developing project lines which are aligned with our business and which will give a certain kind of return. See, we have got two guardrails in this. One, that we have to be in the allied lines of business. Secondly, we have to have a certain return. We have to meet these two stringent conditions to get it passed from the board. That takes some time in developing.
Thank you. Before we take the next question, a request to participants to please limit your questions to two per participant. Next question is from Sandeep Mukherjee from SKP Securities. Please go ahead.
Yes, sir. Thanks for taking my question. Sir, what is the split of production volume between G1, G2, and G3 for the quarter?
How much did G3 produce? Anuj will answer that.
Gadepan 3, we have quarter two production is about 3.3 lakh metric tons.
For G1 and G2, what is the answer?
G1 and G2 is 5.5 lakh metric tons.
Okay, sir. The gas cost for the quarter, sir?
Gas cost for the quarter was on NCV basis, about $15 per MMBtu.
Okay, okay, sir. My next question is, I was reading a recent article of. Government has brought the ammonium sulfate under subsidy. It is pitching as. An urea alternative. What is your take on this, sir?
Almost 600,000 tons of ammonium sulfate is sold in India, majorly in groundnut and tobacco crop, and almost 30-35% market share is in Gujarat alone. We have an establishment there, so we are looking at that product as a portfolio in coming Kharif. We are looking at that product.
Okay, okay, sir. Thank you. Thank you very much.
Thank you. Next question is from Viraj Kacharya from SIMPL. Please go ahead.
Yeah, hi. Thanks for the opportunity again. Just a couple of questions on the crop protection facility thing. Can you give some perspective? What is the share of revenue from new products, say products introduced in the last two, three years? If I have to understand, say, the top five or top ten products, what will be their revenue contribution?
Viraj, almost if you look at the new products launched in the last three to four years, they are contributing to volumes roughly around 30%.
Okay. The top five, top ten products?
The top five products would be giving us a revenue of around. Top five. Let me do a quick math. Should be anything between around 25%.
The composition of top five or top ten, has it largely remained similar, say, three years back or four years, or is there a lot of churn?
No, there have been changes happening now in the last three, four years because of new chemistries coming in, like a new wheat weedicide is giving us good volumes, or some good fungicides have given us good volume. There is a shift in, so those first five, seven, ten are shifting. It is not standard now.
Okay. If I have to just understand in terms of market coverage, say, for four regions where we typically have been selling urea and other fertilizers and new territories, how would that coverage be for the crop protection specialty nutrients?
Crop protection specialty nutrients, we are there in almost 80% of the geography now. In terms of the volumes, and Chambal volumes, majorly it's coming from the northern territories. We have made significant inroads in Maharashtra this year.
Okay. So if I have to look at crop protection or specialty nutrients, of the total business. Would it be right to say 80% is coming from cold territories and 20% from new regions, or 80% is the coverage?
75, 25 would be better this time.
Okay. Got it. And scale of seed business in H1?
Seed business in H1? You want revenue?
Yeah.
It's just 1% of the total traded volumes. In terms of value, it's around INR 8 crore.
Okay. Can I squeeze in one?
We're just introduced.
We're just introduced, yeah.
Okay. Can I just squeeze in one question? See, in crop protection, the margins we have owned is one of the highest ever. It's close to 30% average margins. And this is even remarkable considering it's a traded business at the end of the day. What has given these high margins, and how should one really look at sustainability of margins? Because in the past, we've always talked about 18%-20% operating margins as a sustainable margin in crop protection. The drivers of this margin and how should we understand sustainability?
Yeah, Viraj, I think we have been talking about this for the last three or four quarters. The reason for this is two or three-fold. One is a placement strategy. Also, now that we have started introducing new products. I mentioned 22 new introductions. That freshness that we bring to the portfolio and the churn that we bring, that is one. Second is that keeps the engagement with the farmer that we are increasing through our various outreach programs. The trust that they have in the brand Uttam, what we have done work for the last so many years as far as our urea and other businesses and churn. This overall kind of marketing mix, if I could put it this way, that has made a lot of difference. Now the trade with whom we work very closely is quite enthused.
It is no longer an experiment for them when they used to work with us about five, six years back. Now this is something that they look forward to. They look forward to what the new products we are bringing in. What are the new solutions we are getting in. Secondly, the price points and where we are putting it. It is not the most expensive, and it is not the cheapest. It is somewhere very well positioned in terms of what the farmer will prefer and give some premium to in terms of what the brand is and what the connection with the company overall is. Those factors are quite unique to Chambal in this particular business. Also, please note that when we say that we are giving a complete solution, farming solution in terms of nutrients and in terms of.
Water solubles, all the other elements also there. They feel very comfortable when we deal with the Uttam brand. I think this is one of the things that I can make out. Marketing is a complex exercise. You do not know what clicks when. I think more or less we have got the chemistry in this right. That is all I can say.
Thank you. Next question is from Amit Aghija from HG Hava. Please go ahead.
Thank you for the opportunity. Congratulations for the good set of numbers. My question is, can I get to the number of employees that currently the companies have? What is the expected hiring over the next one or two years?
Right. Number of employees is about 1,100 plus. Give or take. Going forward, it will depend on what kind of activities we do. If we go for other locations, new expansions, and so on, then definitely the number will increase. As the company is growing, definitely the number of employees is expanding on the basis of the actions or the business lines that we are developing.
Sir, would it be possible for you to give me the number? How much of the sales come directly through the Digital Farmer Connect or the size of the network as well?
The Digital Farmer Connect, I would leave to Mr. Srivastava could tell us.
Yeah, Amit. I couldn't understand your question. Can you repeat that?
Yeah. How much of the sales come directly through the Digital Farmer Connect?
We are not selling anything on the digital side. Everything is through the channel.
Okay. What do you have?
What we have, Amit, is an app and a system by which they connect with us. They get educated about our products, the new forthcoming products, the usage methodology for the old products or whatever products we have online. Secondly, a kind of a referral mechanism or a mechanism by which they can ask questions and get answers onto some specific problems. This app was launched, I would say, about two months back. We have something like 80,000-90,000.
Yeah. So.
Active followers and subscribers. We do disseminate through LinkedIn, Meta, and YouTube, and so on. It is growing. I think we have a very stiff target in terms of having 300,000-500,000 subscribers on this, which we should achieve by next year.
Is it possible to give the size of the dealer network?
Size of?
Dealer network.
Dealer network, so close to 5,000 dealers. If you talk about the retail outlets, in private sector, close to around 40,000 retail outlets sell our fertilizers in private trade, and equal amount of sell through cooperatives. This is for fertilizers.
All products.
All products.
Thank you, sir. I appreciate answering my questions for the future. Thank you.
Thank you.
Thank you.
Thank you very much. That was the last question. I would now like to hand the conference over to the management team for closing comments.
Thank you, Rishabh. I think it was a very engaging conversation and penetrating questions. I hope we have been able to answer to the satisfaction of our investor community. We look forward to more such events and to the next quarter's results. Thank you very much.
Thank you very much. On behalf of Chambal Fertilisers and Chemicals, that concludes this conference. Thank you for joining us, ladies and gentlemen. You may now disconnect our lines.