Ladies and gentlemen, good day, and welcome to the Coromandel Q2 FY 2025 earnings conference call, hosted by DAM Capital Advisors Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Nitin Agarwal from DAM Capital Advisors. Thank you, and over to you, sir.
Thank you, Sugant. Hi, good afternoon, everyone, and a very, very warm welcome to Coromandel International's Q2 FY 2025 post-results earnings call, hosted by DAM Capital Advisors Limited. On the call today, we have representing Coromandel International Management, Mr. Sankarasubramanian S., Managing Director and Chief Executive Officer. Dr. Raghuram Devarakonda, Executive Director, CPC Bio and Retail Business; and Ms. Jayashree Satagopan, President Corporate and CFO. I'll hand over the call to the Coromandel management team to make the opening comments, and then we'll open the floor for questions. Please go ahead, sir.
Good afternoon, everyone, and thanks, Nitin, for organizing this Q2 call for Coromandel. First, I'll give you overall business environment, what we witnessed during this quarter, followed by business performance, and Jayshree can take us through on the financial updates, then we can have Q&A session. As you all know, that the monsoon has been good at 108% of the long-term period average, and we have witnessed a strong Kharif season. Especially our south markets received 114% of the normal rain. Northeast monsoon, which is likely to bring rains to Rayalaseema and coastal Andhra, has started on a strong note, and we do expect a very strong Rabi season. IMD is predicting above normal monsoon, and as we speak, the reservoir levels are looking very healthy.
The storage, especially in the southern markets, are much better than what it was in the last year. And also, the crop acreages good in Kharif, except for cotton, rest of the crops we have witnessed a growth over the last year and are better than the average of five years as well. So we do expect this positive trend to continue in the Rabi season with improved reservoir levels and increased acreages. Overall, food grain output is likely to be good, which is very good from the food inflation point of view. On the policy front, also, government has been increasing the MSP, and there's been a recent announcement on increasing MSP for the Rabi season, been 2%-7% increasing number over the last year for various crops.
Also, the government has been advocating the PM-PRANAM scheme, and they released funds to farmers to improve the liquidity in the market. As you all know, the NBS rates for the rabi has already been announced ahead of time. There's been a marginal increase in the nutrient rates for P, whereas N and S has been seeing some reduction. And government also, in order to focus on availability of DAP, has given special package for DAP, and also encouraged industry to actively source DAP and agreed for compensation beyond certain cutoff rates. So overall, there's been some challenges due to supply chain linkage and global geopolitical situation. There's been challenge in DAP availability, which is improving now. On the industry front, raw material prices started moving up in the recent past.
After reaching the lows in June, July, we have seen a spike happening due to Middle East tariffs and also limited participation by China in exports, and certain supplies of raw materials also has resulted in some production outages for certain industry players, so in this, the production more or less maintained well. In fact, I would say there's been a growth in production by 4%. Of course, the imports were down due to supply-related challenges, and the consumption has moved up because of the good monsoon, especially on the NPK side. If you have to look into kharif consumption data, it's very heartening to note that NPK has witnessed a significant growth of a million tonne increase of 18% over the corresponding period of last year, replacing DAP.
This is a good trend to be in because this encourages balanced nutrition, and that is what Coromandel has been advocating for many years now. Consumption overall has been down, basically due to drop in DAP consumption made up adequately by NPK. Potash has largely moved up due to improved availability and single super phosphate. Here again, there has been a margin reduction, but the industry is moving more towards value-added products. Overall, I would say that the industry performance in a given situation of the global commodity supply chain challenges has performed well, and the farmers have started using more of agri inputs to improve the productivity. Coming to specifically the company's performance in Q2, fertilizer plants operated over 100% capacity.
Production during the quarter was at 8.8 lakh tonnes, 13% growth over last year, being one of the record performance for the fertilizer operations. Also, during this quarter, we restarted our phosphoric acid, sulfuric acid plants at Ennore. Also, our project what we announced in early part of the year in April, in, for the phosphoric acid and sulfuric acid facility at Kakinada, is progressing as per plan. We have released major orders and been a good progress during this quarter. This project is likely to be commissioned by March 2026, and hopefully, when this plant is ready, overall 60%-70% of our captive acid requirements will be met internally, and also gives a lot of operational flexibility and raw material security.
Also, some time back, we announced about acquiring the additional stake in BMCC, basically consolidating our position. Currently, we hold 45%, and with this recent announcement of additional acquisition of 8.8%, we'll be crossing 50%, we'll be holding 53.8%. And we are also in the process of stabilizing our rock crushing plant at Senegal, which is just commissioned last week, and hopefully, we should streamline the production and see increased volumes coming into India. Of course, during the quarter, we have significantly increased the usage of Senegal rock at Vizag, and ensured the output of acid is in line with our expectations.
And also, as part of our expansion plan, having created raw material linkages for both acid and rock, as the next logical step, board has approved yesterday's meeting for our company's plan to expand the granulation capacity by 7.5 lakh tons. This will be a brownfield expansion coming up within Kakinada, which will take the capacity of Kakinada, currently with a current capacity of 22.5, to 30 lakh tons, making it one of the largest phosphate site in the country. This is in line with government thrust on Atmanirbhar Bharat in phosphatics. With a lot of global challenges in availability, government has been encouraging industry to go in for captive production. As a company, we have been consciously securing our raw materials, and now phosphate facility is also coming up.
It's a next logical step we have decided to move in for a granulation train, and as you all know, that industry is still importing fifty thousand million tons of DAP, NPK, especially major imports coming to north part of India, and that is where Coromandel is looking to fill this, and substitute the imported DAP with NPKs. We have been a strong player in NP, NPKs in the southern part of India, and now we'll try and see how do we replicate this story in the north to replace the imported DAP. This will also help in balanced nutrition, improving the yield for the farming community. Overall, on the operational side, business has registered a very strong volume growth during this quarter.
In fact, on a quarterly basis, we have done 13% volume growth over the last year, and also 7% on a half-yearly basis. On a half-yearly basis, we have reached a 21.5 lakh ton, which is one of the record sales volume we have done in the recent past. On the consumption basis also, our market share has gone up for the quarter. In fact, during this quarter, there's a significant increase in our consumption from 15% of last year to 20%. In Single Super Phosphate, we have improved our volumes, grown by 9%, and basically, we started focusing more on differentiated fertilizers like GroPlus, which has got micronutrients in SSP. Also, this quarter, we have launched Urea SSP. It is basically a combination of N and P in SSP.
It has got the same ratio of, N and P, similar to what we have in DAP. It's been very well received in the market and can be a good substitute and alternate for the DAP. And the advantage what we have also is, we get price subsidy for this product. As a business, SSP has turned out well this quarter, with the focus on, unique grades and also differentiated products and UriSSP. And also, as you know that we are into drone spraying services. We have created a separate vertical. We have been driving this business for the last two quarters, and we have done 40,000 acres.
We have this unique advantage of having drones supplied from our group company, Dhaksha, and we have also partnered with some of the institutional players in this segment to improve the drone spraying services. Another business, which we started off last year in November, Nano DAP, has received very well in the marketplace. During this quarter, we have focused mainly on consumption part, whatever we placed in the earlier quarters. A lot of market development activities and awareness campaigns have been carried out. We have engaged with various research institutes in terms of improving and ensuring that this product brings in desired impact for the farmers in terms of replacing DAP. Slowly, the awareness is coming in, and we are getting good response, especially for the crops with higher foliage.
Government also been giving trust to this product as a good alternative to DAP. We'll be scaling up these volumes, and we have created the state-of-the-art plant in Kakinada, and hopefully, we should do better in the coming quarter. On the specialty fertilizers, I think volumes have grown compared to last year, and we have done very well on the sulfur segment. Especially states like Karnataka and Maharashtra, we have performed very well on the specialty nutrients category, and we are also in the process of establishing additional capacity for sulfur, which will be coming up by end of Q3. Overall, the nutrient business has done very well in the given situation of volatile commodity prices. We are able to focus on our own unique grades and give trust to the business.
On the crop protection, which had tough quarters in the last year, has really played out well during this quarter. The business has improved on top line as well as in the profitability. The margins have moved up, and especially in the formulation business segment, there has been a volume growth of more than 20% in the domestic formulation, thanks to the new formulations we have introduced during this half year. They're all performing very well in the marketplace, and we continue to work with innovators to bring such new products to improve our formulation business in India. And also, thanks to the positive response to Mancozeb demand in the global market, there's been a considerable uptick in volumes, and exports have grown by 10%.
Good revival in demand for Mancozeb, and in anticipating this, we are also trying to see whether we can increase our capacities to meet the market requirement. This buoyancy in Mancozeb demand is likely to sustain for the coming quarters as well. As you all know, in yesterday's board meeting, the board has also approved putting up a multi-purpose plant at Ankaleshwar. This again, a brownfield expansion we are looking to put up for the fungicide plants, which recently off-patent molecules. We'll be first one to get into this product. In terms of volume in that segment, they are high value and generate a good amount of top line, and we'll be focusing in Latin American markets as well as formulations for the domestic market.
We'll be investing INR 170 crores in this plant, which will take 18 months to come in, and finally we are working on product registrations as well as scaling up volumes in the period to come. This will also help us to understand new chemistries and bring in new process technologies, which will help us to attract other CDMO players who are looking to tie up with us. So this will be a good start on the CDMO opportunity, which we have been talking about for the few quarters now. So we'll continue to engage on this prospective discussions with innovators, and we'll continue to focus on R&D trials to come up with a new set of molecules.
This investment of multipurpose plant is the beginning, and we need to add some more in the days to come to see that we grow this crop protection business in a faster pace. On bioproducts, where we are one of the largest player, only player in the neem-based biopesticides, we are trying to diversify the segment, and we could improve our sourcing capabilities to set up the new systems to handle the neem seeds. We could source neem at a competitive price, which will help us to have some visibility on the margin structures in the coming quarters. The retail where we have significant presence in the southern markets, being one of the largest player in the agri-rural retail chain. We, we have done very well across the product categories.
In fact, the non-fertilizer segment has grown well, thanks to increased footfalls in our retail outlets. We also opened 48 new stores during this quarter. Retail is a way for us to stand and improve the business. In fact, we have seen that whatever new products we are introducing in various business segments, retail could scale up the volumes and go to market much better than the trade channel. In fact, we are also launching this Nano DAP, and we received very well, good response, and the direct connect with customers is really helpful to understand the cycle of the customer and ensure that we position the products well. Overall, across all the business verticals, the business has done well.
In terms of the overall profitability, maybe marginally lower than last year, but in terms of the sequential performance over the previous quarters, we have grown both on top line and, as well as bottom line, and the Q2 performance is also better than our street expectations. I will now request Jayashree to take us through the financial performance, and then we can have Q&A later.
Good afternoon. Good afternoon, everyone, and thanks, Sankar. The financial performance for the quarter and the half year is as below. As far as the turnover is concerned, the company recorded a consolidated total income of INR 7,498 crores during the quarter, and INR 12,281 crores during the half year, vis-a-vis the corresponding period of INR 7,033 crores and INR 12,771 crores respectively. This marks a growth of 7% for the quarter and a degrowth of 4% for the half year. The decrease in revenues is mainly on account of drop in subsidy rates in the fertilizer business as compared to the last year. Subsidy business share in revenues stands at 84% during the quarter and 83% for the half year.
During the previous year, it was 84% for the quarter and 85% for the half year. On profitability, the consolidated EBITDA for the quarter was INR 975 crores as against 1,059 crores in the previous year. For the half year, it was INR 1,481 crores, vis-a-vis INR 1,768 crores during the previous year. Subsidy businesses share in EBITDA stands at 73% during the quarter and 72% for the half year. Corresponding numbers of the previous year was at 81% and 82% respectively. Net profit after tax for the quarter was INR 659 crores in comparison to INR 755 crores to the corresponding quarter last year, and INR 968 crores for the half year as against INR 1,249 crores in the previous year.
As far as subsidy is concerned, during this quarter, the company has received INR 2,868 crores towards subsidy claims. In the previous year, this amount was INR 4,243 crores. For the half year ended, the company received INR 3,855 crores as subsidy. In the previous year, the corresponding number was INR 6,312 crores. Subsidy outstanding as on thirtieth September 2023 was INR 1,714 crores. In the previous year, this number was INR 1,497 crores. The company had closed the quarter with a net cash, which is including the deposits, mutual fund investments, of INR 4,214 crores, and it is focused on improving the working capital levels to further enhance the net cash position.
As far as the product is concerned, recently we have seen the rupee depreciating. Coromandel continued to maintain a conservative position and hedge its exposure accordingly. We thank you all for your continued interest in Coromandel and joining our call today. We look forward to the interactions and the question and answers.
Thank you very much, ma'am. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment before the question queue assembles. Our first question is from the line of Prashant Biyani from Elara Securities. Please go ahead.
Yes, thank you for the opportunity. Ma'am, what drove the profitability improvement in crop protection and especially the non-subsidy, non-CP business?
Hi, Prashant. To answer your question, as the crop protection business, we've seen a good growth happening in the domestic formulation business. That's point number one. And, during the first half, the company had introduced 10 new products, including one patented molecule of ISK. So all these products have received a very encouraging response, and that has to some extent showed the profitability. Apart from that, some of the cost measures that have been taken up at the plant over the past couple of years have also led to a better cost position compared to the previous years, which has also helped in shoring up the margins.
Ma'am, on the non-subsidy, non-CP part?
The non-subsidy, non-CP part is mainly specialty nutrients. Some of it is also in the retail business. And we also have the recent launch of Nano products. The specialty nutrient business has been doing pretty well. It's continuing its trend like in the past years. And there has been some good actions in terms of sourcing the material with the right cost. And these have also contributed in improving the margins.
Okay. Ma'am, secondly, if Sankar sir can answer this, rock prices have increased of late, I guess from the lows. And how are we stocked up on the inventory of rock phosphate, till which month? And do you also expect phosphoric acid prices to increase from here? If yes, then what could be the immediate levels that we can look at?
See, phosphoric price for the Q3 is yet to be settled, so but there will be definite increase compared to what it is right now. Because, you know, the DAP prices have moved up, and generally these prices do move in tandem with, DAP. But, other input prices have gone up, so industry is negotiating to get better rates, but there will be increase over the previous quarter. In terms of the rock prices, the advantage what Coromandel has got in terms of, access to mines and understanding the cost structure and increasing the supplies from Senegal is helping us to manage better in terms of our rock sourcing. We always ensure that we cover for the three to four months ahead, considering the sailing time and also the challenges what we have in the geopolitical situation.
We cover up ahead of time, and, to that extent, always we have a positive carry on, strategic materials like rock phosphate.
Right, sir. Sir, then, going forward, if you see the ammonia prices, subsidy on N has reduced, but prices have increased. So how would it change the complex portfolio mix for you going into H2? Will it be more towards NPK only, and if then, in which grade it will be?
See, this has been a temporary phenomenon. There has been some production outages by a large player in the Middle East, and, prices should soften. Only one-month spike is there, but we don't expect this to sustain for a long time, so ammonia prices can come down. Having said that, the Rabi subsidy is what has been already announced. So we need to see how we optimize the product mix. And, also there can be some flexibility in terms of the farm gate prices, later December, in January, going into January, which could help us to pass on this cost, if this cost is likely to remain where it is now. But I don't believe that, these higher ammonia levels are likely to remain. There can be some temporary challenges in the margin structure, but, it should get normalized.
We do keep optimizing the grades, and that is the flexibility what we have in switching over from one NPKs to another NPKs, and there we have pricing flexibility and input cost advantage. Our own captive production of sulfuric acid and phosphate also helps us to sustain the margin.
Sure. And then lastly, before I jump back into the queue, how much was the revenue from Nano fertilizer as well as Dhaksha in Q2?
Nano fertilizer, in terms of our focus for Q2, as I mentioned, more on the consumption side, and we have done, roughly, in terms of the volumes, I can tell you, 16 lakh bottles is what I think we first sold during the first half. While we can scale up the volumes, we'll be focusing on doing it in Q3. It's precisely 16.8 lakh bottles is what we have done, one liter bottles. And in terms of the Dhaksha, probably we'll address it separately. Jayashree can add, but mainly its orders are in terms of agri drones, which government has purchased, and there are some balance orders executed with other fertilizer companies as well. Other different orders are in the pipeline, waiting for the execution to happen.
Thank you. That's it from my side.
Thank you. Our next question is on the line of Parth Mehta from Vallum Capital. Please go ahead.
Yeah, hi. Just wanted to ask, so, you know, you mentioned that the new MPP in the crop protection side will help meet the growing demand for the identified products in domestic and export geographies. If you could just help me, you know, which are the products that you've identified, and in the domestic and the export geographies that would help us grow?
I think Ragu is on the call. Ragu probably can take you, but we don't want to get into specifics on which products for obvious reasons, but broadly, Ragu can talk to you on what we are trying to focus on.
Okay. Okay, and,
Raghu, are you on the call?
Hello?
Yeah. No, I, my colleague-
Yeah.
Yeah. Ragu, can you... Yeah, if you can just-
Yeah, I think, you know, at the moment, whatever Shankar mentioned, for the obvious reasons, we don't want to divulge the specific names. But as you are aware, dependence on Mancozeb is quite significant. So with this approach, it's going to broad-base our portfolio in fungicides and thereby de-risking dependence on that. So, and besides, the CapEx will take a while to execute as well. Once we go live, I'm sure we can share more details on the specific products. Suffice to say that these are relatively younger products. I think, again, Shankar, in his initial address, mentioned that these are recently off-patent molecules. So that there is a longevity, and therefore, you know, sustained demand for such molecules going forward.
And these, as you may be aware, you know, in the more, what should I say, contemporary AIs, they also lend themselves to good combination. So they combine very well with other molecules. So we plan to formulate some novel mixtures in the meantime, which some of which are already in the pipeline for registration. So by the time the CapEx gets executed, we will also be receiving some of these registrations so that we can quickly leverage the capacities that are coming online. I hope that kind of addresses your question.
Yes, yes, that was helpful. I just wanted to understand, are we coming up with any other new molecules that are, you know, being developed in our R&D, or are they more from the trials that we have done globally?
As you are aware, we are a generics player. But for the new molecules, I mean, when you say new, if they are patented, we are in the process of bringing, you know, such molecules from innovators. We are not innovators. We don't do discovery, on our own, but-
Hello, Ragu, sir?
So there are plans for bringing in patented molecules through our distribution channel globally.
Okay. Okay, great. Just last one, if you can help me, how is the Chinese molecules faring out right now in the export market scenario situation globally, in terms of, you know, volumes or pricing?
Yeah, at the moment, the prices have bottomed out is the general sentiment globally. And, the expectation is that they will start going up some, sometime middle of next year. That is the calendar year. So and, I mean, these, these prices, we believe, are not sustainable for too long because, the Chinese would also like to recover whatever they have invested in. Because in the previous, you know, as you may be aware, you know, there was a glut in the system, inventory in the pipeline, as well as there was a drop in the commodity prices in Brazil for soybean, cotton, and so on, which kind of reduced the, the growers', you know, willingness to spend money on additional space. So all of those are easing up, particularly the inventory is nearly gone.
The excess capacities will continue to haunt.
... maybe the smaller players, the marginal players would have been pushed out, so the total available capacity might have shrunk. And thirdly, the commodity prices are also expected to go up. So all the factors, all the three factors that led to a significant price drop are now easing off, so that should eventually lead to improvement in prices. So this is what we understand of the scenario as far as the Chinese players are concerned in the market.
Okay, great. Thanks, thanks, that's helpful.
Thank you. Before we take our next question, we would like to remind participants that you may press star and one to ask a question. Our next question is on the line of Vishnu Kumar from Avendus Spark. Please go ahead.
Good afternoon. Thanks for your time. In terms of the fertilizer business, the operational profitability is better than expected, for most of us. So is there any thing that we have done differently, or is because we understand that pricing was relatively not that great for us, given the RM and the end market prices. So what has led to kind of slightly better, at least what we, from what we were considering? Is it any operational costs or mix any help would be great.
You are aware that last year we commissioned sulfuric acid plant, and that's been well-timed and very helpful. When the global sulfuric acid prices went up, we could produce sulfuric acid at a much lower price. Also the power generation, what we envisaged, we could operate our turbines at full capacity, and that has significantly reduced the conversion cost. Our ability to scale up the projects to 100% plus capacity, improve operational efficiencies, ensuring that the intermediates, like phosphoric acid, that we capture the value addition, we operate at full capacity. The timing of our raw material purchases and the type of rock, what we use, and the sources of acid we use is completely different.
We have product flexibility in terms of optimizing the NPK mix, depending on the subsidy and the market price, ability to source and use different type of raw materials, whether it is rock or acid, and our intermediate capacity is helping us to generate power and also alternate water source, like RO plant, which we put up last year. All this has been helpful to manage this sort of a volatility in commodity prices, and they come back with the margins. Had the commodity prices have been stable, our numbers would have been much more healthier than what we are reporting now.
Got it. How much would probably be a structural cost saving for us, like, as you, sir, mentioned on the power and the RO and water, others I understand can move up and down. So how much could be a structural cost savings that we are going forward we should see?
The sulfuric acid alone has, can potentially give us, close to INR 160-170 crore per annum, both in terms of the delta between the imported sulfuric acid price and the cost of production and the power generation. So last year will be somewhere between INR 40-45 crore, and that can get doubled. And it's not only helping us in bringing down the cost, but also in terms of the environmental norms, and we are one of the world-class, especially with norms much better than the global standards.
Understood, sir. Sir, also on the... You mentioned that this year, this quarter, or rather, we have seen on the curves, that the DAP consumption has been markedly lower and NPK has probably come up well. Is it this is because of the profitability for traders was very low? Or, since from import replacement angle, government would probably want us to probably import lesser DAP. So should we see structurally, this is going to be a theme for so DAP will go down? Is this more of a short-term issue or, like, we'll bounce back and DAP will come back?
No, absolutely. In fact, it looks to me a structural shift which is happening, especially in the north markets, which are predominantly using DAP for many years. To some extent, the shortfall in the availability has also helped the people to try out the NP grades like twenty, twenty as well as NPK grades. And government also encourages balanced nutrition, and it's a combination of multiple things. Lack of availability, making people to look for alternatives, and that has helped in improving the volume of NPK fertilizers by a million ton. And there has been a general increase over the last four years in terms of the share of NPK versus DAP in the overall phosphatics. This augurs well, and this helps in multiple nutrients.
In fact, as a company like Coromandel, we are not only focusing on primary nutrients NPK, but also trying to see whether we can add secondary nutrients like boron, zinc, and come up with unique grades. So more and more, I think the industry should move towards customized replacement. That's what our approach would be to ensure balanced nutrition, improve productivity for the farmers, and commodity prices supporting the case.
This 0.75 million tons of capacity, when are we likely to have it, I mean, in terms of commercial sales, when should we begin? And in the interim, to capture the market, before we launch the product, are we going to do additional marketing? And, how should we see the approach from now to the when the plant comes in?
A good question. The plant will take two years to come in, and, thankfully, we can't be waiting for the capacity to come in and start selling. In fact, currently, our volumes could have been much better had we have additional production. We are operating at 100% capacity. We are supplementing it with imports, but our imports are predominantly on DAP. In fact, currently, our sale volumes are much higher than what we produce. Our overall production is in the range of 31-32 lakh tons, whereas we are inching towards 40 lakh tons. So we will try to grow this volume for the next two years as well until we have our own capacity.
So we'll be also focusing on newer geographies, northern markets, where our efforts will start now in terms of seeding the market with NP and NPK and develop market for these grades. It may take a while before the switch happens from DAP to NPK, and that's what we'll be exactly doing during this project implementation time, so that as and when the plants are ready, we'll be able to supply those materials from our own manufacturing facility. Till such time, we'll be meeting with imports.
This area that we'll target will still be within the zone where our NBS subsidy is there, or we'll stretch it outside also?
Operates across India, so I don't see any challenge.
Got it, sir. Thank you, and all the best.
Thank you.
Thank you. Our next question is from the line of Risham Jain from DSP Asset Managers. Please go ahead.
Yeah, hi. Good afternoon, sir. So, just two, three questions. The first one is, you mentioned in your opening remarks that you've opened 45 new store in this quarter. Is that correct?
Mm-hmm.
This will be possibly the highest number of stores you have opened, it seems. So, what is the strategy on the retail front, let's say, over the next two, three years?
No, we are very keen to increase the footprints and, we have enough space to operate even in our key markets like Andhra Telangana, where we may look to increase the numbers from what we are in. I think currently we are around 50 to 800 stores. Our aim would be to increase it by another 20% at least in the coming two, three quarters. But we are very, very cautious in terms of where we are opening, so we ensure that, we break even at the earliest opportunity. Based on our learning curve, we don't take longer period nowadays to reach the break-even level. So our choice of location and the product segments and categories will play an important role. Our aim is to scale up the volumes, not only to certain markets, but also look at pan-India.
So we may be looking at western markets as well where we can target certain geographies and crop segments. So our aim would be to increase our retail footprints, and we got our model right. Our ability to connect with farmers have been far better than what it was few years before. So we'll try and exploit this opportunity.
Sir, from number perspective, the 750-800 stores can go to what number, let's say, in next three years?
We are in the discussion stage. We can let you know once we form up our strategy. I don't see why can't we double it in next two, three years' time, but still in the drawing board, and as I mentioned, that we are not in a hurry to increase the printers, but we'll do it in a systematic and cautious way.
Okay, understood. So the second question is, the incremental or higher subsidy for DAP versus NPK. So does that mean that our overall production will be higher of DAP versus NPK, at least in the near term?
As a company, we have been focusing on NPK production and we import DAP. We'll continue this strategy.
Okay, despite higher subsidy for DAP, that doesn't change anything from your overall production mix perspective?
Yeah, but additional compensation in DAP is helping to manage the gap between the subsidy and MRP versus the cost. It doesn't add value to the margin. So our strategy would be to optimize our production towards NPKs and import DAP to meet the supply commitment.
Understood. And, sir, just your guidance on the overall non-subsidy piece, which has been doing quite well, both from revenue as well as profitability perspective. Over the next two, three years, given there are multiple projects which are going on, how should one look at the overall non-subsidy piece?
Crop Protection is one area where, as Raghu mentioned, that we missed out in terms of the market growth because of the time gestation period involved in terms of putting up the facility and product initiation. So a lot of efforts have gone in the last two, three years in identifying the new molecules, and a lot of R&D trials have happened. So hopefully we will be releasing every year some new products. So you have seen this year we have done 10 formulation products, which have increased the domestic formulation sales. We are also looking to introduce new limitation molecules to reduce our dependency on nitrogen and increase our presence in Latin American markets. So we'll be driving our focus on CPC to capture as much as possible, both in the domestic and global markets, and specialty nutrients been growing steadily.
We have been improving our top line by 10%, and the EBITDA has been consistently growing, and that is one category we will try and see how best we can improve, and single superphosphate, which we don't talk much, but we have been consistently growing on volumes and bringing in value-added products, and capacities have been going up. So while it is also part of the subsidy business, but we have changed the overall approach to this business, and that is working out very well for us in terms of unique sales volumes and improved margins and profitability. Besides this retail, we have seen increased footfalls in all our retail outlets, and that is helping us to scale up the non-fertilizer categories where we make margins.
Our focus will be to increase the volumes of non-fertilizer category in the retail footprint. And bio business, very niche segment. Currently, we are focusing on export markets. We are trying to diversify other product categories. We are looking at new product segments in bio, so that is also likely to see traction in the coming periods. Our aim would be to, we have reached some size and scale in fertilizer business. We have done adequately and backward integrated, and we'll continue to grow that piece in terms of our mining, improving the value chain. But in terms of the volume, with this announcement of capacity, we are there as being the largest player in the phosphatic segments.
So our focus on coming quarters will be on driving the other non-fertilizer segments to grow on the top line. And also look out for step out opportunities, which are available. As and when it materializes, we'll be able to articulate. So our aim would be to go more on the non-subsidy piece in the coming quarter.
Okay, sir. Thanks for the detailed answers. All the best.
Thank you.
Thank you. Our next question is from the line of Bharat Singh from Quest Investment Advisors. Please go ahead.
Hi, good afternoon, Sankar and Jayashree, and thanks for the opportunity. Sir, Sankar, my question is of, say, three years perspective, what would be our capacity for this nutrient business, including SSP? And how do we see what kind of a backward integration at that point of time we'll have in terms of whether sulfuric acid or rock phosphate seed, and how that will play out? And second thing, when you are talking of this replacement of DAP with NPK, so how much scope is also there for replacing DAP with phosphate SSP? If you can give some, say, more color on how that thing will really play out. And last question is on the Nano DAP. So how much that will also, over a three-year period, if you can give some color.
On the four places, I think, with the current capacity, 3.2, and which are happening right now, will-
Yeah.
And with the new capacity augmentation from 0.5 lakh tons what we have announced, I think, overall capacity will go up to 45 lakh tons in the next two years' time. And with import of 5 lakh tons, at least we can be a 5 million-ton player on based phosphatic fertilizers, plus we have SSP of 1 million ton. Plus we do DAP and urea, sorry, we do MOP and, urea of 1 million ton. So effectively, if you look at, fertilizer segment, it's 6 million tons of phosphate, plus 1 million ton of urea, plus 500,000 tons of MOP. That's the size we are looking at as far as the fertilizer business is concerned. And, in terms of, Nano, as I mentioned that, we are not in a hurry.
We are actually ensuring that the farmers understand the product, and they come back and, they use it as a replacement, not as an add-on. And we are doing the brand promotion and channel engagement, and we are doing it on a large scale pan-India. Definitely, we see the promising future for Nano, not only in India, but we are looking at export opportunities. A lot of inquiries have come from Latin American markets, and, we can scale up our volumes, and, it's a good business segment to be in, supplementing our specialty fertilizers, which we have grown over a period of time. I don't remember, what is your third question? One is on the fourth one.
What kind of backward integration that we'll have? I mean, once we reach this NPK capacity or this DAP capacity of say, with this expansion, how much of backward integration we'll have?
I think we'll be close to 60% of the total intermediate capacity requirement. We keep some import to trade off, because there are always opportunities available to buy at low price, and especially products like sulfuric acid. We may not going for 100%, and phosphoric acid, at least we can say that will be 60% of the total requirement will be backward integrating. In terms of rock, we will see how it goes with the current mining which is happening. If there are other opportunities comes in, it's always... Because we are largest consumer of rock, and with the expansion of phosphate as we planned at Karnataka, our requirement will be in the range of 2 million tons-2.5 million tons, and our aim would be to see how best we can increase our mining operations.
Once we are successful with the current mines preparation, we may also look at increasing our mining presence also. So that will be our overall game plan, but as of now, we are quite comfortable with the capacity what we have as intermediate.
Jayashree, would you like to give some more color on this, Dhaksha? How Dhaksha are playing out? How much order do we have in, and how do we expect over a couple of years?
Okay. Yeah. Thanks, Bharat Singh, for this question. On Dhaksha, currently, the focus is on two areas. One is the defense orders that have been procured for about INR 240 crore. The team is in the process of executing the order, so we are awaiting the PDI from the government authority. Once it is through, over the next two quarters, the different drones should be completed and shipped. So that's the main focus. Apart from this, there is a lot of activities going on in terms of the agricultural drones. Currently, the large players with whom Dhaksha has been engaged are the fertilizer companies. The new team members have been recruited both for sales and service, so that they can work along with the other major agricultural companies as well, to see how we can get some agriculture-related orders.
There's also work going on with the government in this respect, because remember the drone scheme also will come into play as we expect during the later part of this year. While all of this is happening on the execution front, the team continues to participate in some of the other newer drone development through the R&D team, so that work is also parallelly happening, so in the next two to three years, depending upon the execution of these orders, Dhaksha should be able to garner more orders to come from the defense. The R&D work that is happening on the newer drones, as well as improvements in the agricultural drones, should also help it to consolidate and get better.
Last question on, say, since we are sitting with 4,000-plus crore kind of a net cash, so what will be our capital allocation, including for Dhaksha, additional investment, then other facility? So if you can please share more color.
Yeah, I think the cash that we have, like in the past, we've indicated, it will be mainly for the business growth within Coromandel, right? So each of the businesses come with their own proposals for the growth. You would have also seen that in this board meeting, there has been a sizable capital that has been approved by the board for both, nutrients as well as crop protection business. If there are opportunities that are there, either in the core or adjacencies or any step out, some of these cash that has been built up will be appropriately used. All of it depends upon how strategic is it, what are going to be some of the financial parameters that it needs of it. So that has been the norm with which we've been looking into allocating the capital.
On the same front, if there are interesting opportunities like we had Dhaksha coming up in the past or BMCC related investment that has happened in last two years, those also could be funded through this pool of surplus that has been accumulated.
How much revised CapEx for this year, next year, and for 2027 do we have in plan?
So this year, we are more or less, in line with what has been estimated and indicated to you all. The main CapEx for this year has been the sulfuric acid and the phosphoric acid plant of INR 1,000+ crores, which has been announced at Kakinada. So that spans over a period of couple of years until March twenty twenty-six. Similarly, the two major CapEx programs that are currently being announced will also go over the next two-year period. And Shankar was also mentioning there are a lot of projects that the teams are looking into to see how we can accelerate some of the growth initiatives within the company. And as we roll out the business plan for the year, I'm sure that we will come up with some more interesting proposals.
Subsequently, taking the management and the board approvals, we will be happy to share it with all of you.
Thank you. Thank you, and all the best, both, everyone.
Thank you.
Thank you. Our next question is from the line of Prashant Biyani from Elara Securities. Please go ahead.
Yeah. Sankar, sir, the point that you outlined regarding capacity of, say, four point five million ton and import of five lakh ton. So, where would we be seeding, or selling these, volumes? Would it be in our core and periphery markets? And, how much, volume do we do right now, say, in North and, regions around North? And where could that particular volumes be in the next five years?
The primary market, AP, Telangana, Karnataka, and the tertiary markets, both Maharashtra and Gujarat, we have been fairly supplying now. We don't have any presence in some of the key states like MP, UP and Rajasthan. In fact, if you look at next two, three years, lot of irrigation projects are likely to come up in MP, and Maharashtra also is adding in additional crop acreages. So we have done a detailed amount of strategic approach for additional volume. What I can say is we'll be looking for north markets where we don't have significant presence in terms of NPKs. While we are supplying SSP and also specialty fertilizers, we have not supplied NP and PK. So our aim would be to create those big markets there first.
And of course, our existing core markets, primary markets, our aim would be to capture the additional volume through our retail outlets. As I mentioned earlier, that we'll be increasing our footprint in the key markets, so our additional volumes can come here. And we don't see a challenge of selling something like 50,000 tons is between these markets. As India continues to import 6-8 million tons, and there can be a potential increase in volumes of the overall industry size, likely to go up in the next few years. Observing this additional volume would not be a challenge, and we have a Gromor built out.
Sir, do we have fertilizer business presence right now in UP or Rajasthan side to make the market ready for our large volumes in two, three years?
We have a significant presence in SSP. We are promoting value-added products there. We have presence through specialty fertilizers. Of course, crop protection, we have separate teams selling there, and Nano being a pan-India operation, and we have presence in certain markets, so I think as a company, we'll be moving towards more of the all-India player for nutrients. Rather than looking at the key first markets, we look at pan-India operations with a complete range of product portfolio, right from SSP to DAP and Nano and specialty fertilizers. The whole market is available for us, so that's the way we will look at and try to expand the volume.
... Right, and where do we stand in terms of latest business developments in Spec Chem or CDMO, if anyone can answer that?
CDMO, we have been evaluating some opportunities, and our initiative on multipurpose plant is also step in the direction to see how we can showcase our capabilities, which can help in attracting the innovators. And Spec Chem, we are again in the drawing board in terms of looking at the key segments where we want to go in, and probably once that finally emerges in the next two quarters, we'll be able to articulate our strategy much more faster.
All right. Thank you. That's it from my side.
Thank you. Our next question is from the line of Ranjeet from IIFL Securities. Please go ahead.
Yeah, hi, sir. Thank you for taking my question. The first question is on the NPK CapEx. So I believe this, since you have commented this is a recently offered end products, I believe to be SDHIs. The question is, how far would we be backward integrated into this, or, we are only going to target the manufacturing of technicals and would be importing the intermediates?
Do you want to address that? So as an approach to the manufacturing, obviously, cost efficiencies are something that we need to keep in mind. So the backward integration is still a point where we have significantly many suppliers for the key starting material. So that is how far we go, and that depends on the molecules that we are planning to manufacture or the set of molecules in the multiproduct plant. So depending on the molecules, we have figured out up to which point we need to backwardly integrate. We can't go right up to the end. There is no need also, because that's going to inflate the CapEx significantly.
So we have planned it in such a way that we will be able to source in an effective manner and then process the material to make it technically right. As far as the downstream products are concerned, as I mentioned, we are not stopping with just making AIs, but in parallel, we are. For some of them, we have already received the registration. For some, we are going to receive the registration for some of the formulations that we can produce using the AIs that we plan to manufacture with this multi-purpose plant. Both backward and forward, we are putting in the effort to extract maximum value out of it.
Right, sir. Thank you. Second question is to Shankar, sir. In the last call, you had kind of mentioned a couple of plans. One is what we have seen the board approving on the CapEx front. You had also had mentioned branching out of fertilizers and foraying into related chemistries. So is there any progress on that front, and by when can we expect an announcement on that front? Thank you.
As I told last time, we have now completed our translation project. We need to keep something for next quarter as well. We are working on it. As you know, with materials, everything will come back. It's very much in our radar. We will get you more soon.
Sure, sir. Thank you. That's all from my side.
Thank you. Ladies and gentlemen, in order to ensure that the management is able to answer questions from all participants, please limit your questions to two per participant. Our next question is from the line of Rohan Gupta from Nomura Wealth. Please go ahead.
Hi, sir. Good afternoon. Thanks for the opportunity and congratulations on this set of numbers. Shankar, sir, you, you mentioned that almost in next two years, you plan to definitely overall complex fertilizer to 4.5 million ton, another trading and even further in SSP and urea, MOP trading and all that. I think that you have always been mentioning that the fertilizer margins you have always been targeting with a close to INR 5,000-INR 6,000 per ton. That gives a clear picture about the fertilizer business over the next two years.
Sir, on non-fertilizer business, you have stopped giving and sharing that in slightly more detail, that how you think that in next two to three years, whether the fertilizer business contribution to EBITDA will be 50% or less than that, and also where do you see that the other business, I mean, non-fertilizer business piece, will be contributing to the profitability or EBITDA in next three years?
Yeah, as always maintained, we don't want to grow one business at the cost of others. Fertilizer will have its own growth traction, and non-fertilizer cannot catch up the speed at which fertilizer can grow. Obviously, significant share comes from fertilizers. But a lot of efforts have been taken in the last year and also going on now. So we have been driving the new products, been engaging with various innovators. So I think the real growth in CPC is yet to play out, and our decision to invest in the Ankaleshwar MPP, you can see our interest on growing the crop protection business. And definitely, you will continue to see the volume growth happening in crop protection. Many of the actions what we have initiated last year will start yielding results, and we have pipeline of new products coming in.
See, with the current range of molecules, what we have, whatever we are doing, we are doing the best, both in terms of top line and the bottom line.
... If we have to do it, it can be through inorganic or it has to be through organic. Organic takes its own time, and that's what we are focusing on now. And as and when any opportunity comes to grow inorganically, we may even look at that. It's very difficult for me to put a timeline and the timeframe by which we will increase the share to 50%. All our efforts and investments and strategies will be to increase the balance towards non-fertilizer business. As and when we get clarity, and then we may do investments, we'll definitely share that at appropriate time.
Also, sir, with the government focus on some non-supportive policies on policy front on fertilizers, do you see that there is a need in future that you have to demerge this business because of the working capital related challenges and the interest cost portion where the government wanted to cap the profitability? So you see that, to benefit from that, I mean, you need to de-risk the balance sheet while the company itself is generating solid cash flows. So do you see that you have to demerge the fertilizer business to be the part of the... I mean, to benefit from the government policies in future?
Any such restructuring will be to only create shareholder value. It can be based on any policies or any current regulations. We need to see as we go along. And government always encourages integrated play, and they have been encouraging industry to go in for backward integration. So I think they also support in terms of ensuring that the incremental margins are retained in the business and reinvested in the business and grow the capacity. So we'll be continuously engaging with government. That may not be the reason for why we need to do restructuring. If there is a validation opportunity for the shareholders, then we will look at it, but not only policy front.
That's it from my side, sir. Thank you so much.
Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants, please limit your questions to one per participant. Our next question is from the line of Sumant Kumar from Motilal Oswal. Please go ahead.
Yeah, hi. Last year we talked about that thousand crore CapEx in crop protection. So can you talk about the timeline now for the capitalization of the asset and the commencement?
I think I don't know what you're referring to, probably maybe our CapEx plans or specialty chemicals or CDMO.
Correct.
I think I've answered you there in terms of our working progress. We are going back to the drawing board in terms of identifying the segments in which we want to operate in Specialty Chemicals. And, you know, in terms of CDMO, it's a long-term process. We are engaging with various potential innovators and partners. It'll take some time, so as and when we do share. But our investment will be based on, after summing up and identifying right partners, we will not do up-front investment.
So the technical plant also will take time?
See, we have made in the beginning now, this multipurpose plant. What we are doing has got potential to add another line in the same stream structure, so right there, we may be, as and when we get some visibility. They are in discussion stage at various stages of our CDMO engagement. We'll not be able to disclose at this point of time. Once, as and when they also do give us time to come up with the facility and the product registration, we may do it and take up the investment as and when we sign up the commercials with the potential partners.
Okay. Okay, thank you.
Thank you. Our next question is from the line of Himanshu Binani from Anand Rathi. Please go ahead.
Thank you, sir, for taking my question. Good day, and happy festive season to the management. So, sir, I have two questions. One is on the share of the NPK rates to the overall volumes. So what has been the share, basically, for the second quarter? And the second question was largely around that since we have been, like, backward integrating for quite some time, and that has been, like, able to reap benefits, and going forward also with the kind of, like, cost savings which we have outlined, particularly from the sulfuric acid as well as from the phosphoric plant and the energy savings also. So I do understand that the RM prices globally has been, like, volatile as well as the subsidies from the government. So the question was like, how do we see the EBITDA per ton moving forward?
Our guidance has been somewhere around INR 4,500-INR 5,000 per ton. Do you see that it should, like, increase going forward? How should one actually look into this? Thank you.
Yeah. The sustainable EBITDA, the range what you're indicating, we are quite comfortable with that. And the reason being that, improved value addition and increased intermediate capacities is helping us to sustain this margin in spite of huge volatility in the global commodity prices. We are able to absorb the price shock and challenges on subsidies, and we're able to come up with these numbers because of increased share of captive manufacturing of both phosphoric and sulfuric acid. If the environment improves, definitely the margins will also go up. But as I mentioned earlier, but for these challenges in commodity prices, our margins would have been much higher than what it is now.
In terms of share of unique grades, I think my colleague said it's around 36% on the overall phosphoric volume, which represents the grade which we alone manufacture.
36%?
Yeah.
For this quarter?
Yes.
Okay. Got it, sir.
Thank you. As there are no further questions, I would now like to hand the conference over to the management for closing comments.
So thank you very much. Thank you for your insightful questions. Very helpful, and definitely we look forward to such total interaction, which helps us to sharpen our thinking as we go through this business. Thank you very much for your interest in Coromandel.
Thank you all, and wish you a very happy Diwali.
Happy Diwali, everyone. Thank you.
Happy Diwali. Thank you.
Thanks again for everything.
On behalf of DAM Capital Advisors Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.
Thank you.