Ladies and gentlemen, good day, and welcome to 3Q and nine-month FY 2026 earnings conference call of Paradeep Phosphates Limited, hosted by Antique Stock Broking Limited. As a reminder, all participant lines will be in 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. Manish Mahawar from Antique Stock Broking Limited. Thank you, and over to you, sir.
Yeah, thank you. Good morning, everyone. I am pleased to host today's earnings call of Paradeep Phosphates. We have leadership team represented by Mr. Rajeev Nambiar, COO; Mr. Harshdeep Singh, Chief Commercial Officer; Mr. Bijoy Biswal, CFO; and Mr. Alok Saxena, Head Corporate Finance, and I are on the call. Without further ado, I would like to hand over the call to Mr. Nambiar for opening comments, after which we'll open the floor for Q&A. Thank you, and over to you, Rajeev, sir.
Thank you, Manish, and good morning, everyone, and a warm welcome to Paradeep Phosphates earnings call for the quarter ended December and the nine months of 2026. I appreciate your time and interest in our company. I trust you have seen our earnings presentation and press release, which have been circulated and are available on our website and stock exchanges. Let me give you an overview of Q3 and the nine months completed FY 2025-2026. We have been quite consistent and robust for PPL, reflecting the strength of our operations and our resilience to navigate the global volatility. Happy to report that the production rose 13% year-over-year in Q3 to 1 million tons, and this is successively the second quarter we are doing a 1 million ton production.
Growth was led by the value-added NPK grade and NPK category, which has grown by 30% on YTD. For the last nine months, production and sales reached 2.86 million tons and 3.37 million tons, up by 15% and 17% respectively. For the year-to-date, revenue grew by 34%, EBITDA by 45%, and the PAT by 71% year-on-year. That's a reflection of both volume growth and quality of earnings. Let me also update you on some of the strategic progress. We have completed a fifth evaporator at Paradeep facility and which is in operation now. This is after the completion of the 1,500 tons of sulfuric acid plant, which is stable and reached the rated production capacity.
This evaporator is also going to help us in terms of strong phosphoric acid, which was actually a little bottleneck for us. Now we have come back to the original shape. Urea capacity, MCFL has also been expanded by around 30,000 tons per year on an annual basis in Q3 after the shutdown. Sulfuric acid plant at Mangalore, which is on 300 tons capacity, will be commissioned in the end of quarter four of 2025-2026. An energy improvement project at Goa is also likely to be completed by the last quarter of this year. The fourth acid expansion from 0.5 million to 0.7 million is underway, and the increase in phosphate will enable us, the company to meet substantial requirement of phosphate at both Goa as well as Mangalore through the excess phosphate at Paradeep.
Thus, directionally, we endeavor to make all our sites 100% backward integrated phosphoric acid units. This will significantly improve the quality of earnings per ton at company level. Also, we are looking debottleneck opportunity at Paradeep to increase the granulation capacity from 1.8 million tons to 2 million tons. The benefits of these projects, as enumerated earlier, will likely to give an incremental EBITDA for 2027. Our long-term and short-term credit rating has been upgraded to AA -, then A1+, respectively, reflecting our strong fundamentals and improved credit rating, which will help us to optimize our cost of capital for the capex. We continue with our endeavor of offering farmers with innovative products and helping to achieve balanced fertilization and optimizing the last mile delivery through digital interventions.
Through our expanded distribution and digital outreach, we now engage with over 12 million farmers across 18 states, supported by more than 3,000 retailers and 6,800 dealers and a strong on-ground advisory network. Looking ahead, we remain optimistic about the fertilizer demand, continued government thrust on soil health, and the rising shift towards balanced and specialized nutrient applications. However, we believe that the global uncertainty will remain, and the volatility in key raw material prices and the currency volatility will put pricing pressure in the short term. We continue to invest in our expansion plans as per the schedule, and we believe the expansion will enable us to increase our economies of scale and deepen our market presence. We continue to invest in achieving manufacturing excellence and AI-led manufacturing intervention for agility and sustainability, being one of the core ethos of our operations.
In summary, PPL remains focused to deliver consistent and operational resilience, and continued endeavor for strategic growth and expansion. Thanking all of you, I now open the floor for questions.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Sucrit Patil from Eyesight Fintrade Private Limited. Please go ahead.
Good morning to the team. I have two, two questions. My first question is, just give me a moment, please. Yeah. My first question is, thank you for the detailed commentary. I want you to take a step beyond what was covered in the opening remarks. Given the dependency on imported raw materials and, the variability in demand across crop cycles, how does management think about balancing volume growth, product mix, and margin stability as conditions evolve? Looking ahead, what changes in farmer demand, input availability or pricing dynamics would most influence a shift in this priority? That's my first question. I'll ask my second question after this. Thank you.
Thank you for the question. It's important question, actually. Even though the current condition is actually we are under a little pricing pressure, but a lot of optimization is going back in terms of the product profitability and the portfolios along with the manufacturing excellence actually we are driving that. So if you look at actually, our basic volumes have been shifting from low profitability products to the higher profitability product, which has been very consistently followed for the this year. We can see the flagship product, N20, has been actually moved quite faster and little pressure in terms of DAP profitability. So this is an ongoing thing actually, to make sure that availability to the farmer is ensured.
At the same time, our guided number, like we strongly believe actually the EBITDA guidance of minimum INR 4,500-INR 5,000 is actually an achievable target for us, even though operate with little pressure in terms of the international volatility. But we are geared up in terms of optimizing our product mix as well as the pricing of the raw materials.
Thank you. My second question to Mr. Bijoy is, I had a forward looking from a monitoring point of view. As raw material prices, subsidy flows and working capital cycles move through the year, what are the key internal indicators you track mostly closely to anticipate pressure or improvement in margins and cash cash flow, you know, before we show up on the balance sheet? We want to understand your point of view on this. Thank you.
Good. You know, in fact, this 31st December closing, we had a little bit, you know, due to high raw material prices, which has moved northward, in terms of sulfur and ammonia. So the working capital, the borrowing has increased a little bit, due to higher investment in, what we know, this inventory and, you know, debtors. But what we understand that this is going to, you know, we are. This is a position what we have taken consciously, where this will get liquidated and we will have this, you know, getting back into that, you know, converted to cash. So I don't see fore- I don't foresee that, you know, it will be going largely to impact our profitability.
This is well within the control, and I will be able to sell through whatever the stock we are having and the debtors we are having. You know, this, I don't foresee any sort of challenge in meeting this requirement, and the company, our limits and everything is well, well managed, and we have got enough limit to also see that, you know, we don't have any liquidity issue.
Thank you, and best of luck for the next quarter.
Yeah. Sorry?
I said thank you and best, best, best wishes for your next quarter.
Okay, thank you.
Thank you.
Thank you.
Thank you. The next question is from the line of Prashant Biyani from Elara Securities. Please go ahead.
Yeah, thank you for the opportunity. Mr. Nambiar, what is your view on the next NBS subsidy revision? What should the trajectory be?
Prashant, if you see the NBS's formulation as well as the current pricing, which has happened for the past six months, we expect actually NBS support to be crucial, and it is going to happen for coming. It will be difficult to sell a number, but I think it will be very positive. That's what our industry feels.
And, Prashant, just to add, the government has put in a very robust process on the way they define FPS for the next season. And, everything is being discussed with the industry as a stakeholder team. And finally, we have seen that the last three, last four or eight quarters, the subsidization has been quite positive and supportive to the government. So we are sure that government will continue in the same spirit, and that will not be a challenge for the next fiscal year.
Yeah, Prashant, to add that one, you know, the budget allocation of subsidy is quite good in this, you know, last budget. So what was that? You know, what we see that there is an increase of around, you know, 5%-7% in the budget allocation for the subsidy, and which will take care of this entire the subsidy requirement for this 2026-2027, and generally government support in case there is a need. So we are quite positive about that.
Sure. And, sir, of the total CapEx of INR 3,600 crore that we are doing,
Yeah.
If I have to bifurcate product-wise, how much would be the CapEx for 1 million ton granulation and for 0.25 phos acid and 0.75 million ton sulfuric acid at Paradeep site?
Expansion will cost you around INR 800 crore. The standalone cost of 300,000 will cost you another INR 800 crore-INR 900 crore.
Including sulfuric acid?
No, this phosphoric acid and sulfuric acid, what we are planning at Paradeep, that 0.3 million of phosphoric acid and, you know, 1 million of sulfuric acid, will cost around INR 1,500 crore.
Okay. Out of INR 1,500 crore, INR 800 crore could be for phos and remaining for sulfuric acid.
Yes, yes, yes.
Right. And sir, at MCFL site, what is the quantum of sulfuric acid capacity expansion?
It is 300 per day, which is almost nearing completion now.
Okay.
Currently, we have got 100 million, or 100, metric ton per day, which is going to 400 metric ton per day.
Right. And, sir, regarding the energy efficiency project for the Goa site. So we, I think last year only initiated or completed energy efficient program. In this round of energy efficiency, how much is the quantum of benefit in terms of Gcal per metric ton we are anticipating? And how much is the investment that we are planning?
Goa, actually, we are going to complete this energy efficiency program by end of this quarter, and which will reduce it by 0.3 Gcal actually, and that will release substantial amount. And we are expecting a supportive new energy norms coming up, which is expected to get announced any time during this quarter.
This will take down the energy consumption to what level?
Currently we are at 6.4. We'll come down to 6.1.
What is the investment?
It's around INR 220 crore.
Payback period?
Could be around-
3-4 years.
3-4 years.
Okay. And sir, lastly,
Sorry to interrupt, Mr. Biyani. Please rejoin the queue for more questions.
Sure.
Yeah. Thank you. Before we take the next question, a reminder to all: If you wish to ask a question, please press star and one. The next question is from the line of Preet Nagarsheth from Wealth Finvisor . Please go ahead. Mr. Nagesh, you, your line is unmuted. Please go ahead. Krupia line. As there is no response from the current participant, we'll move on to our next participant. The next question is from the line of Subhro Tripathi from Krush Capital. Please go ahead.
Good morning, sir. Thanks for the opportunity. Firstly, resilient performance considering the sulfur prices which have moved up so sharply. What would be the YoY change of sulfur for PPL, compared to last year?
Can you repeat the question?
What was the year-over-year change of sulfur price for PPL compared to last year?
Typically, sulfur used to hover around $150-$200. It has reached,
550 .
540-550 now.
So for the last-
Yeah. And all our sourcing is imported, or is there some sourcing from IOC Paradeep as well?
We do have actually sourcing of molten sulfur from IOC for Paradeep, as well as sourcing from MRPL for Mangalore Chemicals, Mangalore site.
My second question is regarding the. There was recent news announcement regarding some agreement with SECI, solar energy, for offtake of green ammonia at Paradeep site and Goa site. So there is no announcement or any detail shared in the presentation. Could you share some more light on how you plan to go about this?
This is at the preliminary stage, and, you know, as and when it will unfold, you know, we'll share the details.
Basically, this is an offtake agreement we have to get with SECI. And we expect actually when, whenever SECI is ready, we will sign it. But as far as manufacturing and supply is concerned, it is for a third party.
Any tentative timeline for this, which we're expecting?
Nothing. Agreement could be happening anytime soon, but in fact, the production and supply could be taking time.
Maybe next 2-3 years, only?
Yes, yes.
Okay. That's it from my side, sir. Thank you.
Thank you.
Thank you. The next question is from the line of Soumil Shah from Paras Investments. Please go ahead.
Yeah. Hi, sir. Good morning. I would like to know what is our net debt as on 31st December?
Net debt is around INR 5,450 crore as at 31st December.
Okay. And what would be our subsidy receivable as on 31st December?
No, this net debt is both, you know, the working capital as a long-term debt and subsidy receivable is around INR 3,780 crore.
Okay, okay. So normally, in how much period do we receive the subsidy? So I mean, can you quantify approx how much is due in the current quarter, and how much is it in the next year?
No, this is, you know, out of that, generally the subsidy based on the core sales, you know, this, sales made to the farmer. So what we want, you know, out of this INR 3,700, what, INR 780, whatever we are talking, this all, you know, based on this farmer sale, it will be receivable. You know, out of that, around INR 1,000 crore is what already sales has happened, which is going to come, and balance quantity one, whenever this kind of farmer sale happen, that will be received.
Okay. So only 1,000 is already, I mean, 1,000 subsidy is already about, I mean, sold, so that 1,000 is receivable. Other balance is not yet sold?
Yes. Yes, so typically we'll have two to three weeks of subsidy outstanding at any given point of time.
Okay. Okay, okay, understood. And, can we know what was the EBITDA per ton for this quarter? And what is the reason for-
INR 4,700 per metric ton this quarter.
Sorry, I couldn't get the number.
INR 4,700 per metric ton.
Okay. Okay. And, I think we were targeting about INR 5,000 per metric ton for this year.
If you look at it on YTD basis, you know, we are already INR 5,400 sort of. So yes, you know, the INR 5,000 is quite achievable on a yearly basis.
Okay, and how much of our prices is depending on natural gas prices?
Sorry?
How much of our raw material price is depending on natural gas prices? Because I think there is a huge-
No, you know, it is not much because natural gas price determine the urea price, which is a pass-through.
Okay. We are not much affected with the natural gas prices, right?
Yes. Yes.
Okay, okay. And if I-
Sorry to interrupt, Mr. Shah. Please rejoin the queue for more questions.
Yeah. No, no problem. I'll...
Yeah.
Come back in the queue. Thank you.
Thank you.
Yes, thank you.
The next question is from the line of Varun Arora from Emkay Global. Please go ahead.
Yeah. Hi, sir. Thank you for the opportunity. Just to check, one clarification I need on the EBITDA. So, your guidance on EBITDA is what? Basically I missed that number. So can you just say it again?
Can you repeat it? You know, the question, our voice is not clear.
Yeah, what you said the number on EBITDA, I didn't get that number. Can you just repeat it? Just a clarification I need on this.
EBITDA number for this quarter is INR 4,700, and you know, our guided number for the whole year basis is around INR 5,000 per metric ton.
YTD number is five
Right. Yeah, YTD number is INR 5,300, you know, till December, and as a year, we say that, you know, it will be INR 5,000.
Okay. And, what's your further guidance for FY 2027, if you can say, sir?
I think FY 2027, see, our endeavor is that, you know, we should have in around INR 4,500-INR 5,000, and it all depends on the subsidy policy and, you know, this raw material prices and how much we are able to pass on to the consumers, you know, this is the price. So we are in the process, you know. It is not, you know, maybe but our endeavor that we should get around INR 5,000.
Okay, sir. Sir, on the debt side, so that's approximately INR 5,400 crore debt right now you're holding. So any going forward, you know, any plan to reduce it or just or is this going to be stagnant for some time? What's your you know plan for this? That's the last one.
It's important thing for us to make sure that the debt is not crossed over. We are taking a lot of operational measures to see that the tighter control on the inventory management, the same time, availability is also ensured. So this should actually in the coming quarter and subsequent quarters, it should actually soften down.
Okay, sir. Okay. Thank you so much, sir. Thank you.
Thank you. The next question is from the line of Sandeep Mukherjee from SKP Securities Limited. Please go ahead.
Sir, thanks for taking my question. Sir,
Sorry to interrupt, Mr. Mukherjee. Can you please speak a little louder? We are unable to hear you.
Yes. So thanks for taking my question. Sir, my question is like, what was the gas cost?
Okay.
and EBITDA per ton for urea?
Can you? We are not able to hear you. Can you speak little bit loudly?
Is it okay now, sir? Am I audible?
Better, but, but be louder, kind, kindly.
Yes. So what was the gas cost and EBITDA per ton for the urea?
The gas cost is around $12, but the EBITDA is around INR 3,000.
Thousand rupees. What is the short-term debt on the books, sir, for the nine months?
Short term, you know, if you talk of working capital, we have got around INR 4,200 crore. The long term is INR 1,235 crore.
Okay. Okay, sir. Sir, my last question is, like, what was the CapEx spend for the nine months?
You know, we have spent almost INR 450 crore in this nine months period.
Okay. Sir, sir, one more question. Like, we currently are operating more or less at the same MRP levels which were in Q2?
So just to share with you, the MRPs have been improved for the NPK this year. Only product with the MRPs remained the same as urea and the DAP, which where there is a kind of a guidance. Otherwise, for NPK, we have been taking price changes from time to time.
Okay, sir, that's it from my side. Thank you.
Thank you. Ladies and gentlemen, the management line has been disconnected. Please hold while we get them reconnected. Ladies and gentlemen, thank you for being on hold. We have management connected now on the call. Over to you, sir. Sir, please proceed.
Is there any more questions?
Yeah. So we have next question from the line of Preet Nagarsheth from Wealth Finvisor. Please go ahead.
Sure. So I wanted to understand, sir, the product mix that you employ. The reason I ask is that, the government is trying to improve the access of SSP and other products more and more. So what happens to the DAP that you make, and how do you see the product mix evolving for the next financial year?
A very good morning to you. See, how the product mix is evolving is directionally, our focus is on balanced nutrition. And we've been gradually going into a company which is more dominantly to NPK portfolio. If you look at the portfolio of products, some of the products that we are doing, the flagship product that we have is 20:20:0:13, which is what we call the captain, and that, that's what we run the current positioning. Then we have got 10:26:26, 12:32:16, and Triple Nineteen . That's a complete range of NPK. And in the portfolio volume, if you look at it, almost more than 45%-50% is NPK mix. So that's the direction. The other key direction that we're taking is promoting, basically, high nutrient use efficient products like Nano.
That's the other portfolio change that we're doing.
Okay. So but, how do you see this panning out for DAP versus SSP? What is your view on that on the ground?
So my view is the overall, I mean, the government also is trying to encourage value nutrition, and there is a shift happening towards the NPK. So this year, if you look at the farmer consumption sales, there has been a kind of a reduction in the DAP sales. But the farmer still keeps demanding DAP. So there is a need for a greater awareness. So as a category leader, that's what we're trying to do, that communicate to the farmers the benefits of the balanced use of nutrition and the shift happening towards the NPK category. If you look at the market also today, the NPK segment is today bigger than the DAP segment. But, yes,
Right.
There is a segment, almost 40%-45% of the market, which is still on DAP. And the other, pioneering, leadership step that we have done as PPL, is that we have, we're also encouraging the use of alternative to DAP, which is TSP, which has got 40%-46% phosphorus, but you don't at least, overuse nitrogen there. So that, that's the shift-
Okay.
that we're trying to also lead in the market.
So for this, then, the availability of rock phosphate becomes important. So how are you ensuring security for that?
So how we are ensuring security is, if you look at the value chain partnership that we have, you know, we have partnership with OCP in terms of securing our rock value chain, which is the most important source, as far as P2O5 is concerned.
Right.
For fresh products also for TSP and DAP, we have a strategic partnership with OCP Nutricrops. So that's how we're trying to ensure. And as far as our own manufacturing is concerned, which is very robust, and we are one of the few companies which have a very, very robust portfolio of NPK products in the country. So that's what we are trying to do to ensure there is availability. And as you've seen our footprint, we operate in 18 states today in the country with a wide reach, almost covering 100,000 retailers.
Understood. So if you add all this up, what kind of volume or top-line guidance do you think can come into play for FY 2027?
Volume, 4 million tons.
For, yeah. So volume, see, if you look at it, last year we achieved 3 million tonne, this thing, and this year the guidance is 4 million tonnes plus. So that, that's what we are basically gearing up for it. We have already done 3.8-
Okay, you mean for FY 2026? I was suggesting FY 2027, if you have any sense on that.
Yeah. So we normally don't give a guidance for the next year, but we would be planning a robust growth for the next year. Our overall objective would be to optimize basically our and strengthen our NPK portfolio mix. So that's what we are gearing up. And we will have a robust growth in the next year also.
Wonderful. Thank you so much.
Thank you.
Thank you. The next question is from the line of Dhruv Muchhal from HDFC AMC. Please go ahead.
Yes, sir. Thank you so much. Sir, can you give the sulfuric acid and phosphoric acid production for the quarter? You typically give that in the presentation. I think this time it is missing.
One second. Sulfuric acid, we have produced 4.5 lakh metric ton for this quarter, and around 1.45 lakhs, metric ton.
All right. Thank you. So, the other question was on the inventory. Now, typically, what we see is, I'm looking at the change in inventory that you report in the PNL. Typically, we see a buildup in 1 Q, as the season along and then, drawdown in the next two quarters. This time the drawdown seems to have not happened as much. So, any particular, I mean, just trying to understand what's leading to this?
No, see, out of this increase in the, you know, you know, inventory, mainly the increase in raw material. So that is, that's a conscious, decision that, you know, we have a price volatility as well as, you know, the rupee depreciation. Keeping all these in mind, this, so there is a increase in the raw material stock, which is definitely going to be utilized in this quarter, you know, in all upcoming quarter. And finished goods and, the credit goods, yeah, that is well within control. Generally, this, December, a little bit, you know, inventory buildup happens, which, get liquidated in, starting from April onwards.
Okay, got it. So if it is possible, if you can suggest how much is the, in quantity terms, how much is the fertilizer inventory at the company level, finished goods inventory at the company level this year end, I mean, December end of last year?
We'll share with you that data separately.
Sure. Okay. So the other question was on the expansion, the P acid and the sulfuric acid expansion that we are ongoing. So what, I mean, I think you announced last quarter, so now what stage are we? Have we done the equipment ordering? I think EC and SC, EC clearance is already we have. Any progress that you can highlight in terms of, you know, equipment ordering, other stuff that you might have prepared?
Through both the unit, the acid plant, actually, the EC is available for Paradeep. And, for Mangalore, actually, we applied for the EC. And the, for the granulation unit, actually, the EC application is already on, and we are expected to go for the public hearing coming one or two months. And by August, September, we will get the EC clearance for the granulation expansion Paradeep also. As well as the status is concerned, actually, all the key equipment manufacturers already roped in, and the technical discussions are in the final stage. And once the parameters been frozen, actually, by end of, March, April, we should be able to get the commercials finalized and get the order.
Got it. Perfect. And, yeah, that's, that's all. Thank you so much, and all the best. Thank you.
Thank you. The next question is from the line of Gagan Thareja from Groww Mutual Fund. Please go ahead.
Good morning. I hope I'm audible.
Can you be little louder?
Yeah. So the first question is on the phos acid capacity addition of 0.2 MMTPA, which is stipulated for FY 2027. When exactly in FY 2027 will this be commissioned?
Q2 of 2027.
Q2. The 0.1 MMTPA sulfuric acid addition in the Mangalore site for FY 2027 will be again commissioned by when?
That is, this quarter. So the Q4 of this year, we'll commission that.
So Q4 there is. You see, if I go by your Q2 presentation, there is a 0.03 MMTPA sulfuric acid, which is addition, which is budgeted for FY 2026, which I think you mentioned will get commissioned in Q4 of this year. But then there is another 0.1 MMTPA, which is budgeted for FY 2027. I was talking about that.
Yeah, that is actually the brownfield expansion of the existing capacity. That technical negotiations are going on, actually. Once we are clear about the equipment ordering, we should be able to finish that.
Right. And sir, in FY 2026, the sulfuric acid capacity at Paradeep, as per this presentation, is indicated at 1.9 MMTPA. Just want to understand, this is, I think there was an addition done in FY 2026, in Paradeep sulfuric acid. Can you tell me how much was this and when was it commissioned?
It is commissioned in the month of December.
September.
September end, and now stabilized. This is 1,500 tons per day plant. It has already reached the rated capacity and working pretty well.
Okay. So on an annual basis, how much would it be? You said 1,500 TPD. In MMTPA terms, that would be how much? I'm sorry, I need to understand.
Almost like, 5 lakh tons.
5. So 0.5 million out of the 1.9 happened-
Yes.
very recent?
Yeah.
Okay.
Yes.
And in phos acid, the 0.5 got commissioned fully by FY 2025 itself, and would be-
Yes.
fully utilized.
Yes, it can. It's also completed the rated outputs, and that's the thing, we now are going for expansion in two phases.
Okay. So, these sulfuric acid backward integrations that you have recently sort of commissioned and the 0.2 million that you'll be commissioning next year in phosphoric acid. What sort of, you know, benefits in, you know, in EBITDA per ton terms could this...
Typically, expand the phosphoric acid, the spread is $150 per ton between captive and imported phosphoric acid. So to that extent, the benefit will flow to the earnings of the company for the next year. For the sulfuric acid, the main advantage is power, and also the sulfur, the net back, and that spread is typically $50.
Okay. And you're also doing some energy saving initiatives?
Sorry to interrupt, Gagan.
Uh.
Please rejoin the queue for more questions. Yeah.
All right. Thank you.
Thank you. Ladies and gentlemen, in order to ensure that the management will be able to address questions from all the participants in the conference, please limit your questions to two per participant. Should you have a follow-up question, please rejoin the queue. The next question is from the line of Priti Jain, an individual investor. Please go ahead.
Hi, everyone. Good morning.
Morning, morning, morning.
Am I audible?
Yes.
I wanted to check in terms of the tax expense in the quarter. Our current effective tax rate in the quarter has been 21%, while the same has been 28%, 27% in the last previous quarter. What is that big change that has resulted into a tax distinction?
Yeah, well, this is, you know, you know, this tax impact is mainly on account of regular tax as well as deferred tax.
Yeah.
So when we took over this Mangalore plant, there is a valuation impact. So there is a timing difference, permanent difference, and on account of that, you see this impact the taxation. Generally, it should be around 25%, but you know, you are saying,
Yes, used to 20% in the current quarter.
Sorry?
We are saying that just because of certain expenses wherein we are beneficially, the effective tax, which has become 20% and this is sustainable ahead?
Yeah. See, the timing difference and permanent difference on account of the deferred tax, we get actualized. We see that in and around 22%-23%, tax impact, tax expenses.
But the deferred tax has not changed. The deferred tax amount was INR 7 crore last year and INR 4 crore current year. There is a negligible impact because of a deferred tax.
No. Can you please? You know, we'll respond to you specifically on this question.
According to the results, the previous quarter, deferred tax charge was INR 7.67 crores, and the current deferred tax charge is INR 3.68 crores. So there is a negligible gap because of the deferred tax charge. There is a significant difference in the current tax.
Okay.
What is the reason for that change?
Why don't you send your query separately to the IR? We'll respond to that.
Okay.
Miss Priti, you want to ask more questions?
That, that's all from my side. Thank you so much.
Thank you.
Thank you.
The next question is from the line of Jignesh Kamani from Nippon Mutual Fund. Please go ahead.
Yeah, hi. So
Sorry to interrupt, Mr. Kamani, we are unable to hear you.
Uh, audible?
There is a lot of background noise from your side. Can you please speak a little louder?
Yeah. So in the Mangalore urea plant, five-year window will be over this March, right? So just want to know what will be the impact, the revenue at the?
We can't hear you. Please louder.
Sorry, sir, but we are unable to hear you.
Hello?
Can you please use your handset mode?
Am I audible?
Yeah, yeah. Please go ahead.
Yeah. So in the Mangalore urea plant, I think five-year benefit of the energy efficiency over this March, right, of course. Just want to know, what will be the EBITDA impact post expiry of that energy efficiency in the Mangalore urea plant?
They can't make out what you're asking.
So in urea, we had in Mangalore urea plant, we did a energy efficiency measure CapEx, I think for five year ago. So we are enjoying the EBITDA benefit of that, I can say, which is expiring this March, right?
Yes.
So, profitability at the urea plant will be reduced from this March onward. So just want to know, what will be the impact on that?
No, right now, this, the impact will be around INR 3,000-INR 4,000 per metric ton, due to this energy impact. Changes.
Understood.
One other. Yeah. Yeah. Because the new sulfuric acid, which is going to come by end of this March, actually, the additional energy will be pumped back to the urea plant, where we'll have a significant saving. So this could be not fully nullified, largely it will be nullified.
Understood. Second thing on the CapEx, the current ordering of the equipment and the visibility. Can you provide the separate commissioning date for both Paradeep and the Mangalore site separately for both granulation and the coating integration?
Paradeep is typically after ordering around 22 months. We are targeting a such one and Mangalore will take a little more, mainly because some configurations and special requirements from Mangalore is different than Paradeep. That we can, we can update you actually once the ordering is completed.
So tentatively, Paradeep will be around March 2028, and Mangalore will be around December 2028?
That could be, yeah, yeah.
Sure. Okay, thanks a lot.
Thank you. The next question is from the line of Dev Gulwani from Care PMS. Please go ahead.
Hi, thank you for the opportunity. So company has recently done, will be doing a debottlenecking for backward integration and expansion, in sulfur and phosphoric acid for FY 2028 also. So how much incremental EBITDA per ton we can expect for FY 2027 and FY 2028?
As we said earlier, the incremental EBITDA will come from the increased processed capacity. As we said, we will expand from 5 lakh to 7 lakh by Q2 of next year. To that extent, the incremental EBITDA flow will happen for the next year. Also, the energy efficiency projects, the evaporator that we enumerated in the opening call. All these projects will get us, you know, good incremental EBITDA for FY 2027.
For FY 2028, after the 100% backward integration?
Yeah, so traditionally, the sustainable EBITDA per ton that we give is INR 5,000. Now, with one side being 100% backward integrated. When all the sites get 100% backward integrated, and assuming that all other things remain same, the sustainable EBITDA per ton is likely to improve by 30%-35%.
Okay, thank you. And also in your speech, you mentioned that earnings quality should improve going forward. Can you please elaborate?
That's what I said, 30%-35% will improve when we have all the sites backward integrated.
Okay, thank you.
Thank you. The next question is from the line of Shubro Tripathi from Krush Capital. Please go ahead.
Sir, with regard to the upcoming NBS rate revision, so considering that sulfur prices have gone up by 3.5x-4 x, but phosphoric acid has not really gone up that sharply. So will it have an adverse impact?
No, this, you know, we can't be specific about the phosphate rate. But you know what? We can say that, if you compare the last year budget allocation vis-a-vis this year, you know, there is a increase of around say 5%-7%. So keeping that in mind, we, we expect that there will be some incremental, you know, increase in this, phosphate, NBS rate. But we have to wait for this fine print or the government notification. But, you know, there is a strong feeling that there's increase in this, you know, NBS rate.
Sir, my question was mostly with regard to what has happened historically. The phosphorus content, the phosphorus rate has been increased in the past one year, but sulfur, they have not really increased that sharply. And right now, we are expecting-
Sorry, sorry. See, this year the value chain for sulfur has gotten impacted because of the current Ukraine-Russia situation. Okay, so there's a temporary effect which happened on a part of the supply chain for sulfur. We expect that also to get normalized, maybe another two months' time, that's the expectation. And phosphoric acid value chain is a demand and supply primarily for the NPKs and MAP. And that's the reason why simply you've not seen the similar kind of impact. But sulfur has kind of behaved abnormally. It's not the normal behavior for sulfur, and we expect that to get normalized.
Okay, thank you so much.
Thank you. The next question is from the line of Anik Mitra from Finnomics Solutions Private Limited. Please go ahead.
Am I audible, sir?
Yes, please.
Yeah. Sir, as like we have found that NPK is contributing more in the in your total portfolio at this point in time. And I believe that that is the trend of the country, that we are getting more inclined towards NPK than DAP. So you are backward integrating your DAP facilities. So from that aspect, I understand that your facilities are fungible as well. Now, considering from that context, how significant it is backward integrating your DAP facilities? Maybe you will be producing more, that will be quite normal, like that, DAP, NPK will contribute more in your portfolio going forward as well.
No, so just to clarify, the expansion that we're doing is in the production of granulation, and that is totally fungible. Okay? So the product mix is totally determined by the market requirement and, and the kind of, drivers of profit and growth. So, when we are saying we are expanding the granulation plant in Paradeep by 1 million tons, it's, the product mix is going to be a combination of, NPKs and, DAP. But we can completely move on to, complete, NPKs in, in that portfolio.
Sir, I was referring phosphoric acid. Means you are backward integrating phosphoric acid, that I was referring to.
Yeah. So, you're backward integrating phosphoric acid to kind of, power all your granulation plants with a dominant NPK portfolio.
Okay. So, like, whatever the entire capacity you are planning to utilize in that, the similar kind of utilization will be there if you incline. Like, if you start producing more NPK as well. Is my understanding correct?
Yeah, yeah, that is how we have planned it out. That, that's what the capacity expansion plan for phosphoric acid, to power the complete granulations. If you look at it, we are dominantly Goa and Bengaluru is already totally NPK's. Okay? So Paradeep, we do a little bit of DAP.
Okay. Okay. And sir, in terms of this phosphoric backward integration, you said $250, if I'm not wrong, you said $250 per metric ton will be the benefit. Am I correct?
The audience just, Mr. Mitra, please rejoin us if you-
Yeah, I'll come back. I, I'll come back. I'll come back to the interview. Sir, please answer this question.
Of course, please.
Mr. Mitra?
Yeah, I asked the question.
Can you please repeat your question again?
Sir, I was referring that the phosphoric benefit from the phosphoric acid integration, backward integration. So in US dollar, you said $250 per metric ton. Am I correct or I have missed something?
We figured $150.
$150 per metric, $150 per metric ton, right?
Yeah. Yes.
Okay, okay. Thank you so much.
Thank you. The next question is from the line of Nitin Kaushik, from Afin Capital Private Limited. Please go ahead.
Good morning, sir. Thank you for the opportunity. My question is, after the merger with MCFL and with all these synergies coming up, also the capacity expansion happening, can you please guide us on long-term EBITDA margins coming up? So, can we maintain above 10% mark going forward, or by how much quantum would it increase?
Your voice is not very clear. Can you repeat the question a little bit louder?
Hello, sir. Is it clear now?
Better, better now.
Oh, yes. Sir, my question was, after the merger with, MCFL and with all the synergies coming up, and all this, capacity expansion happening, can you please guide us on long-term EBITDA margins coming up? I was asking if you can maintain about 10% mark going forward, or by how much quantum would it improve?
No, already we are. This EBITDA margin right now is 11%. So we'll be, you know, we'll be maintaining that sort of margin.
Uh, okay.
Yes. Yeah.
Sir, the second question was: Can you please specify the amount of total CapEx which would be incurred in FY 2026?
FY 2026, already we have spent around INR 450 crore, you know, 2025, 2026. So another 50 crore will be spent, so the first year we'll be closing at INR 500 crore. And next year, the, you know, the budget is that, you know, our regular CapEx around maintenance CapEx, around INR 350 crore.
Okay, sir. Thank you, sir. Thank you so much.
Thank you.
Thank you. The next question is from the line of Prashant Biyani from Elara Securities. Please go ahead.
Yeah. So thanks for the opportunity again. Sir, how much was the subsidy received in Q3, and how much is the gross debt?
No, we have received subsidy of around INR 2,500 crore in Q3.
Right.
The second part?
The gross debt.
Okay. Gross debt is around INR 5,000 crore, you know, INR 5,400 crore out of that, after netting of this investment.
Okay. Sir, any pricing have you taken in fertilizer, specifically in Q3?
In Q3, we had taken, Prashant, a price increase for the NPK, primarily N-10 and N-12.
How much?
We had increased our MRP from around INR 1,900 level to almost INR 2,025 level.
Okay. And sir, lastly, how much is the current stock of DAP NPK lying in the channel at the end of Q3?
Okay. So, currently, we have got DAP stocks, which is approximately around 106,000, as far as channel is concerned, and NPK stocks of 500,000 tons.
TSP?
Sorry?
TSP.
TSP.
Yeah.
It's TSP, we have got approximately 65,000 tons of TSP stock.
Okay, sir. Thank you so much.
Thank you. The next question is from the line of Gagan Thareja from Groww Mutual Fund. Please go ahead.
Yes, thanks. So my, my question is on the EBITDA. I think last quarter you indicated that with all these backward integration measures, next year we could incrementally add another INR 350 crore-INR 360 crore to your EBITDA, if I remember it correctly from your transcript. I mean, in the interim, some input prices have moved up sharply. So do we maintain that, that, you know, we, we can, next year add, that sort of a number to the EBITDA on, on this year's global number?
I think we continue to say that all the incremental EBITDA from the backward integration that we have planned and the projects that we have completed will be in the line that we discussed last time. But obviously it is subject to the global price movements. And we'll see how the price movements pans out in next year.
Right. And, given your capacity expansion plans, how should we think of your gross debt movement, from the current levels, how will it move going ahead?
Gross debt will be around 0.75 of the-
Of the equity. We will be maintaining that, you know, at that level, and, we don't want to leverage it further. So it will be hovering around the same round.
0.8 .
Yeah.
Thank you, sir. I 'll now listen. Thanks for taking the questions.
Thank you. Ladies and gentlemen, we'll take that as the last question for today. I now hand the conference over to the management for closing remarks.
Thank you for taking the time to join our earnings call by all the investing community. Should you have any further questions, please reach out to our investor relations team. Thank you once again, and have a good day. Thank you.
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Thank you very much.
Thank you.
On behalf of Antique Stock Broking Limited, that concludes this conference. Thank you all for joining us today, and you may now disconnect your lines.
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