Release Date: May 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Urea business continues to perform well with energy savings schemes delivering better than expected results.
- TAN project is progressing as planned with all statutory approvals in place and significant investments made.
- Focus on Crop Protection and Specialty Nutrients business is on track to achieve targeted EBITDA by FY26-FY27.
- Strong pipeline of 12 new Crop Protection Chemicals (CPC) products for FY25, with a focus on Weedicides.
- Introduction of innovative biological products like Superrhiza and Bio nano Phosphorus, developed in collaboration with TERI.
Negative Points
- Decline in profitability for the Urea business due to lower sales and a softer ammonia business.
- Significant costs associated with the planned maintenance shutdowns of Gadepan I and II plants.
- Reduction in subsidy inflow due to lower gas prices and lower NBS Fertilisers.
- Challenges in the complex fertilisers business, requiring a careful portfolio approach.
- Uncertainty regarding future policy changes and their impact on profitability, especially for Gadepan-III plant.
Q & A Highlights
Q: What led to the decline in profitability for the Urea business?
A: There are three factors. One, our sales as compared to last year, were down by about 1.8 lakh tons. Additionally, our ammonia business is a little soft this year compared to last year. Both these factors majorly led to the reduction in the Urea contribution. (Abhay Baijal, Managing Director)
Q: How much was the Gadepan I and II shutdown-related cost? Was it something very material?
A: The repair and maintenance costs for each of these plants would be INR9 crore to INR10 crore. (Abhay Baijal, Managing Director)
Q: For FY25, what would be the growth drivers segment-wise?
A: We expect improvements in Urea due to energy efficiency projects. For complex fertilizers, we are treading carefully and have already contracted for almost 2 lakh metric tonnes of material. We are focusing on growth in the Crop Protection and Specialty Nutrients (CPC & SN) business. (Abhay Baijal, Managing Director)
Q: How much has your efficiency improved by in terms of Gcal per metric tonne?
A: The expectation in the first plant was roughly about 2%-3%, which has actually been better by about 45%-50%. In Plant 2, it is about 20% better than what we had assumed. (Abhay Baijal, Managing Director)
Q: What would be the CapEx plan for FY25?
A: There are two types: routine maintenance CapEx and new energy efficiency projects. My expectation is about INR360 crores. TAN is separate, with about INR700 crores additionally. (Abhay Baijal, Managing Director)
Q: Any update on the nitric acid value chain project that you are evaluating?
A: We are going in for a detailed cost valuation on concentrated nitric acid, which will be ordered from one of the major licenses. That has been approved. (Abhay Baijal, Managing Director)
Q: Do you expect the same level of DAP sales to continue in FY25?
A: DAP currently with the fixed MRP regime was not very viable, so we have not concluded many contracts. We have already contracted about 60,000 tonnes of DAP. (Abhay Baijal, Managing Director)
Q: Is the Coal India coal gasification project a threat to your TAN project?
A: No, the backdrop growth is about 6% CAGR. We are confident that the market will absorb these quantities. (Abhay Baijal, Managing Director)
Q: Can you provide details on the new biological product, Nano Phosphorus?
A: This is a nano Phosphorus derived through a biological route. We are targeting around 5 lakh acres in Kharif. The price would be comparable to the ecosystem. (Ashish Srivastava, Vice President - Sales and Marketing)
Q: What are the gas prices for this quarter?
A: Gas prices for this quarter were around $17 per mmBtu on an NCV basis. (Ashish Srivastava, Vice President - Sales and Marketing)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
