Release Date: May 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Mangalore Chemicals & Fertilizers Ltd (BOM:530011, Financial) achieved its best-ever operational and financial performance in FY24.
- Total sales for FY24 reached an impressive 8.72 lakh tons, marking the best performance in the last five years.
- The company topped total fertilizer sales in Karnataka for the first time with a 16% market share.
- Operational efficiency remains strong, with seamless operation of ammonia urea plants and essential maintenance of phosphatic fertilizer plants.
- The merger with Paradeep Phosphates Limited is expected to create one of the largest private sector fertilizer manufacturers in India, enhancing geographic footprint and unlocking synergies.
Negative Points
- Q4 FY24 sales were lower at 1.95 lakh metric tons compared to 2.24 lakh metric tons in Q4 FY23 due to deficient monsoons and low reservoir levels.
- Profit before tax for Q4 dropped significantly to INR7.2 crores from INR92 crores in Q4 FY23.
- Margins on urea beyond the reassessed capacity were negligible, impacting profitability.
- Revenue for Q4 FY24 decreased by 32% compared to Q4 FY23 due to reduced import volumes.
- EBITDA for Q4 FY24 decreased by 62% compared to Q4 FY23 due to lower production beyond the reassessed capacity.
Q & A Highlights
Q: My first question was regarding the traded and manufactured volumes split of 1,95,000 of volume that we have done. How much would be traded?
A: We have not done any trading. The entire volume is manufactured. (Nitin Kantak, Whole Time Director)
Q: Despite the fall in the profitabilities for the urea sales beyond ASS capacity, would the EBITDA per tonne have maintained at INR5,000 during the fourth quarter as well?
A: The EBITDA realized is about INR3,000 per tonne compared to the expected INR5,000 due to policy constraints and gas prices. (T Muralidharan, CFO)
Q: What is the current gas cost?
A: The gas cost is around $15 to $16 per unit. (Nitin Kantak, Whole Time Director)
Q: For FY25, do we have any debt reduction guidance?
A: We plan to reduce debt by INR60 crores in FY25 and another INR78 crores in FY26, aiming to wipe off the entire outstanding debt in the next 3-4 years. (T Muralidharan, CFO)
Q: Is it right to presume that once the deadline of December '25 goes away, our Gcal loans would be reset around the current levels of energy consumption?
A: Yes, the benefits will continue until December '25, and we are currently operating at lower than Gcal 5.5 per ton. (Nitin Kantak, Whole Time Director)
Q: What kind of cut in EBITDA per tonne are we expecting for the urea price post-December 25?
A: We expect around INR4,000 per tonne, subject to gas price stability. (T Muralidharan, CFO)
Q: Are there any plans to further improve Gcal apart from the sulphuric acid bit?
A: No immediate plans, but post-merger with Paradeep Phosphates Limited, there may be opportunities for backward integration and further improvements. (Nitin Kantak, Whole Time Director)
Q: Is our fixed cost lower than what the government is currently compensating us for?
A: The fixed cost we incur is more than what is being reimbursed by the government. (T Muralidharan, CFO)
Q: Are we on track with the sulphuric acid plant commercialization by May '25?
A: The plant is expected to be completed by July '25, with basic engineering completed and detailed engineering in progress. (Nitin Kantak, Whole Time Director)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
