CHAMBLFERTNSENovember 8, 2022

Chambal Fertilizers & Chemicals Limited

7,585words

60turns

7analyst exchanges

0executives

Key numbers — 36 extracted

rs,

emicals and Specialty Nutrients business. We have substantially increased volumes of bulk fertilizers, especially NPK fertilizers, which has added to the revenue of the company. As mentioned in the pre

20%

lizers, and as of now, the prices remain stable. The import price of DAP has declined by more than 20% from the peak levels during the second quarter of the current financial year and there was a decli

INR 80,000 crore

there is an improvement in the subsidy payments after, there was an additional amount of more than INR 80,000 crore of additional subsidy by the Government of India and we are hopeful that the substantial portion o

85%

en are we going to achieve the 1,05,000 - 1,06,000 number? So, currently we are generating about 85% to 90% of the ammonia required and we have very clear plans in place to generate the balance quant

90%

we going to achieve the 1,05,000 - 1,06,000 number? So, currently we are generating about 85% to 90% of the ammonia required and we have very clear plans in place to generate the balance quantity als

INR 1,200 crore

tonnes of ammonia per annum. Sir, we would have also budgeted certain IRR while deciding on this INR 1,200 crore of investment earlier that we had finalized? With this additional 40% increase in investment, won

40%

deciding on this INR 1,200 crore of investment earlier that we had finalized? With this additional 40% increase in investment, won't our returns on investment of TAN be impacted? Actually, that's a v

INR 1,800 crore

is is Vivek Ramakrishnan. My question is on the subsidy debtors. Even if you take into account the INR 1,800 crore that you have got, it is still double, almost double year-on-year. Sir, is there any rethink in te

INR 2,25,000 crore

months, that the total outlay that they were talking of for the full year was more in the range of INR 2,25,000 crore - INR 2,50,000 crore and this is the number, I'm saying which was quoted by the Honourable Minist

INR 2,50,000 crore

l outlay that they were talking of for the full year was more in the range of INR 2,25,000 crore - INR 2,50,000 crore and this is the number, I'm saying which was quoted by the Honourable Ministers. Now, what has hap

INR 240

matix. Please go ahead. Yes. Thanks for the opportunity. My first question is basically for this INR 240 odd crore of one time hit that you have taken. Against that what is the volumes that were, the open

INR 230

oliya: Gaurav Mathur: Yes. Exactly. So, what is the volume that you had sold against which this INR 230 odd crores hit we have taken? See, we had on the 1st of April, an opening stock of DAP of about 3

Guidance — 20 items

Gaurav Mathur

opening

“However, there is an improvement in the subsidy payments after, there was an additional amount of more than INR 80,000 crore of additional subsidy by the Government of India and we are hopeful that the substantial portion of subsidy outstanding will be released by the Government of India.”

Gaurav Mathur

opening

“The Board has approved the revised capacity and capital cost of our Technical Ammonium Nitrate project.”

Gaurav Mathur

opening

“The robust demand and high prices of the product give us a lot of confidence about the benefits of this project to the company and we remain very positive about this investment, which we plan to complete over the next 34 months or so.”

Gaurav Mathur

“And the reason is that when we started the project, thereafter, the entire Russian conflict situation emerged.”

Gaurav Mathur

“And looking at both of those things, we felt that it is better to approach the project with a revised number than necessarily go with what we have done earlier.”

Gaurav Mathur

“So, there are a number of factors which anybody who's a supplier of equipment and is going to carry out a project will need to consider.”

Gaurav Mathur

“So, if any timeline is there, it will be helpful if you can share it?”

Gaurav Mathur

“This would happen well within the timeline for the project, and I would expect in approximately within 24 months.”

Gaurav Mathur

“So, we expect gas prices to remain probably USD 15 or higher, which also then contributes to the profitability.”

Vivek Ramakrishnan

“Sir, is there any rethink in terms of the government payments, because they were very prompt for the last couple of years and do you see any such delays going forward?”

Advertisement

Risks & concerns — 3 flagged

These, last year and this year, have been exceptionally volatile.

— Gaurav Mathur

So, I'm not sure I agree with you that this business is uncertain.

— Resham Jain

There has been pressure on the profitability in IMACID also in the current quarter, while we see that phos acid prices still remains much lucrative compared to historical average, there should have been decent profitability in IMACID as well.

— Rohan Gupta

Q&A — 7 exchanges

Yes. Thanks for the opportunity. Sir, apart from this cost escalation in capex, there has also been around a year's delay in commercialization of the plant. What would be the reason for that, sir? Well, if you're talking about the Ammonium Nitrate plant, the delay is not exactly a year, it is more in the range of six months. And the reason is that when we started the project, thereafter, the entire Russian conflict situation emerged. So, the vendors whom we are working with, also had to take that into account, that's one. Second is, we were also examining whether we could further increase the

Prashant Biyani

Sir, this point on geopolitical situation, most of the tech providers are either from Germany, Italy or U.S. So, how could this geopolitical situation delay the commercialization? Well, they need to take into account various aspects like their cost of production, availability of their raw materials for making the equipment, etc. For example, steel, gas cost and availability, power, the currency fluctuations that are happening. So, there are a number of factors which anybody who's a supplier of equipment and is going to carry out a project will need to consider. Sure. And sir, for now, now that

Hi. This is Vivek Ramakrishnan. My question is on the subsidy debtors. Even if you take into account the INR 1,800 crore that you have got, it is still double, almost double year-on-year. Sir, is there any rethink in terms of the government payments, because they were very prompt for the last couple of years and do you see any such delays going forward?

Gaurav Mathur

So, what has happened is, that the government had provided an initial budgetary estimate of the subsidy. But if you see what has been stated in by the Honourable Finance Minister or the Honourable Minister of Chemicals and Fertilizers over the last 3-4 months, that the total outlay that they were talking of for the full year was more in the range of INR 2,25,000 crore - INR 2,50,000 crore and this is the number, I'm saying which was quoted by the Honourable Ministers. Now, what has happened is that because of the rapid escalation of gas prices and prices of imported fertilizers, the original s

Thank you for the opportunity. How do you see the volume growth in Fertilizer and Crop Protection Chemicals in rabi in third quarter and fourth quarter?

Gaurav Mathur

In terms of Bulk Fertilizers, the overall demand of the country right now is relatively stable. So, we will end up with a share of the total, which has been in the past for our Bulk Fertilizer business. As regards the Crop Protection business, obviously, as you've seen from the results, we've seen very strong growth, and we hope to continue with that. However, you must bear in mind that the quantity of Crop Protection Chemicals consumed in the second half of the year is not similar to what is in the first half of the year. So, the numbers are not necessarily extrapolatable. Okay. And sir, my s

Hi. Good afternoon and thank you for the opportunity. Just a quick question on Crop Protection, right. I think the business has done phenomenally, even though it's on a low base, but nonetheless, INR 500 crore of revenue odd in H1. If you could just throw some light in terms of what's happening here, and do you anticipate this kind of traction even going forward? And if so, would it be on account of you've been underpenetrated right now? I mean, I'm just curious in terms of understanding what's driving this business at the speed at which it is?

Gaurav Mathur

Okay. Thank you. I'll request Ashish, our Head of Sales & Marketing to may be provide you with some insights. Okay. Thank you. This is Ashish here. You rightly said that the growth numbers look higher because of the lower base. But, as we have mentioned earlier also, as Gaurav also mentioned in his opening remarks, the Seed to Harvest project which we carried out in some selected geographies and there was a concentrated effort upon building up a proper product portfolio, so that both things put together are giving good results. So, the Crop Protection portfolio in the existing geographies take

Hi, sir. Good afternoon. Thanks for the opportunity. Sir, couple of questions. The first is on some clarifications on this unexpected losses which we have borne on the complex fertilizer. Sir, time to time, we have seen that, in trading businesses we have occurred this kind of losses because of a change in government policies or probably not the right calculation of the subsidies. So, I think that has been quite disturbing, historically, as well. Sir, in this case, I mean, it's just surprising to see that the government has announced a subsidy rate in the month of April itself and DAP and NPK

Gaurav Mathur

while seeing the currency depreciation will impact the imported costs? So just wanted to understand what the thought process of the industry while the markets are open to increase the prices in the market? So, I think the key focus of the government and to an extent supported by the industry is to ensure that fertilizer is available to the farmers at an affordable price. As you can understand, if the fertilizer price to farmgate price of fertilizer goes up very high, that leads to an increase in his production cost. And then MSPs and food inflation, many things come into play. So that's one as

Yes. Hi, sir. Thanks for the opportunity. On this policy front, the experience that we had in the first half, whether it is likely to impact our strategy for the next year at least on the trading of DAP front, or it's likely to remain the same?

Gaurav Mathur

Are you talking of the NBS policy impact for next year I presume? Yes. So, look, I think it is very early to say anything, because there is so much of uncertainty in the global situation and what is happening on the policy front. There is very regular interaction that we and the industry have with the government. So, I don't think anyone, including me, can sort of give any direction as to what will happen next year. No, sir. My question was largely on the approach that we had taken so far, that we have been doing the trading in DAP and NPK. At the start of the year, we would have been assured

Thank you, all of you very much for your very insightful questions. And I hope all of you have a good day and wish you very well for the rest of the festive and winter season. Thank you.

Management

Advertisement

Speaking time

Gaurav Mathur

Moderator

Tarang Agrawal

Vidit Shah

Abhay Baijal

Ranjit Cirumalla

Prashant Biyani

Vivek Ramakrishnan

Pratik Tholiya

Sanjay Agarwal

Opening remarks

Gaurav Mathur

Earnings Conference Call for 2nd Quarter and Ladies and gentlemen, good day and welcome to the Q2 and H1 FY23 Earnings Conference Call of Chambal Fertilisers and Chemicals 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 “*” then “0” on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Rishabh Barar from CDR India. Thank you and over to you, sir. Thank you. Good day everyone. Thank you for joining us on the Chambal Fertilisers and Chemicals Q2 and H1 FY23 earnings call. We have with us today, Mr. Gaurav Mathur, Managing Director; Mr. Abhay Baijal, CFO; Mr. Rajveer Singh, Vice President- Legal & Company Secretary; Mr. Ashish Srivastava, Vice President- Sales & Marketing; Mr. Anand Agarwal, Vice President- Finance

Advertisement

← All transcripts CHAMBLFERT stock page →

Chambal Fertilizers & Chemicals Limited

Market Movers