Coromandel International Limited (COROMANDEL) Q3 FY23 Earnings Concall Transcript

Coromandel International Limited (NSE:COROMANDEL) Q3 FY23 Earnings Concall dated Feb. 06, 2023.

Corporate Participants:

Jayashree Satagopan — Chief Financial Officer

Mayur Gangwal — Head of Finance, Organic Fertilizer and Specialty Nutrients Business

Raghuram Devarakonda — Executive Director

Analysts:

S. Ramesh — Nirmal Bang Institutional Equities — Analyst

Tarang Agarwal — Old Bridge Capital Management — Analyst

Bharat Sheth — Quest Investment Advisors — Analyst

Ankur Periwal — Axis Capital Ltd. — Analyst

Sumant Kumar — Motilal Oswal Financial Services — Analyst

Gagan Thareja — ASK Investment Managers — Analyst

Chintan Chheda — Quest Investment Advisors Pvt. Ltd. — Analyst

Prashant Biyani — Elara Capital — Analyst

Rohan Gupta — Nuvama Wealth Management — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to the Coromandel International Limited Q3 FY ’23 Earnings Conference Call, hosted by Nirmal Bang Equities Private Limited. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Mr. S. Ramesh from Nirmal Bang Institutional Equities. Thank you. And over to you sir.

S. Ramesh — Nirmal Bang Institutional Equities — Analyst

Good evening, and thank you, Vikru [Phonetic]. Good evening, ladies and gentlemen. On behalf of Nirmal Bang Institutional Equities, I have great pleasure in inviting all for this 3Q FY ’23 earnings conference call with the Coromandel International management.

Let me hand it over to the CFO, Jayashree Satagopan, who will introduce the management team and give the opening remarks, followed by Q&A. Jayashree, it’s over to you.

Jayashree Satagopan — Chief Financial Officer

Good afternoon all, and thanks, Ramesh, for organizing this conference call. Today, I have with me Mr. S. Sankarasubramanian; and Dr. Raghuram Devarakonda, Executive Directors of Coromandel, who will join in responding to your queries during the call.

Let me begin with giving an overview of the business environment experienced during the quarter followed by the company’s performance, and then we will have the Q&A session. Global economy, as the World Bank Global Economic Prospects Jan 2023 released, the real GDP growth is estimated to slow down from 2.9% in 2022 to 1.7% in 2023. And then it is expected to increase to 2.7% in 2024.

The decline in the GDP forecast for this year is reflective of synchronized policy tightening aimed at containing very high inflation in the U.S., worsening financial conditions and continued disruptions from Russia’s invasion of Ukraine. The combination of slow growth, tightening financial conditions and heavy indebtedness is likely to weaken investments. Furthermore, these negative shocks and deeper weakness in major economies and rising geopolitical tensions to push the global economy towards recession.

On the agricultural side, the food price index declined to 132.4 in December 2022 and continued to be in the falling trend from the record high of 159.7 in March ’22. The commodity prices continued to soften from their peak levels except for sugar and dairy products. Indian economy, the World Bank has reduced the real GDP growth estimate as of Jan 2023 to 6.6% for FY ’23 from the earlier estimates of 7.1%, which was published in June of 2022. However, it has articulated that India is in a better position to navigate the global headwinds.

Indian economy is progressing well and is likely to remain the fastest-growing large economy in the world. The tax collections have been buoyant, reflecting the all-round performance of the economy. The monthly gross GST collections for the past 10 months were more than INR1.4 lakh crores. With tight monetary measures, inflation has cooled down recently. The headwinds around rupee depreciation, inflation control measures and energy prices need to be closely watched.

Indian agriculture, the country witnessed above normal rainfall during the season. All India cumulative rainfall during October ’22 to December ’22 was higher than normal by 20%. However, few states like West Bengal, Orissa and Telangana witnessed deficit in the rainfall during the period. The crop acreages for rabi was at 645 lakh hectares, which is 4% higher compared to the prior year. Overall, it has been a good rabi season.

Fertilizer industry performance, global supply of key commodities improved during the quarter and the industry continued to witness the softening of prices of major raw materials. Domestically, the fertilizer demand has remained strong supported by good monsoon and favorable policy measures from the government. For this quarter, DAP plus complex fertilizer industry’s primary sales volume was up by 18%, current year 70.9 lakh metric tonnes vis-a-vis 60.2 lakh metric tonnes in the prior year with higher imported DAP sales.

DAP plus complex fertilizer industries phos sales volume was marginally down by 2%, current year 74 lakh metric tonnes vis-a-vis 75.8 lakh metric tonnes in the last year. Major raw material prices continue to witness a downward trend from all-time high prices. The government is proposing a downward revision in NBS rates, in line with the trend of falling raw material prices, and this is under discussion.

On a year-to-date basis, DAP plus complex fertilizer industries primary sales volume was up by 16%. Current year is 190 lakh metric tonnes vis-a-vis 163.6 lakh metric tonnes with the prior year. DAP plus complex fertilizer industries phos sales volume was marginally down by 1%. Current year, it is 177.6 lakhs metric tonnes vis-a-vis 180.1 lakh metric tonnes in the prior year.

Coromandel’s performance. Coromandel delivered a robust performance during the quarter, registering a strong growth in turnover and profitability with the agricultural environment remaining favorable in most of its key operating markets, normal crop sowing, coupled with favorable policies from the government. Record volume sales in NPK and higher subsidy realization in the nutrients business primarily led to increase in the revenue during the quarter.

In Crop Protection business, domestic formulation and B2B business grew during the quarter, which was offset with headwinds faced in the export markets. Coromandel ensured that agri inputs are made available to the farmers in its key operating markets and promoted the use of balanced nutrition, including organic fertilizer to help rejuvenate the soil and farm productivity.

Company’s Nutrient segment performance. The nutrient and Allied business segment revenue increased by 72% during the quarter and 71% on a year-to-date basis. Company’s SND and organic products registered a good growth during the year, both in terms of turnover and profitability. One new product, Gardina, targeted at the urban garden segment was launched during the quarter.

On the sales front, the business registered a record volume with sales of 10.5 lakh metric tonnes during the quarter, which was 27% higher than last year, where the volumes were 8.3 lakh metric tonnes. On a year-to-date basis, DAP plus complex volumes was at 30.2 lakh metric tonnes vis-a-vis a 27.3 lakh metric tonnes in the prior year, which is 11% higher.

Manufactured DAP plus complex volume was higher by 21% for the quarter and 11% on a year-to-date basis compared to prior year. Imported products volume, mainly DAP was higher at 88% for the quarter and 12% on a year-to-date basis. Company’s market share in Q3 was about 14.8%, and on a year-to-date basis 15.9%. In the previous year, it was 13.7% in Q3 and 16.7% on a year-to-date basis. The market share for complex fertilizer grew during the quarter and the full year. SSP Q3 sales was at 2.2 lakh metric tonnes with a growth of 17% over last year, and on a year-to-date basis, sales was at 6.2 lakh metric tonnes versus 6 lakh metric tonnes compared to the prior year.

Market share on a year-to-date basis for SSP was at 14.9% vis-a-vis 14.7% in the prior year. The urban garden is a growing segment. And during the quarter, the specialty nutrient business launched a new product named Gardina to cater to the needs of this segment. Our commercial team have continued to ensure timely availability of raw materials to enable continuous production at the manufacturing plants by staying abreast of the latest developments in the global markets.

During the quarter, our DAP and complex fertilizer plants operated at 108% capacity and produced 9.29 lakh metric tonnes of fertilizers. On a year-to-date basis, the plants have operated at 102% of the capacity and produced 26.45 lakh metric tonnes of fertilizers. Fertilizer production during the quarter was at 1.1 lakh tonnes and on a year-to-date basis, it’s 3.4 lakh metric tonnes.

Progress on our key capital projects is going as per plan. We work on sulfuric acid plant, as well as the desalination plant at Vizag is progressing well and commissioning is expected as per schedule in July 2023. With these initiatives, we would continue to promote balanced nutrition approach and support the farming community. On the Crop Protection business, the business registered a growth of 4% in revenue for the quarter and 3% on a year-to-date basis.

Domestic formulation witnessed good growth with positive traction from the new products that were launched during the year and the prior year. Cost lag effect and price-related challenges in Mancozeb impacted our export performance. Domestic formulation witnessed good growth with positive traction from the new product launches made during the year. A new bioinsecticide under the brand name of Azamax was launched by the business during the quarter. With this, seven new products have been introduced during the current year. The crop protection business is focused on refreshing and strengthening its portfolio and has lined up two new technical and three new formulations to be introduced in the fourth quarter.

The R&D and product registration teams are working on a rich pipeline of new and combination products to be launched in the coming year. The business is further activating some of its registration in the global markets through collaborations with the key B2B customers. Multipurpose plant at Ankleshwar for manufacture of three new technicals have been completed, and the business is envisaging purchase of additional land for further expansion of the business.

On the bioproducts, the business is working on other plant extracts to expand its product offerings. Our retail stores operated well during the quarter, focusing on providing all-round agri solutions including products, farm advisory and mechanization services. The business has launched a new e-commerce platform and has received good response from its end customers. Retail business has improved its operational efficiencies and has leveraged technology to reach out to its farmers.

During Q3, 96% of the stores have been profitable and operated with negative working capital levels. The company continues to promote active solutions with farmers and started piloting cold storage solutions through its retail network. It further plans to scale up drone applications after successful completion of pilot tests in its key operating markets.

With that, let me take you through the company’s financial performance. Turnover, Coromandel recorded a consolidated total income of INR8,350 crores during the quarter and INR24,276 crores for the nine months ended 31st December vis-a-vis corresponding period of INR5,100 crores for the quarter and INR14,952 crores for nine months. This represents a growth of 64% for the quarter and 62% for nine months. The increase in revenues has been mainly on account of volumes in the fertilizer business and higher subsidy realization.

Nutrients and Allied business contributed to 92% of the share and remaining 8% coming from Crop Protection business for the quarter and the same for the nine month as well. Subsidy, non-subsidy share of business stands at 88% and 12% for the quarter and 87% and 13% for the nine months. During the previous year, this ratio was 82% and 18% during the quarter and 81% and 19% for the nine month period.

Profitability, consolidated EBITDA for the quarter was INR781 crores vis-a-vis INR544 crores last year. And for the nine months, it was INR2,523 crores as against INR1,770 crores during the previous year. In terms of subsidy, non-subsidy share, it stood at 74% and 26% during the quarter and 77% and 23% for nine months. In the previous year, it was 70% and 30% for the quarter and 72% and 28% for the nine month period.

Net profit after tax for the quarter was INR527 crores in comparison to the INR382 crores for the corresponding quarter last year, and INR1,766 crores for the nine months as against INR1,239 crores in the previous year. Subsidy, during the quarter, company received INR3,992 crores towards subsidy claims. Comparative figures last year was INR2,296 crores. For the nine months ended 31 December, ’22, subsidy received is INR7,994 crores and the previous year it was INR4,459 crores. Subsidy outstanding as on 30th of December 2022 was at INR4,359 crores versus INR1,336 crores during the previous year.

Interest, during the quarter, company incurred a net interest expense, excluding IndAS interest of INR8 crores vis-a-vis an interest income of INR15 crores in the same quarter last year. For the nine months period, company earned a net interest income of INR0.5 crores versus INR20 crore interest income during the previous year. Company continued to maintain the surplus funds of [Technical Issues] in Board-approved securities and these are earmarked for specific growth-related activity. The company also put some short-term borrowings to fund the near-term working capital needs, mainly to balance return on mismatching investment.

Credit rating, company’s balance sheet continues to be strong. The company’s long-term credit rating by India Ratings and Research, a Fitch group company continued to be at IND AAA/Stable and short-term rating at IND A1+. The company’s long-term credit rating by CRISIL continued to be at CRISIL AA+/Positive and a short-term debt rating at CRISIL A1+.

Forex, during Q3, rupee was volatile and we traded in a broad range of INR80.72 to INR82.94 to a dollar. Coromandel follows its prudent conservative approach of hedging the forex exposures, which has immensely helped by limiting the impact due to currency depreciation. Dividend, the Board in its meeting held on 2 February, 2023 has approved an interim dividend of INR6 per share.

With good Northeast monsoon and higher reservoir levels, Indian agriculture continues to be in a bright spot. With strength in our key operating markets, Coromandel will continue to ensure timely availability of agri inputs to the farming community through our dealers and retail outlets. Coromandel with its diversified presence across its agri value chain will continue to provide balanced nutrition and integrated pest management solutions to maximize farm productivity.

As we open the session for Q&A, please allow me a moment to introduce my colleagues who have joined the call today, S Sankarasubramanian heads our Nutrition businesses. Sankar has been with Coromandel and the Murugappa Group for more than 30 years. And prior to his business role, he has held a position of CFO of the company. Dr. Raghuram Devarakonda heads the Crop Protection Chemicals, Bio Products and Retail Business of Coromandel. Raghu brings an experience from industry and consulting business, joined Coromandel in August ’21. Prior to this, he has worked with the Murugappa Group between 2004 and 2013.

Thank you all for your interest in Coromandel and joining us in the con call today. We look forward to the interaction. We can now open the session for question and answers.

Questions and Answers:

Operator

Thank you very much. [Operator Instructions] Our first question is from the line of Tarang Agarwal with Old Bridge Capital. Please go ahead.

Tarang Agarwal — Old Bridge Capital Management — Analyst

Hello. Good afternoon, and thank you for the opportunity. I have three questions. The first is, if there is any update on BMCC mines and when can we see some round of commercializations coming from them?

The second on the S3 plant. You said that the commercialization will start from July 23. Just wanted to get a sense on what is the post tax cash payback that you’re anticipating for this plant once it commercializes and how much time will it take to run at optimal utilizations?

And the third is phos acid prices for the quarter.

Jayashree Satagopan — Chief Financial Officer

Thank you. Thank you, Tarang. On the BMCC mines, I would request Sankar to provide an update. And Sankar, if you want, you can also take the SA3 and — the 3 is right.

Sankarasubramanian S. — Executive Director

Good afternoon. In respect of BMCC operation, we are seeing good traction in the last three months. In fact, we have deputed our team and we have engaged mainly focusing on the mining part. And that has yielded good results and we are stabilizing the operations. We started receiving shipments and hopefully, we should be able to achieve the target volumes what we plan for the year ’23-’24. So at this point of time, whatever we envisage to do we are on the right track.

Tarang Agarwal — Old Bridge Capital Management — Analyst

Sir, just a follow up. So, my sense is about a third of your requirement were to be met by this mines. So, can we anticipate that coming in from FY ’24?

Sankarasubramanian S. — Executive Director

It should be 20% of our requirement, to begin with. But the potential is high. In fact, it will be beyond what we envisaged earlier. Potential is high. But next year, we can say hardly 20% of our requirements can be met from the Senegal mine.

Tarang Agarwal — Old Bridge Capital Management — Analyst

Wonderful.

Sankarasubramanian S. — Executive Director

In respect of sulfuric acid plant is your second query, right?

Tarang Agarwal — Old Bridge Capital Management — Analyst

Yes.

Sankarasubramanian S. — Executive Director

Sulfuric acid plant will be commissioned by July, and whatever we stated to achieve as per the plant, we should be able to get the production as planned earlier. From August onwards, we should be able to come back to full stream. We may require a month of stabilization. From August onwards, we should achieve the rated capacity.

Tarang Agarwal — Old Bridge Capital Management — Analyst

How much would the payback be, sir, on this, I mean, in how many years?

Sankarasubramanian S. — Executive Director

See, this sulfuric acid is more investment from the point of securing the raw material side, as currently our requirements are quite significant, almost a million tonne of sulfuric acid. The part of it 50% is being covered through our captive facility what we have envisaged. So, we look at more of augmenting our captive source of raw material. It’s a function of import price of sulphuric acid versus the cost of our own manufacturer. And also it generates other savings in terms of power and other utilities. So it’s more of, I would say, it’s a supply security.

Tarang Agarwal — Old Bridge Capital Management — Analyst

Got it. And the last is on phos acid prices.

Sankarasubramanian S. — Executive Director

We have finalized our third quarter price at $1,050 as against $1,175, which was there for the previous quarter. We have signed up with our joint venture partner, PhosCo.

Tarang Agarwal — Old Bridge Capital Management — Analyst

Okay. Thank you.

Sankarasubramanian S. — Executive Director

Thank you.

Operator

Thank you. Our next question is from the line of Bharat Sheth with Quest Investment Advisors Private Limited. Please go ahead, sir.

Bharat Sheth — Quest Investment Advisors — Analyst

Hi, Coromandel management team. Thanks for the opportunity and welcome, Sankar, and Dr. Raghu on the Board. So, I have a question on — first on this fertilizer. See, Jayashree in view of declining fertilizer raw material price as well as final product price and the farm output price is also declining, so with that background, how do we see fertilizer demand for FY ’24? That is first question?

And since we are operating almost at full capacity, so what will be our strategy to grow that volume? And second thing, our EBITDA per tonne has increased substantially over last seven years — six years to seven years from almost 2,000 level to around 6,000 in FY ’23 because of several business initiative, as well as backward integration program. So can you give — I mean, margin trajectory, how do we see now from here onwards? So how much decline if at all if it happens, can we anticipate or any further room to improve?

Jayashree Satagopan — Chief Financial Officer

Okay. Thanks, Mr. Bharat, for your questions. The first one is in terms of the raw material prices coming down, right? So, we are seeing this trend over the last few months, and we expect in most of the materials this trend to continue. With that, we would also expect some sort of a correction in the subsidy realization from the government, which is what I was mentioning a little while ago.

Given those, I think — and the good monsoon conditions that is there and the increase in the overall area under cultivation, we expect the demand for fertilizers to continue to be good, both in terms of NPK, DAP, as well as SSP. So given that that there is a good demand for fertilizers, our production, our inputs will be helpful in terms of meeting the farmer requirements. As far as the capacity is concerned, you would have seen, I was mentioning that on a year-to-date basis, our capacity utilization is more than 100%.

Bharat Sheth — Quest Investment Advisors — Analyst

Correct.

Jayashree Satagopan — Chief Financial Officer

As I had mentioned in the past, too, we have taken few actions at the plants for debottlenecking the capacities and also some intelligent mix of using certain raw material has also increased the throughput. Apart from it, as we have been sharing in the past, the type of product that we produce, meaning the grade, also determine the throughput at our plants. So a combination of all of these three will help in terms of getting our capacity utilization at decent levels.

Apart from that, we would also be looking into strategically importing complex fertilizers. This year, we have imported DAP to a great extent because importing DAP vis-a-vis manufacturing made more economic sense. In the past, we have also imported NPK. So, we will continue to resort to these practices, which happens on a month-to-month, quarter-to-quarter basis.

Apart from this, the business is also contemplating to see how we can increase the capacity, like we have alluded in the past. This will also mean that we will have to look at securing some of the key raw materials, which the business is actually tying up very well. So probably as the business plan for next year gets firmed up, we will have a little more clarity in terms of how we go forward. But the demand for NPKs is quite good and we expect it to go up. And based on that, the business will come with your proposal for further capacity expansion.

The last one from your end was in terms of EBITDA per tonne margin. Yes, over a period in time, the EBITDA per tonne has been showing an upward trend and despite an increase in the raw material prices and the cap sort of on the MRP. Given the fact that the commercial teams have worked in terms of securing multiple sources for our raw materials and the flexibility that our manufacturing plants have exhibited in processing these raw materials have ensured that this has been on a good upward trend. What you sell about INR6,000 per metric tonne is something that we should look at stabilizing and maintaining in the coming years, although there could be some sort of a adjustment in raw material prices, or the MRP correction and so on and so forth.

Bharat Sheth — Quest Investment Advisors — Analyst

Okay. And two more questions, Jayashree, with your permission. One is what is the potential of this nano DAP and how do we see the convergence of economic interest of government, our company and farmers and farmers’ mindset for the acceptance of this nano DAP? And what is our strategy whether we’ll be manufacturing and how is the raw material scenario for that? Is it again imported?

And second, on drone side, are we going in — entering into manufacturing or we’ll be just providing the services?

Jayashree Satagopan — Chief Financial Officer

Okay. Nice question. So, I’ll take the drones question first. As you know, in the last couple of quarters back, we mentioned that we have invested in a ag tech company who is manufacturing drones. This is part of our investment in agri start-up companies. We will be leveraging the drones manufactured by this company. And two of our businesses has already done their pilot trials, CPC and specialty nutrients. And we want to sort of scale it up because we believe ag tech is going to be the future. So, that’s the strategy around drones. As regards nano DAP, this is a very interesting area. And I’m going to once again request Sankar as he is much more closer to the business to articulate on this question.

Sankarasubramanian S. — Executive Director

See on nano DAP, as a company, we have taken a lead in terms of developing this technology in-house and we have applied for patent and we have also applied to government for the approval, which is expected [Phonetic] any time. And we are also carrying out field trials to understand the efficacy of the product. And the results are mixed. We have to wait and see. We have to carry out more trials in the next season to establish nano DAP. We could see some improvements, partial replacements in certain crops with a higher fully [indecipherable]. That is what our initial studies has revealed. It’s too early stage to comment on how this will play out, but we are very much focused on it and we’ll be able to share more as we progress on our field trials. But it’s looking very promising and we have taken a lead on this.

Bharat Sheth — Quest Investment Advisors — Analyst

Sir, can you, I mean, cannibalize our NPK sales going ahead? Or how — where it will replace?

Sankarasubramanian S. — Executive Director

See, the bulk fertilizers, soil application that will continue to remain because predominantly, the NPK grades, including DAP what we consume is predominantly soil applications. The nano DAP is more focused on full year. So it may be an add-on supplementary nutrients. It can’t replace in entirety. And also it requires that sort of adaptation by the farmers, which will take time. And also, it involves additional costs in terms of spraying as well. So it requires a lot of education and the effect has to be seen on the ground. So the question of replacement is too early to talk about. And our view is our bulk fertilizer application will continue to remain, and this will help to replace some portion of the crop pressing stage [Phonetic] as and when the farmer applies it.

Bharat Sheth — Quest Investment Advisors — Analyst

Okay. Thank you. And Jayashree, have we received any subsidy post Q3? And what is this government, I mean, undertaking, we have not received, whether this will keep on increasing or not?

Jayashree Satagopan — Chief Financial Officer

No. The totals of the outstanding is a combination of what we have already sold and raised as a claim and it also includes the channel inventory, right? So the government has been sort of giving the subsidy. It has been a little slower compared to previous year, but we don’t see a concern in this area. As you know, this year, the subsidy rates have also gone up compared to last year. Therefore, you would see that the quantum is slightly higher, but that doesn’t mean that we’re not going to receive the subsidy.

Bharat Sheth — Quest Investment Advisors — Analyst

So, we have not received post December, correct? Is that fair understanding?

Jayashree Satagopan — Chief Financial Officer

No, we have received. We have received even in January. So, we continue to receive subsidy, that’s not an issue.

Bharat Sheth — Quest Investment Advisors — Analyst

So how much claim we received so far, post December?

Jayashree Satagopan — Chief Financial Officer

Mayur, do you have the numbers?

Mayur Gangwal — Head of Finance, Organic Fertilizer and Specialty Nutrients Business

INR1,200 crores.

Jayashree Satagopan — Chief Financial Officer

Around INR1,200 crores.

Bharat Sheth — Quest Investment Advisors — Analyst

Okay. Thank you. If I have any questions, I’ll come back in queue.

Operator

Thank you. [Operator Instructions] Our next question is from the line of Ankur Periwal with Axis Capital, please go ahead.

Ankur Periwal — Axis Capital Ltd. — Analyst

Yeah. Hi, ma’am, Thanks for the opportunity, and congrats for a good set of numbers. First question on the crop protection side. While you did mention in your initial commentary on the overall growth in the domestic market, while Mancozeb was slightly weak, if you can put some more light on what is the pricing or volumetric trend in Mancozeb as well as on non-Mancozeb crop protection portfolio, how has our performance been and some guidance there?

Jayashree Satagopan — Chief Financial Officer

Yeah, Ankur. Thanks for your question. As I mentioned, during this year, the business is seeing some amount of pressure, especially on Mancozeb given the fact that the ban of this molecule in Europe has happened and the excess capacities from our competitors, namely UPL and Indofil is now available for other markets, as well as for India. So, that has actually led to a bit of a pricing war, if I were to use that terminology. And from our standpoint, the business has taken a pretty conscious call that beyond the point, we would not be subsidizing and selling the product for the sake of volume. So, that’s been the prime reason for sort of a, I would say, a lower increase in the revenue as such.

In terms of absolute volume increase or decrease, let me come back to you. But from a team standpoint, the intent is to ensure that the production is happening and we are able to sell at reasonable margin levels. Having said that, the business has also been focusing on seeing how do we derisk our portfolio from the old generics that we have had, especially in Mancozeb still is about 40%, 45% of our overall turnover. With that in mind, we have identified quite a good number of so-called recently off-patented molecules.

As I was mentioning, the multipurpose plant for production of three of such molecules got commissioned recently, and the first order has also been executed. This is for products like azoxystrobin, picoxystrobin and cyproconazole. These three are relatively new products and couple of them have very large potential. So in the new land that is also planned to be acquired, the business is looking into adding few more technicals. So from an overall portfolio standpoint, there is conscious efforts to move from the old generics while there is still a large demand for it, given the fact there is a lot of competition action there. Practically, we have to manage volume with this new products. That’s the way one should look into the CPC technical business.

Ankur Periwal — Axis Capital Ltd. — Analyst

Sure, ma’am. And just, next question related to crop protection again. We have seen some bit of margin pressure over the last couple of quarters, primarily because of RM inflation there. Is large part of RM inflation already passed through, given there is a decline there as well in RM prices?

Jayashree Satagopan — Chief Financial Officer

Yeah, I would think so. The raw material prices are coming down, which is a good trend. But in some of the molecules, we are seeing that pricing pressures are there. That’s where we have to manage between volume price and margins. So, this is a very tactical operational call that we take on a monthly basis. I expect this to continue for a little while. And the business also is working on number of initiatives at the plant level in terms of cost optimization, both on the conversion side, on the fixed cost. And we have come up with several ideas, which will help us to remain cost competitive, including purchasing of raw materials at better rate. So, I think all of this should start playing out very soon and we should be able to handle the pressures on margin front.

I would request Raghu to sort of chip in and add his comments here.

Raghuram Devarakonda — Executive Director

Yeah. Thanks, and good afternoon, everyone. So the only other point that I would try to add to what our CFO has already shared is that other than the product portfolio, even the business portfolio we are trying to change in terms of the proportion of revenue that comes from our various fields. So primarily, the B2C side of things, we are investing heavily in that area to improve the product portfolio and also in terms of putting more feet on the street so that our market penetration also improves. So with that, the margin pressures that we are seeing in the commodities like technical, we should be able to tide over somewhat.

Ankur Periwal — Axis Capital Ltd. — Analyst

Sure, Raghu. That’s helpful. That’s it from my side. I’ll get back into the queue. Thank you.

Operator

Thank you. Our next question is from the line of Sumant Kumar with Motilal Oswal. Please go ahead.

Sumant Kumar — Motilal Oswal Financial Services — Analyst

So in Q2 FY ’23, we raised our EBITDA per tonne estimate for manufacturing fertilizer from INR4,500 to INR5,500. So can you talk about the margin profile for fertilizer business for FY ’24, and what is the revised guidance for FY ’23?

Jayashree Satagopan — Chief Financial Officer

So Sumant, as you know, we don’t give a guidance for quarter or a year. The indication, obviously, is we will be in the range of INR5,500 to INR6,000 per metric tonne. That’s our endeavor to sustain the INR5,000 to INR6,000 type of range per metric tonne. And every effort will be done by the business to see how we can maximize it. I have already spoken about multiple initiatives that have been taken starting from procurement, manufacturing, brand building, logistics. So, all of those will continue. So, I think I’d leave it there and let’s take it every quarter and then look at it on an annualized basis.

Sumant Kumar — Motilal Oswal Financial Services — Analyst

So what are the key reasons? Can you talk about the pricing? Raw material price has corrected. We have not cut the price of our key products or backward integration. So there are many factors. So can you talk about from here, if we are going to reduce price, this margin is sustainable or not for FY ’24?

Jayashree Satagopan — Chief Financial Officer

Yeah, as you know that during the beginning of the year, the raw material prices were very high, Government had increased the subsidy, right? And when the raw material prices come down, it is very natural for government to also re-look at the subsidy rates that are being offered. Today, the government’s outflow in terms of subsidy is actually very, very high. And as I was mentioning, they are contemplating a downward revision in the subsidy rate and the MRP also will get moderated. If the raw material prices are coming down, obviously, like in the past, there will be a correction to subsidy, there could be corrections to MRP because end of the day, we have to make fertilizer affordable for the farmers.

Sumant Kumar — Motilal Oswal Financial Services — Analyst

So can we conclude saying that the EBITDA per tonne whatever we have generated in FY ’23 is not going to be in FY ’24?

Jayashree Satagopan — Chief Financial Officer

No, I won’t say that. As I said, we have been in the range of INR5,500 to INR6,000. We should continue to maintain those levels.

Sumant Kumar — Motilal Oswal Financial Services — Analyst

Okay. Thank you so much.

Jayashree Satagopan — Chief Financial Officer

Thank you.

Operator

Thank you. Our next question is from the line of Gagan Thareja with ASK Investment Managers. Please go ahead.

Gagan Thareja — ASK Investment Managers — Analyst

Yeah. Good afternoon. Am I audible?

Jayashree Satagopan — Chief Financial Officer

Good afternoon. Could you speak a little louder, please?

Gagan Thareja — ASK Investment Managers — Analyst

Yeah. Is this better? Can you hear me now?

Jayashree Satagopan — Chief Financial Officer

Yeah.

Gagan Thareja — ASK Investment Managers — Analyst

Yeah. Ma’am, just one question, I think around the second quarter, there was an initiative by the government to promote unbranded fertilizers, Bharat brand fertilizer, basically, the government logo on the fertilizer packaging would be two thirds and the company logo probably one third. What could be the implications of this move as far as brand building and brand patronage are concerned for you?

Sankarasubramanian S. — Executive Director

Yeah.

Jayashree Satagopan — Chief Financial Officer

Shankar, please go on.

Sankarasubramanian S. — Executive Director

See, this is the initiative overall that the government, we welcome the move by the government, especially considering the fact, in the products like urea, government is extending significant amount of subsidies. They have come up with this universal brand of Bharat brand and also being extended to other grades of fertilizers. Packaging brand on the package is only one aspect of communication.

But companies like Coromandel, our engagement with the farming community is more by way of — to our agri graduates going and communicating with the farmers, talking to them about the products and our extensive farm exchange activities, which has been carried out, besides other activities like soil testing, organic carbon testing, communicating to the products and the value proposition of new products what we introduce, those brands value proposition continues to remain. And also in the one-third percent, we communicate our brand and our logo. So, we don’t see any major change. But we welcome this suggestion, which has come from the government to have universal branding of Bharat Urea or Bharat NPK.

Gagan Thareja — ASK Investment Managers — Analyst

Sir, as I understand it from the government side, the initiative probably is being done to rationalize the subsidy cost on the transit of fertilizers, the idea being that subsidizes being bulky. It’s appropriate for certain radiuses or radii to be maintained within which the sales is done, probably that was their incentive. Would that, therefore, not have some sort of fall out repercussions for or limit in some way what companies can do in terms of brand building and selling a little far away from where their plants are based?

Sankarasubramanian S. — Executive Director

Maybe true in the case of products like urea, where you can’t make in any differentiation at the product level. But whereas in the NPKs with the multiple nutrients and also the value creation what we give in terms of, for example, we have grades which are unique to us for 24:24, which are fortified with sulfur. Similarly, we have grades like 20-20 [Phonetic] unique to Coromandel. These unique grades are value proposition and it’s different and that needs to be communicated and the farmers prefer those grades.

So, we don’t see much of a challenge and we have been building these volumes on these grades over a period of time. I agree maybe for generic products like urea are generic grades for that matter, DAP, farmers may be agnostic about the brand. But the unique grades what we have, there will be traction for — and the demand will be there for this market. And that purely depends on the extension activities what companies carry out.

Gagan Thareja — ASK Investment Managers — Analyst

Thanks for that. And just one final question. If you could enumerate what is the degree of backward integration you have now? And with the mine that you’ve taken a stake in over a three-year timeframe, to what degree further can you increase your backward integration for the fertilizer business?

Sankarasubramanian S. — Executive Director

Backward integration varies from product to product. In the case of acid, we are almost close to 50%, you can say, on the backward integration of captive phosphoric acid. And in terms of rock, we diversify our source. Definitely, we will not be able to go into mining to meet up the entire rock requirement. As I mentioned in my earlier response, we have visibility up to 20% to 30% of our requirements being met through our mines at Senegal. Any further opportunities, we need to evaluate. And in terms of sulfuric acid, we have currently 50% to 60% and we are augmenting capacities further. So as and when need arises and if the economics pay for it, we will expand our capacities on intermediates as well.

Gagan Thareja — ASK Investment Managers — Analyst

And on rock, are you currently at 20% to 30%, or are you lower than that?

Sankarasubramanian S. — Executive Director

So current — this is the first overseas investment on mining. So far we have been only buying. So, we just started with our Senegal investment. So, this will be 20 to 30 percentage.

Gagan Thareja — ASK Investment Managers — Analyst

Okay. Thanks, sir. I’ll get back in the queue. Thank you.

Operator

Thank you very much. Our next question is from the line of Chintan Chheda [Phonetic] with Quest Investment Advisors Private Limited. Please go ahead.

Chintan Chheda — Quest Investment Advisors Pvt. Ltd. — Analyst

Yeah. Good afternoon, and thanks for the opportunity. My first question is related to the growth in the Crop Protection segment. So given the headwinds that we are facing in Mancozeb and the new MPP plant, which is coming up, right? So what is the growth that we are envisaging in this segment over the next couple of years?

Jayashree Satagopan — Chief Financial Officer

So Chintan, once we see some sort of stability in the market and the new products kicking in, we should see a growth of about 10%, 12% or so, that’s what we are looking at. Having said that, the businesses are working through your annual budgeting process and we will get more clarity in the next couple of months. As Raghu was mentioning, the intent is to see how we grow our B2C business furthermore because there is an opportunity to not only grow the revenue, but also the margin since our base is also very relatively smaller compared to our B2B and our export business. So, I think, definitely in the double- digit we should be in a position to see the growth.

Chintan Chheda — Quest Investment Advisors Pvt. Ltd. — Analyst

Okay. And ma’am, secondly, in this new growth areas of nano DAP and drone technologies, so is there any capital commitments that you have made? Or over the next two years, three years, what is the kind of investments that will be required over here?

Jayashree Satagopan — Chief Financial Officer

On the drone, we made an investment in ag tech, right? So that’s as much at this point in time. Over a period in time, we will see how we can help the start-up in terms of scaling up their own operations given the expertise that Coromandel has in terms of pest manufacturing practices, in terms of approach to the market, also trying — and piloting through our own businesses mainly Crop Protection, F&B and retail. So that will take care of the drone part of the business.

On the nano DAP, as Sankar was mentioning, we have applied for a patent. We will be working closely with the government to see that we are getting the approval. And putting up our nano DAP plant compared to any other granulation plant is going to be much shorter in terms of timeframe. As I understand, [indecipherable] for the capacities that they have created, which is roughly about INR5 crores to INR6 crores bottles is about INR150-odd crores. So it’s not a huge investment if I look at it from a benchmark standpoint.

So from Coromandel, as we go along, we will be taking a call. We already have our pilot plant for liquid fertilizers in Vizag, which currently the business is using for production of nano DAP to sort of test and trial in the universities and in the field. But the proposal for putting up a dedicated nano DAP facility and the investment will come through during the business planning cycle.

Chintan Chheda — Quest Investment Advisors Pvt. Ltd. — Analyst

Okay. Got it. Thanks a lot.

Jayashree Satagopan — Chief Financial Officer

Yeah.

Operator

Thank you. Our next question is from the line of Prashant Biyani with Elara Capital. Please go ahead.

Prashant Biyani — Elara Capital — Analyst

Yeah. Thanks for the opportunity. Jayashree ma’am, what could be the capacity utilization of the granulation plant and how much utilization are we targeting next year?

Jayashree Satagopan — Chief Financial Officer

Okay. The capacity utilization of our plants currently for all the three quarters put together is about 102%, which is what I was mentioning earlier during the call. Prashant, you would also recall that there are several measures that have been taken by the company to hit this type of a capacity utilization. We spoke about some debottlenecking operations. Second, we looked into multiple sources of raw materials. Third is the grades that we are producing. And fourth is obviously looking at what grades we can import so that we can produce more of certain other grades.

So combination of this has actually helped to hit about 100 plus percentage till now. In Q4, we will be doing through the annual turnaround in both Vizag and Kakinada, which sort of would moderate for the full year. This is also in line with our past performance, right? Q4 typically, we take a 88%. For the coming year, we expect a similar trend to continue. In fact, our Kakinada debottlenecking and using different sources of raw material has helped in scaling up capacities there. And we should be able to hit even slightly higher volumes with all our three plants fully in operation next year.

Prashant Biyani — Elara Capital — Analyst

Yeah. And how much incremental capacity would be available through debottlenecking next year?

Sankarasubramanian S. — Executive Director

Can I comment? See, there are multiple opportunities in which we can increase the volume, depends on the mix. We can’t go by the current volume. With the current trains, we can produce multiple products. So, we have taken two, three steps. One is in terms of producing different grades in the same plant. So if X grade can produce, say, 100 tonnes, Y grade can produce 120 tonnes. So it depends on the mix optimization. So, there is a scope of increasing volume through the mix optimization. Second can be through the debottlenecking of the capacities, which we are seriously contemplating, which should come through in the second quarter of next year. And third, we use different sources of raw materials, which can increase the throughput. And fourth, we are also looking at additional trains with possibilities being explored. So always the business will look for opportunities of volume growth as well as the mix, which can bring in top line growth for us. And as Jayashree mentioned in the earlier response, there is also option for us to produce certain unique grades in our plants and the generic grades can always be imported. So, our focus will be to increase production of NPKs and import DAP. So that strategy also will play out more in the next year.

Prashant Biyani — Elara Capital — Analyst

Right. And sir, with regard to future growth for the industry and as well as for, Coro, I mean, we are right now at a very critical stage where on one hand nano fertilizers are being promoted and on the other hand, we are also short of granulation capacity. So going forward, I mean, how do you see this, how much has been the acceptability of nano fertilizers while you were doing trials and whether it would be prudent to set up capacity, how much capacity of — how much granulation new capacity is prudent to be set up in the country? Is there any risk of some of the spare — some of the granulation capacity being available because of some market shift to nano fertilizers over the next three years to five years? So because of all these things, how do you see — so which path would be correct for Coro to take?

Sankarasubramanian S. — Executive Director

See, if you know the phosphatic industry segment is close to 20 million, 22 million. It ranges between 20 million to 22 million. And India produces roughly 13 million tonnes. So basically 6 million tonnes to 7 million tonnes is imported. So even if you were to assume that nano DAP is going to come in, first, it will only replace the imported DAP. So, our aim is also to see that how this can replace the imported DAP. That’s what government is also looking at it. So, we don’t see any challenge to the domestic capacities and there’ll be co-existence.

There are multiple products. Whether it is water-soluble fertilizers or specialty nutrients or nano DAP, they’ll coexist along with the main soil applicants. And we don’t see any challenge to the existing capacities when we are almost importing 40% of the total annual requirement of phosphatic. And Coromandel will definitely look at expanding volumes and there are opportunities available in this space and we will look at growing the granulation capacity as well. In tune with government focus on Atmanirbhar, it makes immense sense for the companies to augment domestic capacities not only for granulation, also to create a backward integration opportunity. And we’ll continue to focus on that.

Prashant Biyani — Elara Capital — Analyst

Right. And sir, lastly, while we have applied for patent for nano DAP, what would be our plans for other nano fertilizers? And specifically, do we plan to venture into nano urea and have we been able to find another route to manufacture nano urea?

Sankarasubramanian S. — Executive Director

So we have nano urea technology as well, which we have applied for patent and we are going through the various studies, which are required for making our application to the government. We are going through that phase. We are also carrying out the field trials. Once we get the studies completed, we will apply to the government and take the approval and then we will launch nano urea as well.

So, we have got an alternate route of manufacturing nano urea as well. But again, I repeat my response in the earlier case, these are all meant for full-year applications, which are much later part of the crop stage at the time of flowering and it cannot replace the traditional soil applications which are happening. So to that extent, there are no immediate challenge in terms of the volumes prospects for the phosphatic per se.

Prashant Biyani — Elara Capital — Analyst

Sure.

Sankarasubramanian S. — Executive Director

But our effort on nanotechnology applications will continue to be there and we will look at opportunities, including nano micro nutrients also going into the future.

Prashant Biyani — Elara Capital — Analyst

Sir, how has [Speech Overlap]

Jayashree Satagopan — Chief Financial Officer

I just want to add one more comment here. These are still very early days of nano technology, right? It was launched this year, I mean, in the last — in this current financial year nano urea. And we are talking about nano DAP. We just need to see even on the four year application to what extent there is going to be a substitution. It’s an interesting area to watch out. We’ll have to wait and see rather than getting into some sort of a conclusion whether there is going to be a substitution or whether it’s going to be an add-on application. But it’s an interesting space to look out for.

Prashant Biyani — Elara Capital — Analyst

Right. And in your trials, how have you seen the farmers acceptability for nano fertilizer?

Jayashree Satagopan — Chief Financial Officer

As I said, it’s very early stage, Prashant. We’re just doing some university trials. So once we get to some level of certainty, we’ll definitely be happy to share with all of you.

Prashant Biyani — Elara Capital — Analyst

Sure. Thank you. That’s it from my side.

Jayashree Satagopan — Chief Financial Officer

Thank you.

Operator

Thank you. Our next question is from the line of Rohan Gupta with Nuvama. Please go ahead.

Rohan Gupta — Nuvama Wealth Management — Analyst

Yeah. Hi, sir. Hi, ma’am. Good evening. Good to see Sankar sir joining call after such a long time. Sir, couple of questions from my side. First is on fertilizer margin itself. Jayashree ma’am, you guided roughly INR6,000, that is the margin per tonne you are looking in fertilizer. We have seen that we have been continuously improving our stable margin guidance from almost INR4,000 to INR4,500 to INR5,000 or roughly INR6,000. We have been living in environment where the phos acid prices were continuously going up and now they have started correcting. So, I think that during this time, we definitely enjoyed some margin because of backward integration, high backward integration.

When we are talking about INR6,000 stable margin per tonne, assuming that DAP prices comes back to the normal of, say, INR40,000 per tonne, what they used to trade earlier, that’s a pretty handsome margin on a average realization basis of INR6,000 and given that our profitability will be primarily coming from the government subsidies. Do you think that the government will be okay with this kind of margin enjoyed by the industry, though I understand Coromandel will have a efficiency level also driving this margin? But still do you see that this margin for the industry can sustain at these levels once the phos acid prices and DAP normalizes?

Jayashree Satagopan — Chief Financial Officer

Yeah. Good question, Rohan. As you know, the margins have been improving on a year-on-year basis, primarily based on the cost efficiencies, backward integration, building on the brands, creating demand for unique grades based on agronomist activities in the field, so on and so forth. So, I would look at a steady state as I was mentioning between INR5,000 to INR6,000 of EBITDA per tonne margin for us. These levels, based on the efficiencies that have come in should sort of be doable.

While we see that PA prices are coming down, in the immediate future, I don’t see a drastic reduction per se, right, because the demand next year also is expected to be higher. We still do not know how China is going to play the card, or there is going to be still law enforcements [Phonetic] that happens into the country. For DAP, primarily, we are seeing more imports and we will also continue to import that and start manufacturing more of NPKs and unique grades in our facilities, right?

So with that, we should sort of be able to maneuver around these margin levels. The government, obviously, will be looking into reduction in the subsidies, which I was also mentioning little earlier, given there is also for unique grades of, bit of flexibility to work out on the MRP. So it’s going to be a combination of multiple factors. And as the capacity at the plants go up, primarily due to debottlenecking and using multiple grades or sources of materials or types of materials, there is also going to be efficiency on the fixed cost front. So once you’ve looked into it overall, so I think we should be comfortable in this range. I wouldn’t get too worried in terms of whether these numbers are reasonable or not.

Rohan Gupta — Nuvama Wealth Management — Analyst

Okay. Sir, second — ma’am, second is a clarification. In Q2, we mentioned that definitely we do have some high cost inventory of phos acid and the prices of phos acid last quarter came down to $1,175, while they have further come down $1,050 now. We have seen that despite that cautious outlook, which you shared in Q2, which could have led to some inventory led losses, we are seeing the Q3 numbers are pretty robust and the margin has been very well maintained. So when the prices or raw material has further fallen to $1,050, government is still holding on the subsidy rates, which they have revised in month of October.

I’m sure that we are almost half of the Feb now. So it means that for the current quarter, the subsidy rates will be the same at what we have seen in Q3. So it means that we are looking at very, very attractive Q4, with a fall in raw material prices and also the — even the prices coming down in phos acid. In previous quarter also, market prices of DAP and NPK whatever channel checks suggest are still holding on. So it indicates with all these things probably indicating a good Q4, unless the government further reduces the prices on the subsidies. Is that understanding correct, ma’am?

Jayashree Satagopan — Chief Financial Officer

Well, as I was mentioning, Rohan, government is already contemplating reduction in the subsidy rates and it is in discussions within DOF, will go for approvals to the cabinet because they are seeing a trend which is coming down as far as raw material prices are concerned. What we do not know now is from when do the reduction in subsidy rate would be applicable. Like for instance, 1st April onwards, the rate went up but the announcement didn’t happen in March. It happened subsequently. While the government was willing to give an increase in the subsidy rates effective 1st April, maybe they may want to reduce the subsidy rate from 1st January because they’ve been talking about it. But at this point in time, we do not know the exact date. So, I wouldn’t jump one to, say, the government may not change the rate for the quarter, therefore it will be.

They are definitely seriously considering a reduction in the rate. We do not know how much. We do not know the date. And if that doesn’t happen, there may be some corrections in the market price also because the expectation is to see how the farmers benefit out of it. And we all know that the subsidy outlay for the government has been quite high. And the incentive for them also is to reduce the subsidy rate. You have also see that formality coming in, the budget speech of the Finance Minister. Therefore, I would rather wait a week or so, when we will get little more clarity on this subject. We’ll look into the change in the subsidy rates by the government. I hope that clarifies.

Rohan Gupta — Nuvama Wealth Management — Analyst

Yeah. Right, ma’am. Thank you very much for clarifying that. So, I think that the further reduction in subsidy or any point of time the government announcement, which may be retrospective effective from 1st of Jan itself will be the biggest risk, which we are going to face right now. And we don’t know how the company handles that risk, I mean, because that is not in our hand, right?, o you must be having some inventory. The current quarter phos acid prices are already fixed. So, I think that we are just only doing the business, but there is all — there is a risk, which we are having right now in terms of the impact to the profitability. Correct?

Jayashree Satagopan — Chief Financial Officer

This happens every time, Rohan, when the rates move up or down.

Rohan Gupta — Nuvama Wealth Management — Analyst

Yeah. Right.

Jayashree Satagopan — Chief Financial Officer

So it’s part of the business. Yeah.

Rohan Gupta — Nuvama Wealth Management — Analyst

Got it, ma’am. Got it, ma’am. Thank you. Thank you so much, ma’am. Thanks a lot.

Jayashree Satagopan — Chief Financial Officer

Thank you.

Operator

Thank you very much. Now, I would like to hand the conference over to Mr. Ramesh for closing comments. Please go ahead, sir.

S. Ramesh — Nirmal Bang Institutional Equities — Analyst

Hello. Let me ask questions before I close the call. So, I would like to have your thoughts on how you see the Crop Protection business achieving its true potential in terms of the improved product mix, and what is the kind of share you expect from the formulations? And when you see some kind of steady trajectory in terms of volume growth and margin expansion, would it be by ’25 or FY ’26, if you can give your thoughts on that in terms of the internal assessment that would be useful?

And secondly, on the structural soil nutrient content, how do you see that imbalance being addressed because you have a problem in terms of the steep discount for the urea price for the farmer. So, any thoughts or government thinking on that you can share in terms of the potential for long-term growth in the complex fertilizers? I know these are slightly difficult questions, but if you can give your thoughts, it would be great.

Jayashree Satagopan — Chief Financial Officer

All right, Ramesh. On CPC, as we have been maintaining, the opportunities for Coromandel to grow this business is large. Therefore, from a mid term or long term, when you look at it, it is extremely critical to work on two factors, which we sort of have shared in the past. One is revamping and having a good product portfolio, reducing our dependency on Mancozeb, improving our B2C sales compared to our B2B, both domestically and also in select export markets. And also looking into backward integration when it comes to the new technicals that are being picked up by the business and improving the channel strength, both in terms of the dealer network as well as our feet on street. So multiple of these initiatives are being taken by the business, including a lot of changes within the organization and getting the right people whether it is for R&D, product development, manufacturing, across multiple areas.

So I honestly believe, in the next year to the next two years, three years, we will see a very different player in this business where we will have a much more enriched portfolio, deeper penetration into the B2C segment and also select markets globally where we will be going on a B2C. Apart from it, multiple registrations have been taken. We are also looking into activating them, either on our own or through our B2B customers globally, which should also help. As far as the soil nutrient question that you asked, this is about promoting balanced nutrition, right? This is what Coromandel has been doing. If you look at us as a company, we’ve been talking about balanced nutrition, selling more of NPKs, not even DAPs, leave urea.

Urea is primarily for footfall, which we also import, sell it relatively through our dealers or market it through our retail network. But Coromandel’s focus has been on NPKs. We have about 150-odd agronomists. We have nutri clinics through which we further advocate right farmer practices and behaviors, which has actually helped in growing the NPK market in our key operating areas, whereas there is a higher dependency on urea, as well as DAP in many of the northern markets where Coromandel is not present as much.

As part of our initiative working with the government, government advocacy, we have been constantly talking about and discussing with the government on our own through FAI the need for promoting balanced nutrition. And government is also conscious about it. And we do hope at some point in time with DBT 2.0 that we are talking, they may be linking subsidies to usage of fertilizers and thereby, sort of moderating the type of fertilizers the farmers will use, which will help in improving the farm productivity.

All of these have its own rationale. And when the government will do, whether they will do now or they will do a couple of years later, we do not know. But there are different ways how the government can actually work through this. You see the government is also continuously in dialogue through this PMKSK that they have sort of introduced, working with different dealer outlets, talking to the farmers. So, they are looking into this seriously. It’s a question of time. However, from Coromandel’s standpoint, we will continue our focus on balanced nutrition. We will continue our focus on intermediates because we believe this is the right thing to do for sustainable agriculture.

Thank you very much for your question.

S. Ramesh — Nirmal Bang Institutional Equities — Analyst

Thanks a lot, Jayashree. That was very helpful.

So with that, we bring this conference call to a close. Let me first thank Jayashree, Sankar and Raghuram from the Coromandel management team for taking time off and giving them this call and answering all the questions. I also thank all the participants for making this an interactive session.

Thank you very much, and have a good day, ladies and gentlemen. Thank you.

Jayashree Satagopan — Chief Financial Officer

Thank you.

Operator

[Operator Closing Remarks]