Coromandel International Limited (NSE: COROMANDEL) Q2 2025 Earnings Call dated Oct. 25, 2024
Corporate Participants:
Sankarasubramanian S — Managing Director & Chief Executive Officer
Jayashree Satagopan — President, Corporate & Chief Financial Officer
Raghuram Devarakonda — Executive Director; CPC, Bio & Retail Business
Analysts:
Nitin Agarwal — Analyst
Prashant Biyani — Analyst
Parth Mehta — Analyst
Vishnu Kumar — Analyst
Resham Jain — Analyst
Bharat Sheth — Analyst
Ranjit Cirumalla — Analyst
Rohan Gupta — Analyst
Sumant Kumar — Analyst
Himanshu Binani — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Coromandel Q2 FY ’25 Earnings Conference Call hosted by DAM Capital Advisors 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. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Nitin Agarwal from DAM Capital Advisors. Thank you and over to you, sir.
Nitin Agarwal — Analyst
Thank you, Siddhant. Hi, good afternoon, everyone, and a very, very warm welcome to Coromandel International’s Q2 FY ’25 Post-Results Earnings Call hosted by DAM Capital Advisors Limited. On the call today we have representing Coromandel International Management: Mr. Sankarasubramanian S, Managing Director and Chief Executive Officer; Dr. Raghuram Devarakonda, Executive Director, CPC Bio and Retail Business; and Mrs. Jayashree Satagopan, President, Corporate and CFO.
I’ll hand over the call to the Coromandel management team to make the opening comments and then we’ll open the floor for questions. Please go ahead, sir.
Sankarasubramanian S — Managing Director & Chief Executive Officer
Good afternoon, everyone. And thanks, Nitin, for organizing this Q2 call for Coromandel. First, I’ll give you overall business environment what we witnessed during this quarter followed by our business performance and Jayashree can take us through the financial updates, then we can have Q&A session. As you all know that the monsoon has been good at 108% of the long-term period average and we have witnessed a strong kharif season. Basically our south markets received 114% of the normal rains. Northeast monsoon, which is likely to bring rains to Rayalaseema and Coastal Andhra, has started on a strong note and we do expect a very strong rabi season. IMB is predicting above normal monsoon and, as we speak, the reservoir levels are looking very healthy. The storage especially in the southern markets are much better than what it was in the last year and also the crop acreages was good in kharif.
Except for cotton, rest of the crop we have witnessed growth over the last year and better than the average of five years as well. So, we do expect this positive trend to continue in the rabi season with improved reservoir levels and increased acreages. Overall, food grain output is likely to be good, which is very good from the food inflation point of view. On the policy front also, government has been increasing the MSP and there has been recent announcement on increasing MSP for the rabi season. Been 2% to 7% increasing number over the last year for various crops. Also the government has been advocating the PM-PRANAM scheme and they released funds to farmers to improve the liquidity in the market. As you all know, the NBS rate for the rabi has already been announced ahead of time. There’s been marginal increase in the nutrient rate for peak whereas NMS has seen some reduction.
And government also in order to focus on availability of DAP has given special package for DAP and also encourage industry to actively source DAP and agreed for compensation beyond certain cutoff rate. So overall, there has been some challenges. Due to supply chain linkage and global geopolitical situation, there has been challenge in DAP availability which is improving now. On the industry front, raw material prices started moving up in the recent past. After reaching the lows in June, July, we have seen spike happening due to Middle East tariffs and also limited participation by China in exports and certain supplies of raw materials also has resulted in some production outages for certain industry players. So in this, the production more or less maintained well. In fact I would say there has been a growth in production by 4%. Of course the imports are down due to supply related challenges.
And the consumption has moved up because of the good monsoon especially on the NPK side. If I have to look into kharif consumption data, it’s very heartening to note that NPK has witnessed a significant growth of 1 million ton increase of 18% over the corresponding period of last year replacing DAP. This is a good trend to be in because this encourages balanced nutrition and that is what Coromandel has been advocating for many years now. The consumption overall has been down basically due to drop in DAP consumption made up adequately by NPK and potash has marginally moved up due to improved availability. And single super phosphate, here again there’s been a margin reduction, but industry is moving more towards the value-added product. Overall, I would say that the industry performance in the given situation of the global commodity supply chain challenges has performed well and the farmers have started using more of agri inputs to improve the productivity.
Coming to specifically company’s performance in Q2. Fertilizer plants operated over 100% capacity. Production during the quarter was at 8.8 lakh tons, 13% growth over last year. We have been one of the record performers for the fertilizer operations. And also during this quarter, we restarted our phosphoric acid, sulfuric acid plant at Ennore. And also our project what we announced in early part of the year in April for phosphoric acid and sulfuric acid facility at Kakinada is progressing as per plan. We have released major orders and seen good progress during this quarter. This project is likely to be commissioned by March ’26 and hopefully when this plant is ready, overall 60% to 70% of our captive acid requirements will be met internally and also gives lot of operational flexibility and raw material security. Also sometime back we announced about acquiring the additional stake in BMCC basically consolidating our position.
Currently we hold 45% and with this recent announcement of additional acquisition of 8.8%, we’ll be crossing 50%. We’ll be holding 53.8%. And we are also in the process of stabilizing our fixed processing plant at Senegal, which was just commissioned last week, and hopefully we should streamline the production and see increased volumes coming into India. Of course during the quarter, we have significantly increased the usage of Senegal rock at Vizag and the incurred output of acid is in line with our expectation. And also as part of our expansion plan having created raw material linkages for both acid and rock, as the next logical step Board has approved yesterday at the meeting for our company’s plan to expand the granulation capacity by 7.5 lakh tons.
This will be a brownfield expansion coming up within Kakinada, which will take the capacity of Kakinada currently with a capacity of 22.5 tons can move to 30 lakh tons making it one of the largest phosphate site in the country. This is in line with government thrust on us and [Indecipherable] in phosphatics. With lot of global challenges in availability, government has been encouraging industry to go in for captive production. As a company, we have been consciously securing our raw materials and now phos acid is also coming up. It’s a logical step we have decided to move in for granulation train. And as you all know that industry is still importing 6 million to 7 million ton of DAP NPK especially major imports coming to north part of India and that is where Coromandel is looking to fill this and substitute the imported DAP with NPKs.
We have been a strong player in NPKs in the southern part of India and now we’ll try and see how do we replicate this story in the north to replace the imported DAP. This will also help in balance nutrition improving the yield for the farming community. Overall, on the operational side, business has registered a very strong volume growth during this quarter. In fact on a quarterly basis, we have done 13% volume growth over the last year and also 7% on a half yearly basis. On a half yearly basis we have reached 21.5 lakh tons, which is one of the record sales volume we have done in the recent past. On the consumption basis also, our market share has gone up for the quarter. In fact during this quarter, there has been significant increase in our consumption from 15% of last year to 20%.
In single super phosphate, we have improved our volumes grown by 9% and basically we started focusing more on differentiated fertilizers like Groplus, which has got micronutrients in SSP. And also this quarter, we have launched Urea SSP, which is basically a combination of N and P in SSP. It has got the same ratio of N and P similar to what we have in DAP. It has been very well received in the market and can be a good substitute and alternate for the DAP. And the advantage what we have also is we get price subsidy for this product. So as a business, SSP has turned out well this quarter with the focus on unique grades and also differentiated products and urea SSP. And also as you know that we are into drone spraying services. We have created a separate vertical. We have been driving this business for the last two quarters and we have done 40,000 acres.
And we have this unique advantage of having drones supplied from our group company Dhaksha and we have also partnered with some of the institutional players in this segment to improve the drone spraying services. Another business which we started off last year in November, Nano DAP, has received very well in the marketplace. And during this quarter, we have focused mainly on consumption part, whatever we faced in the earlier quarters, a lot of market development activities and awareness campaigns have been carried out. We have engaged with various research institutes in terms of improving and ensuring that this product brings in desired impact for the farmers in terms of replacing DAP. Slowly the awareness is coming in and we are getting good response especially for the crops with higher foliage and government also been giving thrust to this product as a good alternative to DAP.
So we’ll be scaling up these volumes and we have created the state-of-art plant in Kakinada and hopefully we should do better in the coming quarters. On the specialty fertilizers, I think volumes have grown compared to last year and we have done very well on the sulfur segment. Especially states like Karnataka and Maharashtra, we have performed very well on the specialty nutrients category and we are also in the process of establishing additional capacity for sulfur, which will be coming up by end of Q3. So overall, the nutrient business has done very well in the given situation of volatile commodity prices. We are able to focus on our own unique grades and give thrust to the business. On the crop protection, which had soft quarters in the last year, has really played out well during this quarter. The business has improved on topline as well as on the profitability. The margins have moved up.
And especially in the formulation business segment, there has been a volume growth of more than 20% in the domestic formulation thanks to the new formulations we have introduced during this half year. They’re all performing very well in the marketplace and we continue to work with innovators to bring such new products to improve our formulation business in India. And also thanks to the positive response to mancozeb demand in the global market, there has been a considerable uptick in volumes and exports have grown by 10%. Been good revival in demand for mancozeb and anticipating this, we are also trying to see whether we can increase our capacities to meet the market requirement. This mancozeb demand is likely to sustain for the coming quarters as well.
As you all known in yesterday’s Board meeting, the Board has also approved putting up a multipurpose plant at Ankleshwar. This is again a brownfield expansion. We are looking to put up a fungicide plant, which recently operated in [Indecipherable]. We’ll be the first one to get into this product. In terms of volume, they are high value and generate a good amount of topline and will be focusing in Latin American markets as well as formulations for the domestic market. We’ll be investing INR170 crores in this plant, which will take 18 months to come in and parallely we are working on product registrations as well as scaling up volumes in the period to come. This will also help us to understand new chemistries and bring in new technologies, which will help us to attract other CDMO players who are looking to tie-up with us. So this will be a good start on the CDMO opportunity, which we have been talking about for the few quarters now.
So we’ll continue to engage on this prospective discussion with innovators and we’ll continue to focus on R&D trials to come up with a new set of molecules. And this investment of multipurpose plant is the beginning and we need to add some more in the days to come to see that we grow this crop protection business on a faster pace. Bioproducts where we are one of the largest players and only player in the neem-based biopesticides, we are trying to diversify this segment and we could improve our sourcing capability. We set-up the new systems to handle the neem seeds and we could source neem at a competitive price, which will help us to have some visibility on the margin structures in the coming quarters. The retail where we have a significant presence in the southern market being one of the largest player in the agri rural retail chain, we have done very well across the product categories.
And in fact the non-fertilizer segment has grown well thanks to increased footfalls in our retail outlets. We also opened 43 new stores during this quarter. Retail is a way for us to expand and improve the business. In fact we have seen that whatever new products we are introducing in various business segments, retail could scale-up the volumes and go-to-market much better than the trade channel. In fact they’re also launching this nano DAP and they received very well good response and the direct connect with customers are really helpful to understand the psyche of the customer and ensure that we position the products well. So overall across all the business verticals, the business has done well and while in terms of the overall profitability may be marginally lower than last year. But in terms of the sequential performance over the previous quarters, we have grown both on topline and as well as bottom line and Q2 performance is also better than our stated expectations.
I would now request Jayashree to take us through the financial performance and then we can have Q&A later.
Jayashree Satagopan — President, Corporate & Chief Financial Officer
Good afternoon, everyone, and thanks Sankar. The financial performance for the quarter and the half year is as below. As far as the turnover is concerned, the company recorded a consolidated total income of INR7,498 crores during the quarter and INR12,281 crores during the half year vis a vis the corresponding period of INR7,033 crores and INR12,771 crores, respectively. This marks a growth of 7% for the quarter and a degrowth of 4% for the half year. The decrease in revenues is mainly on account of drop in subsidy rates in the fertilizer business as compared to the last year. Subsidy business’ share in revenue stands at 84% during the quarter and 83% for the half year. During the previous year, it was 84% for quarter and 85% for the half year.
On profitability, the consolidated EBITDA for the quarter was INR975 crores as against INR1,059 crores in the previous year. For the half year, it was INR1,481 crores vis a vis INR1,768 crores during the previous year. Subsidy businesses’ share in EBITDA stand at 73% during the quarter and 72% for the half year. Corresponding numbers of the previous year was at 81% and 82%, respectively. Net profit after tax for the quarter was INR659 crores in comparison to INR755 crores for the corresponding quarter last year and INR968 crores for the half year as against INR1,249 crores in the previous year. As far as subsidy is concerned, during this quarter the company had received INR2,868 crores towards subsidy claims. In the previous year, this amount was INR4,243 crores.
For the half year ended, the company received INR3,855 crores as subsidy. The previous year the corresponding number was INR6,312 crores. Subsidy outstanding as on 30th September 2023 was INR1,714 crores. In the previous year, this number was INR1,497 crores. The company had closed the quarter with a net cash; which is including the deposits, mutual fund investment; of INR4,214 crores and it is focused on improving the working capital levels to further enhance the net cash position. As far as the forex is concerned, recently we have seen the rupee depreciating. Coromandel continued to maintain a conservative position and hedged its exposure accordingly.
We thank you all for your continued interest in Coromandel and joining our call today. We look forward to the interactions and the question and answers.
Questions and Answers:
Operator
Thank you very much, ma’am. We will now begin the question and answer session. [Operator Instructions] Our first question is from the line of Prashant Biyani from Elara Securities. Please go ahead.
Prashant Biyani
Yes. Thank you for the opportunity. Ma’am, what drove the profitability improvement in crop protection and especially the non-subsidy non- CP business?
Jayashree Satagopan
Hi Prashant. Thanks for your question. The crop protection business, we have seen a good growth happening in the domestic formulation business. That’s point number one. And during the first half, the company had introduced 10 new products, including one patented molecule of ISK. So all these products have received a very encouraging response and that has to some extent showed the profitability. Apart from that, some of the cost measures that have been taken up at the plant over the past couple of years have also led to a better cost position compared to the previous years, which is also helping shoring of the margin.
Prashant Biyani
And ma’am, on the non-subsidy non-CP part?
Jayashree Satagopan
The non-subsidy, non-CP part is mainly specialty nutrients. Some of it is also in the retail business and we also have the recent launch of Nano products. The specialty nutrients business has been doing pretty well. It’s continuing its trend like in the past years and there has been some good actions in terms of sourcing the materials at the right cost and these have also contributed in improving the margin.
Prashant Biyani
Okay. Ma’am, secondly — if Sankar sir can answer this. Rock prices have increased off late I guess from the lows and how are we stocked up on the inventory of rock phosphate till which month? And do you also expect phosphoric acid prices to increase from here? If yes, then what could be the immediate levels that we can look at?
Sankarasubramanian S
See, phosphoric acid price for the Q3 is yet to be settled, but there will be definite increase compared to what it is right now because the DAP prices have moved up and generally these prices do move in tandem with DAP. Other input prices have gone up so industry is negotiating to get better rates, but there will be increase over the previous quarter. In terms of the rock prices, the advantage what Coromandel has got in terms of access to mines and understanding the cost structure and increasing the supply from Senegal is helping us to manage better in terms of our rock sourcing. We always ensure that we cover for the three to four months ahead considering the sailing time and also the challenges what we have in the geopolitical situation. We cover up ahead of time and to that extent, always we have a positive carry on strategic materials like rock phosphate.
Prashant Biyani
Right, sir. Then going forward if you see the ammonia prices, subsidy on N has reduced, but prices have increased. So how would it change the complex portfolio mix for you going into H2? Will it be more towards NPK only and if then, in which grade it will be?
Sankarasubramanian S
See, this has been a temporary phenomenon. There has been some production outages by a large player in the Middle East and prices should soften. Probably one month spike is there, but we don’t expect this to sustain for a long time so ammonia prices can come down. Having said that, the rabi subsidy is what has been already announced. So we need to see how we optimize the product mix and also there can be some flexibility in terms of the palm leaf prices later December and January — going into January, which could help us to pass on this cost if this cost likely to remain where it is now. But I don’t believe that this higher ammonia levels are likely to remain. There can be some temporary challenges in the margin structure, but it should get normalized and we do keep optimizing the grades and that is the flexibility what we have in switching over from one NPK to another NPK and where we have pricing flexibility and input cost advantage. And our own captive production of sulfuric acid and phosphoric acid also helps us to sustain the margin.
Prashant Biyani
Sure. And ma’am, lastly before I jump back into the queue, how much was the revenue from nano urea and nano fertilizer as well as Dhaksha in Q2?
Sankarasubramanian S
Nano fertilizer in terms of our focus for Q2, as I mentioned, is more on the consumption side and we have done roughly in terms of the volumes, I can tell you, 15 lakh bottles is what I think we must have sold during the first half. Well, we can scale up the volumes. We’ll be focusing on doing it in Q3. It’s precisely 16.8 lakh bottles is what we have done, one liter bottle. And in terms of the Dhaksha, probably we’ll address it separately. Jayashree can add that mainly its orders are in terms of agri drones which Coromandel has purchased and there are some balance orders executed with other fertilizer companies as well. Other defense orders are in pipeline waiting for the execution to happen.
Prashant Biyani
Thank you. That’s it from my side.
Operator
Thank you. Our next question is from the line of Parth Mehta from Vallum Capital. Please go ahead.
Parth Mehta
Yeah, hi. Just wanted to ask so you mentioned that the new MPP in the crop protection side will help meet the growing demand for the identified products in domestic and export geographies. If you could just help me which are the products that you’ve identified in the domestic and the export geographies and can grow?
Sankarasubramanian S
I think Raghu is on the call. Raghu probably can take through. But we don’t want to get into specifics on which products for obvious reasons. But broadly, Raghu can talk through on what we are trying to focus on. Raghu, you’re on the call?
Raghuram Devarakonda
I think at the moment whatever Sankar mentioned, for the obvious reasons we don’t want to divulge the specific names. But as you are aware, dependence on mancozeb is quite significant. So with this approach, it’s going to broad base our portfolio in fungicide and thereby derisking dependence on that. And besides, the capex will take a while to execute as well. Once we go live, I’m sure we can share more details on the specific products. Suffice to say that these are relatively younger products. I think again Sankar in his initial address mentioned that these are recently off-patented molecules so that there is a longevity and therefore, sustained demand for such molecules going forward. And these, as you may be aware in the more, what should I say, contemporary AIs, they also lend themselves to good combination so they combine very well with other molecules. So we plan to formulate some novel mixtures in the meantime, which — some of which are already in the pipeline for registration. So by the time the capex gets executed, we will also be receiving some of these registrations so that we can quickly leverage the capacities that are coming online. I hope that kind of addresses your question.
Parth Mehta
Yes, that was helpful. And just wanted to understand are we coming up with any other new molecules that have been developed in our R&D or are they more of from the tie-ups that we have done?
Raghuram Devarakonda
So as you are aware, we are a generics player. But for the new molecules, I mean when you say new if they are patented, we are in the process of bringing such molecules from innovators. We are not innovators. We don’t do discovery on our own, but — so there are plans for bringing in patented molecules through our distribution channel globally.
Parth Mehta
Okay. Just last one if you can help me. How is Chinese molecules playing out right now in the export markets and how is the situation globally in terms of volumes or pricing?
Raghuram Devarakonda
Yeah. At the moment, the prices have bottomed out is the general sentiment globally and the expectation is that they will start going up some time middle of next year, that is the calendar year. So — and I mean these prices we believe are not sustainable for too long because the Chinese would also like to recover whatever they have invested in. So because of the previous — as you may be aware, there was a glut in the system, the inventory in the pipeline, as well as there was a drop in the commodity prices in Brazil for soybean, cotton, and so on; which kind of reduced the growers’ willingness to spend money on additional space. So all of those are easing up, particularly the inventory is nearly gone. The excess capacities will continue to haunt. Maybe the smaller players, the marginal players would have been pushed out so the total available capacity might have shrunk. And thirdly, the commodity prices are also expected to go up. So all the factors — all the three factors that led to a significant price drop are now easing off. So, that should eventually lead to improvement in prices. So this is what we understand of the scenario as far as the Chinese players are concerned in the market.
Parth Mehta
Okay, great. Thanks. That helps a lot.
Operator
Thank you. [Operator Instructions] Our next question is from the line of Vishnu Kumar from Avendus Spark. Please go ahead.
Vishnu Kumar
Good afternoon. Thanks for your time. In terms of the fertilizer business, the operational profitability is better than expected for most of us. So is there anything that we have done differently or is the — because we understand that pricing was relatively not that great for us given the RM and the end market prices. So what has led to kind of slightly better at least from what we were considering? Is it any operational costs or mix? Any help would be great.
Sankarasubramanian S
See, as you aware that last year we commissioned sulfuric acid plant and that’s been very timed and very helpful. When the global sulfuric acid prices went up, we could produce sulfuric acid at a much lower price. And also the power generation what we envisaged, we could operate our turbines at full capacity and that has significantly reduced the conversion cost. So our ability to scale up the projects to 100% plus capacity improved operational efficiencies ensuring that the intermediates like phosphoric acid where we capture the value addition, we operate at full capacity. And the timing of our raw material purchases and the type of rock what we use and the sources of acid we use is completely different. We have product flexibility in terms of optimizing the NPK mix depending on the subsidy and the market price, ability to source and use different type of raw materials whether it is rock or acid, and our intermediate capacity is helping us to generate power and also alternate water source like RO plant which we have put up last year. All this has been helpful to manage this sort of volatility in commodity prices and come back with the margins. Had the commodity prices have been stable, our numbers would have been much more healthier than what we are reporting now.
Vishnu Kumar
Got it. How much would probably be a structural cost savings for us? Like as you, sir, mentioned on the power and the RO and water, others I understand can move up and down. So how much could be a structural cost savings that we are — going forward we should see?
Sankarasubramanian S
See, sulfuric acid alone can potentially give us close to INR160 crores, INR170 crores per annum both in terms of the delta between the imported sulfuric acid price and the cost of production and the power generation. So half year will be somewhere between INR40 crores, INR45 crores and that can get doubled. It’s not only helping us in bringing down the cost, but also in terms of the environmental norms. We are one of the world class facility with norms much less than the global standards.
Vishnu Kumar
Understood, sir. Sir, also on the — you mentioned that this quarter or rather we have seen on the curve that the DAP consumption has been markedly lower and NPK has probably come up well. Is it — this is because of the profitability for traders was very low or since from a import replacement angle, government would probably want us to probably import lesser DAP. So should we see structurally this is going to be a theme for — so DAP will go down? Is this more of a short-term issue or like we’ll bounce back and DAP will come back?
Sankarasubramanian S
Absolutely. In fact it looks to me a structural shift which is happening especially in the north markets which are predominantly using DAP for many years. To some extent, the shortfall in the availability has also helped people to try out the NP grades like 2020 as well as NPK grades. And government also encourages balanced nutritions and it’s a combination of multiple things; lack of availability, making people to look for alternates, and that has helped in improving the volume of NPK fertilizers by 1 million ton. And there has been a general increase over the last four years in terms of the share of NPKs versus DAP in the overall phosphatics. This augurs well and this helps in multiple nutrients. In fact as a company like Coromandel, we are not only focusing on primary nutrients NPK, but also trying to see whether we can add secondary nutrients like boron, zinc, and come up with unique grades. So, more and more I think the industry should move towards customer expectations. That’s what our approach would be to ensure balanced nutrition, improve productivity for the farmers, and government is also supporting such a shift.
Vishnu Kumar
This 0.75 million ton of capacity, when are we likely to have it? I mean in terms of commercial sales, when should we begin? And in the interim to capture the market before we launch the product, are we going to do additional marketing and how should we see the approach from now to when the plant comes in?
Sankarasubramanian S
Good question. The plant will take two years to come in and rightfully we can’t be waiting for the capacity to come in and start selling. In fact currently our volumes could have been much better had we have additional production. We are operating at 100% capacity. We are supplementing it with imports. Our imports are predominantly on DAP. In fact currently our sale volumes are much higher than what we produce. So, our overall production is in the range of 31 lakh to 32 lakh tons whereas we are inching towards 40 lakh tons. So we will try to grow this volume for the next two years as well until we have our own capacity. So we’ll be also focusing on newer geographies northern markets where our efforts will start now in terms of feeding the market with NP, NPK fertilizers and develop a market for these grades. It may take a while before the switch happens from DAP to NPK and that’s what we’ll be exactly doing during this project implementation time. So that as and when the plants are ready, we’ll be able to supply those materials from our own manufacturing facility. Till such time, we’ll be meeting it with imports.
Vishnu Kumar
So this area that we’ll target will still be within the zone where our price subsidy is there or we’ll stretch it outside also?
Sankarasubramanian S
In phosphatics, price subsidy operates across India up to 1,400 kilometers so I don’t see any challenge.
Vishnu Kumar
Got it, sir. Thank you and all the best.
Operator
Thank you. Our next question is from the line of Resham Jain from DSP Asset Managers. Please go ahead.
Resham Jain
Yeah, hi. Good afternoon, sir. So just two, three questions. The first one is you mentioned in your opening remarks that you opened 45 new store in this quarter. Is that correct?
Sankarasubramanian S
Yes, sir.
Resham Jain
This will be possibly the highest number of stores you have opened it seems. So what is the strategy on the retail front, let’s say, over next two, three years?
Sankarasubramanian S
We are very keen to increase the footprints and we have enough space to operate even in our key markets like Andhra, Telangana where we may look to increase the numbers from what we are in. At least currently we are around 750 to 800 stores. Our aim would be to increase it by another 20% at least in the coming two, three quarters. But we are very very cautious in terms of where we are opening so we ensure that we break even at the earliest opportunity. Based on our learning curve, we don’t take longer period nowadays to reach the breakeven level. So, choice of location and the product segments and categories will play an important role. Our aim is to scale up the volumes not only to certain markets, but also look at pan India. So we may be looking at western markets as well where we can target certain geographies and crop segments. Our aim would be to increase our retail footprints and we got our model right. Our ability to connect with farmers have been far better than what it was few years before. So we’ll try and expand and exploit this opportunity.
Resham Jain
So sir, from number perspective the 750, 800 stores can go to what number, let’s say, in next three years?
Sankarasubramanian S
We are in the discussion stage. We can let you know once we come up with our strategy. I don’t see why can’t we double it in next two, three years’ time. But it’s still in the drawing board and, as I mentioned, that we are not in a hurry to increase the centers. But we’ll do it in a systematic and cautious way.
Resham Jain
Okay, Understood. Sir, the second question is the incremental or higher subsidy for DAP versus NPK. So, does that mean that our overall production will be higher of DAP versus NPK at least in the near term?
Sankarasubramanian S
As a company, we have been focusing on NPK productions and we import DAP. We’ll continue this strategy.
Resham Jain
Okay. Despite higher subsidy for DAP. That doesn’t change anything from your overall production mix perspective.
Sankarasubramanian S
Yeah. But additional compensation, DAP is helping to manage the gap between the subsidy and MRP versus the cost. It doesn’t add value to the margins. So our strategy would be to optimize the production towards NPKs and import DAP to meet the supply commitments.
Resham Jain
Understood. And sir, just your guidance on the overall non-subsidy piece, which has been doing quite well both from revenue as well as profitability perspective. Over the next two, three years given there are multiple projects which are going on, how should one look at the overall non-subsidy piece?
Sankarasubramanian S
See, crop protection is one area where, as Raghu mentioned, that we missed out in terms of the market growth because of the time gestation period involved in terms of putting up a facility and product initiation. So, a lot of efforts have gone in the last two, three years in identifying the new molecules and a lot of warranty tails have happened. So, hopefully we’ll be releasing every year some new products. As you have seen, this year we have done 10 formulation products which have increased the domestic formulation sales. We are also looking to introduce new generation molecules to reduce our dependency on mancozeb and increase our presence in Latin American markets. So we will be driving our focus on CPC to capture as much as possible both in the domestic and global markets. And specialty nutrients been growing steadily.
We have been improving our topline by 10% and the EBITDA has been consistently growing and that is one category we will try and see how best we can improve. And single super phosphate, which we don’t talk much, but we have been consistently growing on volumes and bringing in value-added products and capacities have been going up. So while it is also part of the subsidy business, but we have changed the overall approach to this business and that is panning out very well for us in terms of unique grades, volumes, and improved margins and profitability. Besides this retail, we have seen increased footfalls in all our retail outlets and that is helping us to scale up the non-fertilizer categories where we make margins. So, our focus would be to increase the volumes of non-fertilizer category in the retail footprint. And bio business very niche segment, currently we are focusing on exports markets on a client [Phonetic] base.
We are trying to diversify other product categories. We are looking at new product segments in bio. So, that is also likely to see traction the coming periods. Our aim would be to — we have reached some size and scale in fertilizer business. We have done adequately and backward integrated and we’ll continue to grow that piece in terms of our mining, improving the value chain. But in terms of the volume with this announcement of capacity, we are there as being the largest player in the phosphoric segments. So our focus from coming quarters will be on driving the other non-fertilizer segments to grow on the topline and also look out for step-out opportunities which are available. As and when it materializes, we’ll be able to articulate. So our aim would be to grow more on the non-subsidy piece in the coming quarter.
Resham Jain
Okay, sir. Thanks for the detailed answer. All the best.
Operator
Thank you. Our next question is on the line of Bharat Sheth from Quest Investment. Please go ahead.
Bharat Sheth
Hi. Good afternoon, Sankar and Jayashree, and thanks for the opportunity. My question is after three years’ perspective, what would be our capacity for this nutrient business including SSP? And how do we see what kind of a backward integration at that point of time we’ll have in terms of whether sulfuric acid or rock or rock phosphorous acid and how that will play out? And second thing when you are talking of this replacement of DAP with NPK, so how much scope is also there for replacing DAP with phosphate SSP? So if you can give some — share more color on how that thing will really play out. And last question is on the Nano DAP so how much that will also over a three-year period if you can give some color?
Sankarasubramanian S
On the fertilizers, I think with the current capacity at 3.2 and debottlenecking which are happening right now will — and with the new capacity of granulation 7.5 lakh tons what we have announced, I think overall capacity will go up to 45 lakh tons in the next two years’ time. And with import of 5 lakh tons at least we can be a 5 million ton player on base phosphatic fertilizers plus we have SSP of 1 million ton plus we do DAP and urea — sorry, we do MOP and urea of 1 million ton. So effectively if you look at our fertilizer segment, it’s 6 million tons of phosphatics plus 1 million ton of urea plus 0.5 million ton of MOP. That’s the size we are looking at as far as the fertilizer business is concerned.
And in terms of Nano, as I mentioned that we are not in a hurry. We are actually ensuring that the farmers understand the product and they come back and they use it as a replacement not as an add-on. And we are doing the brand promotion and channel engagement and we are doing it at large scale pan India. Definitely we see the promising future for Nano not only in India, but we are looking at export opportunities. Lot of inquiries have come from Latin American markets and we can scale up our volumes and it’s a good business segment to be in supplementing our specialty fertilizers which we have grown over a period of time. I don’t remember what is your third question actually. One is on the fertilizer revenues…
Bharat Sheth
What kind of backward integration that will have? I mean once we reach this NPK capacity or this DAP capacity of this expansion, how much of backward integration we’ll have?
Sankarasubramanian S
See, I think we will be close to 60% of the total intermediate capacity requirement and we keep some import to trade off because there are always opportunities available to buy at low prices and especially products like sulfuric acid. So we may not go in for 100% and phosphoric acid at least we can say that it will be 50% of the total requirements we’ll be backward integrating. In terms of rock, we will see how it goes with the current mining which is happening. If there are other opportunities come in, it’s always because we are largest consumer of rock. And with the expansion of phosphoric acid plant at Kakinada, our requirement will be in the range of 2 million to 2.5 million tons and our aim will be to see how best we can increase our mining operations. Once we are successful with the current mining spot we are in, we may also look at increasing our mining presence also. So that will be our overall game plan. But as of, now we are quite comfortable with the capacities what we have for intermediate.
Bharat Sheth
And basically would you like to give some more color on this Dhaksha? As Dhaksha plays out, how much order do we have in and how do we expect over a couple of years?
Jayashree Satagopan
Okay. Thanks, Mr. Bharat Sheth, for this question. On Dhaksha, currently the focus is on two areas. One is the defense orders that have been procured for about INR240 crores. The team is in the process of executing the orders so we are awaiting the PDI from the government authority. Once it is through, over the next two quarters the defense drones should be completed and shipped. So, that’s the main focus. Apart from this, there is lot of activities going on in of the agricultural drones. Currently the large players with whom Dhaksha has been engaged are the fertilizer companies. New team members have been recruited both for sales and service so that they can work along with the other major agrochemical companies as well to see how we can get some agriculture related orders.
There’s also work going on with the government in this respect because an MoD drone scheme also will come into play as we expect during the later part of this year. While all of these is happening on the execution front, the team continues to participate in some of the other newer drone development through the R&D team. So, that work is also parallely happening. So in the next two to three years depending upon the execution of these orders, Dhaksha should be able to garner more orders to come from the defense. The R&D work that is happening on the newer drones as well as improvements in the agricultural drones should also help it to consolidate and get better.
Bharat Sheth
And last question on say since we are sitting INR4,000 plus crore kind of a net cash so what will be our capital allocation including for Dhaksha additional investment, then other facilities? So, if you can give — share more color.
Jayashree Satagopan
I think the cash that we have like in the past we’ve indicated, it will be mainly for the business growth within Coromandel, right. So each of the businesses come with their own proposal for the growth. You would have also seen that in this Board meeting there has been a sizable capital that has been approved by the Board for both nutrients as well as crop protection business. If there are further opportunities that are there either in the core or adjacencies or any stepouts, some of this cash that has been built up will be appropriately used. All of it depends upon how strategic is it, what are going to be some of the financial parameters that it meets up with. So, that has been the norm with which we’ve been looking into allocating the capital. On the same front, if there are interesting opportunities like we had Dhaksha coming up in the past or BMCC related investments that had happened in last two years, those also could be funded through this pool of surplus that has been accumulated.
Bharat Sheth
So how much revised capex for this year, next year, and for ’27 do we have in plan?
Jayashree Satagopan
So, this year we are more or less in line with what has been estimated and indicated to you all. The main capex for this year has been this sulfuric acid and the phosphoric acid plant of INR1,000 plus crores which has been announced at Kakinada. So that spans over a period of couple of years until March 2026. Similarly the two major capex programs that have currently been announced will also go for the next two year period. As Sankar was also mentioning, there are lot of projects that the teams are looking into to see how we can accelerate some of the growth initiatives within the company. And as we roll up the business plan for the year, I’m sure that we will come up with some more interesting proposals and subsequently taking the management and the Board approvals. We will be happy to share it with all of you.
Bharat Sheth
Thank you. Thank you and all the best both everyone.
Operator
Thank you. Our next question is from the line of Prashant Biyani from Elara Securities. Please go ahead.
Prashant Biyani
Yeah. Sankar sir, the point that you outlined regarding capacity of say 4.5 million ton and import of 5 lakh ton, sir, where would we be seeding or selling these volumes? Would it be in our core and periphery markets? And how much volumes do we do right now say in north and regions around north and where could that particular volumes be in the next five years?
Sankarasubramanian S
See, the primary market; AP, Telangana, Karnataka, and periphery markets, both Maharashtra and Bengal we have been fairly supplying now. We don’t have any presence in some of the key states like MP, UP, and Rajasthan. In fact if you look at next two, three years, a lot of irrigation projects are likely to come up in MP and Maharashtra also is adding additional crop acreages. So, we have done a detailed amount of strategic approach for additional volume. What I can say is we will be looking for north markets where we don’t have significant presence in terms of NPKs. While we are supplying SSP and also specialty fertilizers, we have not supplied NP, NPK.
So, our aim would be to create those markets there first. And of course our existing core markets, primary markets; our aim would be to capture the additional volume through our retail outlets. As I mentioned earlier that we’ll be increasing our footprints in the key markets so our additional volumes can come here. And we don’t see a challenge of selling something like 50,000 tons between these markets. As India continues to import 6 million to 8 million tons and there can be a potential increase in volumes of overall industry size likely to move up in the next three years, absorbing this additional volume would not be a challenge and we have a blueprint developed for the same.
Prashant Biyani
And sir, do we have fertilizer business presence right now in UP or Rajasthan side to make the market ready for our large volumes in two, three years?
Sankarasubramanian S
We have a significant presence in SSP. We are promoting value-added products there. We have presence to specialty fertilizer and of course crop protection. We have separate team selling there. And with Nano being a pan India operation and we have presence in northern markets. So I think as a company, we’ll be moving towards more of the pan India player for the nutrients. Rather than looking at the key South markets, we look at pan India operations with a complete range of product portfolio right from SSP to DAP and Nano and specialty fertilizers. The whole market is available for us. So, that’s the way we will look at and try to expand our volume.
Prashant Biyani
Right. And where do we stand in terms of latest business developments in spec chem or CDMO? If anyone can answer that.
Sankarasubramanian S
CDMO, we have been evaluating some opportunities and our initiative on multipurpose plant is also a step in the direction to see how we can showcase our capabilities which can help in attracting innovators. And spec chem, we are again on the drawing board in terms of looking at the key segments where we want to go in and probably once that fine print emerges in the next two quarters, we should be able to articulate our strategy much more sharper.
Prashant Biyani
All right. Thank you. That’s it from my side.
Operator
Our next question is from the line of Ranjit from IIFL securities. Please go ahead.
Ranjit Cirumalla
Yeah. Hi sir. Thank you for taking my question. The first question is on the MPP capex. So I believe this — since you have commented this is a recently operated product, I believe it will be SDHIs. The question is how far would we be the backward integrated into this or we are only going to target the manufacturing of technicals and would be importing the intermediates?
Sankarasubramanian S
Raghu, you want to address that?
Raghuram Devarakonda
So as an approach to the manufacturing, obviously cost efficiencies are something that we need to keep in mind. So, the backward integration is till a point where we have significantly many suppliers for the key starting material. So, that is how far we go and that depends on the molecule that we are planning to manufacture or the set of molecules in the multiproduct plant. So depending on the molecule, we have figured out up to which point we need to backwardly integrate. We can’t go quite up to the end. There is no need also because that’s going to inflict the capex significantly. So we have planned it in such a way that we will be able to source in an effective manner and then process the material to make it technical AI. Now as far as the downstream products are concerned, as I mentioned, we are not stopping with just making AIs, but in parallel we are — for some of them, we have already received the registration; for some, we are going to receive the registration for some of these formulations that we can produce using the AIs that we plan to manufacture with this multiproduct plant. So both backward and forward, we are putting in the effort to extract maximum value out of it.
Ranjit Cirumalla
Right sir. Thank you. Second question is to Sankar sir. In the last call, you had kind of mentioned a couple of plans. One is what we have seen the Board approving on the capex front. You also had mentioned branching out of fertilizers and foraying into related chemistries. So is there any progress on that front and by when can we expect an announcement on that front? Thank you.
Sankarasubramanian S
As I told last time, we have now committed our granulation project. We need to keep something for next quarter as well. We are working on it. If it materializer, we definitely will come back. It’s very much in our radar. You will get to know something.
Ranjit Cirumalla
Sure, sir. Thank you. That’s all from my side.
Operator
Thank you. [Operator Instructions] Our next question is from the line of Rohan Gupta from Nuvama Wealth. Please go ahead.
Rohan Gupta
Hi sir. Good afternoon. Thanks for the opportunity and congratulations on a good set of number. Sankar sir, you mentioned that almost in next two years you plan to definitely overall complete fertilizer to 4.5 million ton another trading, and even further in SSP, and urea, MOP trading and all that. I think that you have always been mentioning that the fertilizer margins you have always been targeting close to INR5,000 to INR6,000 per ton. That gives a clear picture about the fertilizer business over next two years. Sir, on non-fertilizer business, you have stopped giving and sharing that slightly more detail that how you think that in next two to three years whether the fertilizer business contribution to EBITDA will be 50% or less than that and also. Where you see that the other business — I mean non-fertilizer business piece will be contributing to the profitability of EBITDA in next three years?
Sankarasubramanian S
See, I’ve always maintained don’t want to grow one business at the cost of others. Fertilizer will have its own growth traction and non- fertilizer cannot catch up to the speed at which fertilizer can grow. Obviously a significant share comes from fertilizer. But lot of efforts have been taken in the last year and also going on now where we’ve been driving the new products, been engaging with various innovators. So I think the real growth in CPC is yet to play out and our decision to invest in the Chinese prices are the lowest. You can see our interest on growing this crop protection business. Definitely you will continue to see the volume growth happening in crop protection. Many of the actions what we have initiated last year will start yielding results and we have pipeline of new products coming in.
See, with the current range of molecules what we have, whatever we are doing, we are doing the best both in terms of topline and the bottom line. If we have to do it, it can be through inorganic or it has to be through organic. Organic takes its own time and that’s what we are focusing on now. And as and when any opportunity comes to grow inorganically, we may even look at that. So it’s very difficult for me to put the timeline and the timeframe by which we will increase the share to 50%. All our efforts and investments and strategies would be to increase the balance towards non-subsidy business. As and when we get clarity and then we may do investments, we’ll definitely share that at the appropriate time.
Rohan Gupta
Also sir, with the government focus on some non-supportive policies on the policy front on fertilizer, do you see that there is a need in future that you have to demerge this business because of the working capital related challenges and the interest cost portion where the government wanted to cap the profitability? Do you see that to benefit from that I mean you need to deleverage the balance sheet while the company itself is generating solid cash flows? So do you see that you have to demerge the fertilizer business to be the part of the — I mean to benefit from the government policies in future?
Sankarasubramanian S
Restructuring will be to only create shareholder value. It can’t be based on any policies or any current regulations. We need to see as we go along. And government always encourages integrated play and they have been encouraging industry to go in for backward integration. So I think they also support in terms of ensuring that incremental margins are retained in the business and reinvested in the business and grow the capacity. So we will be continuously engaging with government. That may not be the reason for why we need to do restructuring. If there is a value creation opportunity for the shareholders, then we may look at this, but not from the policy point of view.
Rohan Gupta
That’s it for myself. Thank you so much.
Operator
Thank you. [Operator Instructions] Our next question line of Sumant Kumar from Motilal Oswal. Please go ahead.
Sumant Kumar
Yeah, hi. Last year we talked about the INR1,000 crore capex in crop protection. So, can you talk about the timeline of the capitalization of the asset and the commencement?
Sankarasubramanian S
See, I don’t know what you’re referring to. Probably maybe our capex plans of specialty chemicals and CDMO. I think I answered there in terms of our work in progress. We are going back to the drawing board in terms of identifying the segments in which we want to operate in specialty chemicals and you know in terms of CDMO, it’s a long-term process. We are engaging with various potential innovators and partners. It will take some time. So as and when it materializes, we do share with you. But our investment will be based on after signing up and identifying right partners, we may not do upfront investments.
Sumant Kumar
So the technical plant also will take time?
Sankarasubramanian S
See, we are making a beginning now. This multipurpose plant what we are doing has got potential to add another line in the same civil structure. So like that we may be as and when we get some visibility. We’re in discussion stage at the various stages of a CDMO engagement, we may not be able to disclose at this point of time. Once they also do give us time to come up with the facilities and the product initiation. We may do it and take up the investment as and when we sign up the commercials with the potential partners.
Sumant Kumar
Okay. Thank you.
Operator
Thank you. Our next question is from the line of Himanshu Binani from Anand Rathi. Please go ahead.
Himanshu Binani
Thank you, sir, for taking my question. Good day and happy festive season to the management. So sir, I have two questions. One is on the share of the [Indecipherable] rates to the over overall volumes. So what has been the share basically for the second quarter? And the second question was largely around that since we have been like backward integrating for quite some time and that has been like able to reap benefits and going forward also with the kind of like cost savings which we have outlined particularly from the sulfuric acid as well as from the phos acid plant and the energy savings also. So I do understand that yes, the RM prices globally has been like volatile as well as the subsidies from the government. So the question was like how do we see the EBITDA per ton moving? So our guidance has been somewhere around the INR4,500 to INR5,000 per ton. So do we see that it should like increase going forward? So, how should one actually look into this? Thank you.
Sankarasubramanian S
Yes. The sustainable EBITDA the range what you’re indicating, we are quite comfortable with that and the reason being that improved value addition and increased intermediate capacities is helping us to sustain this margin in spite of huge volatility in the global commodity prices. We are able to observe the price shock and challenges and subsidies and able to come up with these numbers because of our increased share of captive manufacturing of both phos acid and sulfuric acid. If the environment improves, definitely the margin should also go up. But as I mentioned earlier, but for these challenges in commodity prices, our margins would have been much higher than what it is now. In terms of share of unique grades, I think my colleague says it’s around 26% on the overall phosphatics volumes, which represents the grade which we alone manufacture. That’s the number for this quarter.
Himanshu Binani
26% for this quarter?
Sankarasubramanian S
Yes.
Himanshu Binani
Okay. Got it.
Operator
Thank you. As there are no further questions, I would now like to hand the conference over to the management for closing comments.
Sankarasubramanian S
Thank you very much. Thank you for your insightful questions. Very helpful. And definitely we look forward to such fruitful interaction, which helps us to sharpen our thinking as we go to build this business. Thank you very much for your interest in Coromandel.
Jayashree Satagopan
Thank you all and wish you a very Happy Diwali.
Sankarasubramanian S
Happy Diwali to everyone. Thank you.
Raghuram Devarakonda
Happy Diwali. Thank you.
Operator
[Operator Closing Remarks]