Deepak Fertilisers and Petrochemicals Corporation Limited (NSE: DEEPAKFERT) Q2 2025 Earnings Call dated Oct. 30, 2024
Corporate Participants:
Sailesh Chimanlal Mehta — Chairman and Managing Director
Deepak Rastogi — President and Chief Financial Officer
Analysts:
Harmish Desai — Analyst
Rishabh Gang — Analyst
Jainam Ghelani — Analyst
Parth Kotak — Analyst
Harsh Shah — Analyst
Unidentified Participant
Kushal Shah — Analyst
Jai Zariwala — Analyst
Chintan Shah — Analyst
Presentation:
Operator
Ladies and gentlemen, good day. And welcome to the Deepak Fertilizers and Petrochemical Corporation Limited Q2 FY25 earning conference call hosted by Phillip Capital, India Private Limited. [Operator Instructions]
I now hand the conference over to Mr. Harmish Desai from Phillip Capital India Private Limited. Thank you and over to you, sir.
Harmish Desai — Analyst
Thank you Nikita. Good evening and welcome to the second quarter and half year f 525 earnings scholar, Deepak Fertilizer and Petrochemicals Limited hosted by Philip Capital from the management. We have Mr Sailesh Mehta, Chairman and managing director, Mr Deepak Rastogi, President and Chief Financial Officer, Mr Tarun Sna, President, Technical Ammonium Nitrate MRSA Jain VP, corporate Finance and Miss Pala head investor relations. I would like to thank the management for giving us the opportunity to host this call. We will begin the call with opening remarks from Mr Sailesh Mehta, followed by Mr. Deepak Rastogi for update on financial performance post, which will have a QN.
Thank you and over to you, sir.
Sailesh Chimanlal Mehta — Chairman and Managing Director
Thank you, Harmish. A very good afternoon to all of you. And I would like to warmly welcome each one of you in this Q2 F 525 the next call. I hope you had a chance to run through our running presentation press release and the details which have been updated on our website. And I hope you had an opportunity to somewhere study them. But let me share with you some of the highs as I see in the quarterly results. So at the outset, let me have the joy in sharing the highlights of the quarter results from the positive change that we have seen.
The consolidated revenues grew by 13% and have crossed INR2,700 crore for the quarter. EBITDA grew by 73% and stands to around INR494 crore. The margins grew from 12% to 18% and all of it culminating into a 237% jump in the net profit to 214 rows for the quarter. Now, what are these have undercurrents that are once off? What are short term? What are the other currents that will sustain and grow over a period? Could be the rightful curiosities from a strategic perspective. And let me share some of my thoughts on these areas, a good monsoon while strongly supporting the crop nutrition business, they bring some expected dumpling in the mining and chemicals business.
However, going forward while the enhanced water levels in the soil and the dams promise a continued a good agriculture season for RBI leading right up to next karif. The clearing of the monsoon should trigger the revival of the mining sector, chemical sector in the second half. In terms of the longer term and sustaining undercurrents, I would like to reiterate four major ones. So number one quarter after quarter, we continue to get a very good positive validation of the beautiful alignment of all our three businesses with the India growth story. The demand drivers continue to remain robust and we see that undercurrent emerging from India’s needs for coal power or limestone, cement or infrastructure, all of it giving very good TS for the mining chemicals business.
And so also the growing income levels, mid income group levels, growing and their food habits moving to more of fruits and vegetables aligning beautifully with our crop nutrition business. And so also the China plus one and the move towards more and more specialty chemicals supports our industrial chemicals business. So number one, the first undercurrent which you are seeing play out quarter after quarter and having a sustaining positive effect has been this this beautiful alignment with the India growth story. Second that we see is a positive play emerging out of our backward integration into ammonia.
And as you are well aware that you know, the new ammonia world scale ammonia plant kicked in sometime back and what it has done.
Operator
Ladies and gentlemen, we have management with us. Please go ahead sir.
Sailesh Chimanlal Mehta — Chairman and Managing Director
Yeah, is my voice clear? It got suddenly disconnected.
Operator
Yes and now it is clear, please go ahead.
Sailesh Chimanlal Mehta — Chairman and Managing Director
So as I was saying, the second undercurrent that we are seeing panning out is our backward integration into the ammonia plant which a world scale ammonia plant that came up short while back. And what we are seeing is that it is emerging to be a very strong risk mitigator and a value capturer for us and a very strong stabilizing foundation for all our downstream businesses. Also, as we look at the disturbing situation emerging in the Middle East and we were just thinking that if we didn’t have the ammonia plant, our dependence on a critical raw material coming from the Middle East would have been a matter of deep concern because of the issues emerging there and the shipping costs and so on and so forth.
So this aspect of it is going to be a great risk mitigator to have our own ammonia facility across our current complex. Plus the price volatility that would emerge on the ammonia front will now be captured within the group rather than you know, us being at the mercy of the pricing that will emerge out of a war like situation. The third on the current that I’m seeing which will have an ongoing strong impact is our intense and committed strategic journey from commodity to specialty based on very strong R&D and deep consumer segmentation and insights in the crop nutrition business. We are seeing a growing basket of crop specific nutrients and a growing and strong market acceptance on its efficacy, obviously, in terms of improvement and yield, but also in terms of the quality of the produce, we also now began with the introduction of cross specific water soluble fertilizers.
So the journey continues with the I would say very strong drive in the fertilizer business for sure. Even in the industrial chemicals business, you’re finding go and go with the steel grid, nitric acid and the Pharma grid. IP A and in the mining chemical business, the team has executed over 15 PC O projects besides proving Len Base and four as a huge value addition for the end user segment. So the third undercurrent that I’m seeing which will have a long term impact is the committed drive from commodity to specialty or holistic solutions. The fourth undercurrent that promises to have also a long term sustaining impact is the recent NCLT approved restructuring and Demerger, what it will end up doing is not only unwind and unfold, the real strengths of each of the businesses, what will bring the end to end focus right from the board member right down to the lowest officer for that specific business.
And of course, make us attractive propositions for strategic alliances and global joint ventures. Now beyond these four sustaining undercurrents that I shared, namely the alignment with the India growth story, the backward integration that ammonia brings the commodity to specialty drive and the corporate restructuring. There are two other developments that I would like to share which you may have read about. One is of course a fire anti dumping duty on IP A. We also have a good long term sustaining impact both on the top line and bottom line of the industry, chemicals business. And the second is we are seeing a very strong fast paced KPEX plan executing the technical Ammonium Nitrate Gopal Port project and the H Nitric Acid Project.
And those will have lasting positive undercurrents. And unlike other typical KEX programs, these two capexes are usually risk mitigated in view of number one, the 40 years of operating experience behind these projects. We are not doing anything new. I mean we have experience of running 10 facilities and NTIC asset facilities over the last 40 years. So no unknown areas whether it is in terms of safety, health, environment operations rules regulations. The second is that for both the products, we’ll be entering a market again where we have been there for the last 40 years. It is, you know, nothing new in terms of creating new customers or new distribution networks, nothing all of it will be stepping into something which we have been doing since the last 40 years. And of course, in both the cases, the demand drivers continue to be aligned with the India growth story. So we feel that those capex plans are hugely risk mitigated.
So now with the strategic overview, let me now hand you over to Mr. Deepak Rastogi to share the nitty gritty and detailed figures and also questions that you may have and before and all my very best to each of you and your families for Deepak. Thank you, Deepak.
Deepak Rastogi — President and Chief Financial Officer
Yeah, thank you, Mr. Mehta. Am I audible?
Operator
You loud and clear.
Deepak Rastogi — President and Chief Financial Officer
Okay, good afternoon, ladies and gentlemen, I appreciate you joining us today for Depot Fertilizers and Petrochemicals conference call to discuss our results for the second quarter and for the first half of financial year ’25. I’m pleased to report that our performance for this quarter is a reflection of resilience and strategic initiatives we have undertaken in the recent years. We have achieved total operating revenue of INR2,747 crore with an operating of INR494 crore. This is for the second quarter of this year. This translates to a little bit of margin of approximately 18% representing significant year on year growth of approximately 690 basis points, the net profit for the quarter. So to 214 growths reflecting a 237% increase compared to the same period last year. On the balance sheet side, we continue to work on the deleverage of debt.
We have prepaid 200 quotes of that ahead of the schedule. Therefore, overall debt has come down during the card. I would not like to dwell deeper into the performance of our businesses. So during this is for the crop nutrition business performance during the Q2 of 25 for crop nutrition business, the sales volume of manufactured bulk bulk fertilizers achieved is 268 1,000 metric tons. Marking extraordinary growth of 83% over Q2 of last financial year which is financial year ’24. This quarter stands out as one of the best performances in the company’s history. Our strategic focus on high performing products have started bearing fruits. Several monsoon conditions in core markets allowed us to drive sales of specialty fertilizers like crop tax. March sales of crop reach 37,000 metric tons reflecting a robust year on year growth of 70%.
Our targeted campaigns for crops such as cotton and sugarcane have been effective to grow revenues. We continue to focus on high quality specialty fertilizers like Solich for grapes and Teo. Looking ahead of to Q3, the above normal monsoon rail has greatly enhanced the ground level water promising strong Rubby season. We anticipate increased acreages for Rubby crush crop, particularly sugarcane onion and potato. Regarding industry chemicals business, you know, nitric acid volume slightly decreased, you know, by 1% on yoy basis. While IP volumes actually fell by 10% yoy. Despite that the revenues overall for the industrial chemicals business actually grew by 9% IP volumes were declined due to process constraints and shut down. As you are aware that the anti dumping duty has been implemented from October 22nd of this year for a duration of five years, which should actually help the domestic manufacturer sustain margins going forward.
The specialty stainless steel grade nitric acid has received positive feedback from the customers and we continue to work to enhance the revenues from that perspective. Demand and margin for nitric acid are expected to remain stable over the next few quarters. R GP based IP A demand and margins are expected to be stable and improving following the implementation of the anti dumping duty on chinese supplies over the next few quarters regarding the mining chemicals business and then sales volume increased by 16%. Why? Why? And 20% from a first half of you know, this year. As compared to the first half of the last year, overall sales volume decreased by 24 21%. Why? Why in Q2 attributed to the plant shut down and the lien period due to monsoon overall revenues fell by 8%. Why? Why? While in the first half the volumes declined marginally by 1% of similar, you know, half of the last year while revenues rose by 6%.
Yoy, the plant undertook a plant shut down of maintenance activities to complete capacity demark resulting in increased capacity of from 537 KTP A to 587 KTP A consequently, production volumes one lower by 21%. Why? Why? And as because it was planned, looking forward, we expect the demand recovery in Q3 supported by growth in coal, cement and production. If somebody I was strong performance. This quarter is a testament of strategic initiatives. We have undertaken like backward integration and moving from commodity to specialty and also introducing innovative product offerings, you know, to our customers and consumers. We believe the steps we are taking will position us for sustained growth in the future.
Now I will open the floor for Q&A.
Questions and Answers:
Operator
Thank you very much. We will now begin the question and answer session. [Operator Instructions] The first question is from the line of Rishabh Gang from Sancheti Family Office. Please go ahead.
Rishabh Gang
Hello, thank you for the opportunity. Congratulations on the overall numbers and the margins. So how do you see the kind of margin going forward? Like we can expect 18% to be a steady state with the margin?
Deepak Rastogi
So are you so just to clarify, are you you know, asking for the consolidated 18% is what you’re saying? Or it is a business specific number consolidated? Yeah, I think, you know that, you know, we have been actually delivering these numbers, you know, over the past few quarters and we think, you know, we have got that a sustainable level going forward. Obviously, there will always be some cyclicality involved, you know, going up and down within the bank. But you know, that should be the way to go forward.
Rishabh Gang
Also regarding the new proposed corporate structure, right, the demer.
Deepak Rastogi
Entities.
Rishabh Gang
Would.
Deepak Rastogi
They be separately listed? So the plan obviously is that, you know, each business would be separately listed at appropriate point in time. Okay. Like one to two years down the line. So there is no timeline as such, but obviously, you know, we would provide the timelines as we take those decisions going forward also.
Rishabh Gang
What’s your road map on being a net that we like? And how many years do you envision or take any plans for that sir? And what’s your take on.
Deepak Rastogi
The steady state.
Rishabh Gang
ROCE of the business?
Deepak Rastogi
Yeah, so you know, purely from a tech perspective as you know that we already have two expansion plans which are continuing going forward. One is for Gopalpur and the other is for the HGE. And hence given that, you know, the repayments only starts, you know, post to the CODs which is the commissioning happens and hence the leverage of the balance, you know, that that would happen, you know, after that. However, the normal repayments cycles for all the businesses continues the way it is. And whenever we have an opportunity, like we had an opportunity this quarter, we are able to at least, you know, fast forward or expedite some of those repayments, you know, ahead of schedule by the year-end.
Rishabh Gang
How much net debt do you think you will be having?
Deepak Rastogi
So, you know, from a gross perspective currently, you know, we have you know, delivered around 3,600 groups, you know, or 3,500 groups, 600 groups. So, you know, I would say that, you know, additional draw down of maybe around for the projects, you know, so there will be no other drawdowns, but we are expecting around 300 to 400 groups worth of additional drawdowns for our new projects, you know, going forward. So, you know, give or take a grass number would be closer to maybe around 4,000. Again, you know, around that number is what we are expecting right now.
Rishabh Gang
By the year end all and also the ro ce front, right? So like what do you think would be the steady state roc of the business?
Deepak Rastogi
So we will have to really work that out, you know, because there are two new projects which are coming in And you know, the EBITDA for those projects would only start up, you know, obviously kicking in from, you know, effectively for on a yearly basis. Close up, you know, around 2,627 right? That’s the financial year. And generally, you know, the idea is that, you know, all the effectively to the new projects should be between 18% to 20%. So if they actually, if we continue to deliver this, the Roc will be far more obviously very, very high in terms of the deliveries. But till the time that happens, because there is a capex which is happening and there is no Abita to that. Obviously, the ROCE will be depressed for now.
Rishabh Gang
All right. Got it. Thank you so much, sir.
Operator
Thank you. The next question is from the line of Jainam Ghelani from Svan Investments. Please go ahead.
Jainam Ghelani
Hi, sir. Thanks for this opportunity and congratulations for a good set of numbers. So my first question is, what was the contribution from ammonia savings in this quarter?
Deepak Rastogi
So, you know, what we have done is that, you know, are you so, first of all, thank you so much, you know, for the, for your compliments, but purely from a overall you know, contribution on IBI side, you know, it is closer to around 45 to 50 groups. You know, that’s the number which we have and these numbers would actually improve. Once the year prices continues to go up, go up, you know, and which we have been actually seeing those indications now. That and mostly Q3 and Q4 when the winter kicks in. Obviously, you know, we have seen the ammonia prices actually, which is Fobme hardened and it is closer to around 400 to 400 you know, 50. So if that happens, obviously, the margins will further improve, going forward.
Jainam Ghelani
The current level of ammonia, what will be the contribution that we will be making on important at $430 which you indicated for the month of October.
Deepak Rastogi
So, you know, we don’t, we, we, we basically don’t you know, provide that data specifically, but I can tell you that, you know, and which we have been consistently telling that, you know, if, if the ammonia prices are closer to $300 Fobme, we would be obviously, you know, contribution positive if we are, if the money prices are $400 plus Fobme you know, we would be people to positive and you know, that will continue. So, obviously, the other thing which obviously, we have been reinforcing it.
And in fact, Mr also make the point, you know, if the ammonia prices are slightly lower, obviously, the benefit flows into the other businesses. If the ammonia prices are actually had the benefit stays in the ammonia, you know, business. And obviously, you know, it doesn’t flow through the other business. But overall from a related perspective, it will not have much of a difference, you know, across the company and across the group as we will capture the benefit or expense, both sides, you know, within the group. So it would not have it. But obviously, if you are looking independently this business, yes, you know, there will be some physicality involved based on money, your prices, how it actually moves.
Jainam Ghelani
Given the recent upgrade in the ammonia prices should come down 300 now back to 430. How do you see a global demand supply playing out in terms of ammonia and in terms of the pricing, I mean, the product you can help us understand.
Deepak Rastogi
So as far as the global you know, economics is concerned, you can actually get through the history of, you know, how the prices have actually behaved. But, you know, most of the time, you know, the prices have ranged between $400 to $450 fob and most of the time there are variabilities in between, you know, we saw last quarter, you know, the prices were closer to around, you know, $275 to $300.
This quarter, we are looking, you know, which is Q2, we saw, you know, it’s pinching up to around $350 going forward and all, all the time, you know, Q3 is definitely at Q3 and Q4 are from a pricing perspective high because of the harsh winters. If it goes through, then the demand goes up and hence, you know, the prices actually have an impact on the same.
Jainam Ghelani
Second question, I mean, just for the earlier participant, in terms of the capital, you indicated that there will be additional 300, 400 groups of broad during this fiscal year and you know, both the project goal, Food and the Nitric acid project is likely to come out soon in second of 520 six. So what is the incremental capital that you will be spending in financial year 26? And for the completion of this cap, what will be at that big that?
Deepak Rastogi
So, you know, if I were to sum up, you know what you’re asking is that, you know, we are expecting the peak that to sometimes in financial year, you know, end of financial year 2,526 or early 2,627 to be closer to around 6,000 quotes. You know, because we basically have to incur closer to almost 3,000 quotes, you know, both put together and 30% of that would come from the equity and the balance would be, you know, raised through the debt.
Jainam Ghelani
INR6,000 crore will be a big one can probably assume by the end of next fiscal year. Now, sir, if you want to make up, because if you look, Mr. Mehta, his opening is not indicated regarding the sustainable growth driver and one of the sustainable growth drivers for the our business was the be also. So can you help us understand the total INR6,000 crore or current INR4,000 crore of the dead? Which is that in the book, how does it bifurcate between the various verticals that is going to get the most?
Deepak Rastogi
So, you know, obviously we can send you the details separately, but you know, it is based on the projects which businesses, so let’s say for our mining chemicals business, the Gopalpur you know, obviously plant that would actually you know, be added there as far as the the heat metric as itd is concerned. You know, obviously it will come to the industrial chemicals business, which is LYPC, but we can share that data separately and you know, I do not have the data.
Jainam Ghelani
Sure. So that’s all from our side. Thank you and best wishes for the festive season.
Deepak Rastogi
Thank you so much.
Operator
Thank you. The next question is from the line of Parth Kotak from PLUS91 Asset Management. Please go ahead.
Parth Kotak
Hey, thank you. Thanks for taking my question. Firstly, I’d like to congratulate you and your team, sir for a great set of numbers. All, most of my questions again have been answered. One question that I have sir is the impact of facility downtime. The roa is downtime for IP A and nitric acid production. Can you share when this capacity utilization will return to normal lenders, repairs will have any impact on this quarter’s ebita margins.
Deepak Rastogi
So, you know, just to give you a sense that part of that, you know, irrespective of whether it is a planned or it is an unplanned, you know, downtime, you know, there is, we are actually looking to operate our plans between a capacity of around 92% to 98%. You know, that is the kind of capacity utilization we have in all the actually plans currently including AOR including A including IP and things like that. And hence, you know, where we will need to enhance the capacity.
So, you know, you know, we had to actually enhance the capacities, you know, let’s say for our mining chemicals business. So we added that there will be a needed, you know, downtime for those products. We have been continuously doing preventive maintenance, you know, for all the plants and you know, we want to optimize it. But, you know, this year you would find that most of the facilities would actually be between, you know, 92% to 95% capacity utilized ammonia would be an exception. It can be even higher than 100%.
Parth Kotak
Perfect, sir. Perfect. I think that sums up your views really well. So lastly on the impact of ammonia on segment reporting, you mentioned earlier that ammonia profits are embedded in the chemical business. Can we expect any changes to segment reporting, post expansion to provide better visibility into ammonia performance or this is how we’d like to continue.
Deepak Rastogi
So for now, we will want to continue like this, but we will look into this to see whether we need to change our segment and reporting. Even though you know, on the on the yearly side, yeah, on the yearly side, we provide the details for all the segments for our ammonia business. In any case, we actually publish separate results and hence and the consolidated results. So you know, you would have most of the details. But you know, as you have actually requested, we will look into this and see if it is appropriate for us to change the reporting.
Parth Kotak
Sure, sir. Sure. Thanks for taking my question and wish you all the very best for the quarters to come.
Deepak Rastogi
Thank you.
Operator
Thank you. The next question is from the line of Harsh Shah from Rera Holding. Please go ahead hello, Please go ahead, sir.
Harsh Shah
Hello, hello, am I audible?
Deepak Rastogi
Yes, you are audible.
Harsh Shah
Yeah, good afternoon, sir. Great numbers. Congratulations. And the operating cash flow of almost INR1,100 crore was was outstanding. So first question is on the technical grade ammonium nitrate part of the business. So this quarter, if I see the realization has been almost flattish on qoq basis. So just for me to understand that are we, are we, have you not yet seen the benefits of higher ammonia prices flow through into our realization? That is one. And the second is once we have our de bottlenecking capacity operative, what kind of growth in terms of volume are we seeing? Because I remember last few quarters, we had seen a lot of imports coming from Russia. So any update on on that situation in terms of import supplies.
Deepak Rastogi
So, you know, I will answer you in two parts. First of all, you know, the monsoon season actually is the lean season for this business because of the water logging or, you know, flooding in the mine, the mining activities actually are reduced. So in spite of that, the volumes have slightly have come down, but, you know, they are not nowhere actually too much down, you know, all that is number one, the second point which you made for. On the pricing side. Generally, the ammonia prices do not decide how the the tan ammonia, the tan prices actually works, you know. So it’s there is a commodity which is called again, fertilizer grid, fertilizer grids, ammonium nitrate that actually determines how the pricing and the premiums will be actually set in the marketplace.
So I can tell you that versus last year, obviously, the amount the pricing globally have actually strengthened. And we have been you know, obviously getting higher selling prices for our product versus last year. So the third question which you asked was that, excuse me.
Harsh Shah
Again, it’s Harsh Shah that is from your side.
Deepak Rastogi
Hello. Yeah. So can I continue? Yeah, so, you know, from purely from an imports perspective, generally around 15% to 20% of the demand of India is catered through imports. You know, this year, you know, obviously there are Russian imports but you know, almost 40 50% imports are also from other countries apart from Russia. And hence, we do not basically see much, you know, obviously challenge there, but you know, that is going to continue over us.
Harsh Shah
Okay, that is helpful. And another question was for the industrial chemical business. Since expanding our nitric acid capacity, will this mostly be used for our captive consumption or this will also be used for market sales?
Deepak Rastogi
So you know, for CNA actually, it is predominantly for marketing, you know, so we have, you know, tied up almost close to 65% of our capacities of our CN A with RC. The balance again will actually go on spot sales and things like that as far as the diluted, which is DNA, which is R WNA, almost 50% to 60% actually is captured, the balance would be sold outside to, you know, to the other system.
Harsh Shah
And in terms of end user industry, will we see any change in sales mix in terms of more sort of getting sold for value added products or will the sales or the end consumer remain same that we have currently? No.
Deepak Rastogi
So we have been actually improving our specialty grade sales over a period of time. So, you know, obviously the customers, you know, so we have as you know that we have added seal grade nitric acid for an example, we have added the fool which caters to mostly the hospitals or the pharmaceuticals and the infected industry and things like that. Now, we have also, you know, in a process to launch, you know, for semiconductors, you know, I pgri you know, those you know, products. Now these are very much industry specific applications which we will continue to develop. And hence, we will always have the similar base of the customers which we will cater, which we have been catering to but we will continue to add with the specialty, we will continue to add new customers going forward.
Harsh Shah
And just the last question, follow up. Would you be able to give any numbers in cost terms as to how much would be commodity grade, the sales to fertilizer companies? One I get and how much would be value add? And what, where would this percentage? 10 say 23 years down the line.
Deepak Rastogi
So, you know, we are currently at around 20% you know, 8,020 you know, it is the normal grades and you know, 20% are specialty grades and you know, we are looking to at least, you know, double this number over a period of a couple of years.
Harsh Shah
Understood. Understood, sir. Thanks a lot. Wishing you all a very Happy Diwali. Thank you, sir.
Deepak Rastogi
You too.
Operator
Thank you. [Indecipherable]
Unidentified Participant
Hi, good evening. Congratulations on a great set of numbers. So most of my questions have been answered. I just wanted to know, do we have any progress with our mining services division? And have you got any orders for that?
Deepak Rastogi
So, you know, we have already executed more than you know, 15 projects or programs so far. And as we speak, you know, multiple projects are under progress at this point in time. So, you know, that’s a work in progress and that it is only going to increase and improve going forward?
Unidentified Participant
Okay. And what sort of margins do we look at when you take these services or these mining services contracts?
Deepak Rastogi
So generally what happens is that, you know, the product margin stays because you know, we are selling the product and all, but for the services, you know, there is an additional margin that is based on how the what are the project or the you know, program details, you know, how much is the benefits which gets approved to the customer based on which you know, we basically decide how much will be the premium we will charge for the for our services. So it is not obviously a single number, but you know, if I were to give you a ballpark number, maybe you know, 10% to 15% you know, over and above what we do, obviously will become a normal benchmark going forward as you know, we actually improve that and increase the city of the TCO programs going forward.
Unidentified Participant
Okay. Thank you and good luck for the next few years.
Operator
Thank you. The next question is from the line of Kushal Shah from an individual investor. Please go ahead.
Kushal Shah
Hello, am I audible?
Deepak Rastogi
Yes, you are audible.
Kushal Shah
Thank you. So I have two questions. My first question is that we have seen many changes recently in the top management that is Mr Amita Barga designed last year. And now Mr. Deepak Rasoi is going to resign and we have so much of capex plan. Then how do we plan to stabilize the top management? And would Mr Soar and will be joining in the position of because to be continue for so many years, like do the shareholders of that kind of assurance? And the second question would be on the lines of mining chemicals and it’s particularly how deeper fertilizers would have an edge over the existing experienced miner and how difficult or easy it is to replicate the to total cost of ownership model that we have built. Thank you.
Deepak Rastogi
Okay. So, you know, on the first question, obviously, the company has a very good pipeline in terms of succession planning. You know, there are, there will be management people or employees would actually join, your employees will join and, you know, some employees would actually, so that’s a normal process of an organization and the organization is well equipped to handle you know, either the new expansions or the mergers and things like that. So given that, you know, we have seen this over the past 40 years, you know, the all the IP and the knowledge actually right in the processes in the company.
So I don’t think so that, you know, that could be one of the concerns which, you know, we have. Obviously, we will, as we speak, you know, we continue to you know, create more you know, obviously experts and more of, you know, people, you know, in the system so that, you know, we do not have a vacuum in terms of succession planning, which is well, well actually matured and it is obviously discussed at the board level also. So that is number one on your question towards the PC U I would hand it over to my colleague Mr Kusina who will answer that, you know, whether it is easy for any other company to replicate the DC model. You know, so I will go over to you. Let me reconfirm your question. What’s your question on detail?
Kushal Shah
Sir. So my question is a why do deeper fertilizer or chemical company would have an edge over the existing miners for several years of experience in mining or like the infrastructure? And the second part of the question is let us say some other player comes into the market and how easy or difficult it is to replicate the total cost of ownership model for them.
Sailesh Chimanlal Mehta
Okay. Thank you for your questions. On the first part, we are not claiming in any form and shape that our knowledge base is much larger than the existing miners. What we do is as it happens in the normal course of business. When in any organization, when there’s a team of people working on the same thing over and over again like it happens in a typical time, then chances are high that areas of opportunities are overlooked, not because of not because of any, any design, but it’s just that it’s normal way of working. So what we do in our total cost of ownership model is we, we, we send a team of people to the mines, do a baselining benchmarking of their overall cost, which encompasses drilling, lasting excavation, hauling and crushing, where applicable these operations and spot opportunities for improvement. And then we, as we spoke earlier in one of the questions, we try to enter into some projects and contracts to help the mining companies to improve that cost.
So, that’s the business model. On the second one, you know, whether any other company is able to replicate this. I think I’ve answered this question in some of the other calls earlier in previous quarters. It is difficult, we don’t know of any company which is working on this model. It is unique and why it is unique is not just because of how we approach it, but it’s also about how we contract, you know, these kinds of projects, which is a combination of the inputs that we provide and at the same time the output that we generate. So it’s very much outcome based approach rather than an input based approach, which is where most of the companies operate in this space. That’s where we draw the difference in terms of our business model versus the others.
Kushal Shah
And one more question on how long will it take for TCO to mature and be a significant contributor in the revenue?
Sailesh Chimanlal Mehta
So we started this concept a couple of years back and like it happens with any new concept, it matures over a period of time. We have come a long way already in terms of not only just building the capabilities but also as was mentioned by Mr. Deepak was earlier by by executing 15 odd 15, you know, 15 odd projects in that direction. And this these projects have been delivered in coal segment of the market in the metal and limestone segment of the market and also also in the infrastructure segment of the market. So it’s it’s working quite nicely, it’s maturing and we are on the growth trajectory. We anticipate that as we go along, this will start becoming a bigger pie, you know, in our chunk.
Deepak Rastogi
Oh, thanks a lot for the star and Mipo. Thanks.
Kushal Shah
Thanks a lot for the answer, Sailesh and Deepak.
Sailesh Chimanlal Mehta
Thanks.
Deepak Rastogi
Thanks.
Operator
Thank you. The next question is from the line of Jai Zariwala from an individual investor. Please go ahead.
Jai Zariwala
Hi sir, congratulations on a great set of number. So I have two questions. My first question is based on like you mentioned in the PPP that we are going to launch a new IP based on semiconductor like on on according to which quarter we can expect the revenue kicking in from this particular segment or it is in a very initial stage, like I want to just know the progress on this.
Deepak Rastogi
So, you know, we already have a product right now. Obviously, the scale is very, very small given that, you know, the industry in India has to pick up. And you know, this is like a, you know, as this because a lot of manufacturing activities have just started for semiconductors in India. And hence, you know, we expect this business to grow multiport till the time, you know, whatever activities which are there for, you know, domestic sales as well as for exports, you know, we continue to you know, look at those opportunities and see, you know, what could be the best way to actually improve, obviously our revenues, you know, in that particular segment.
Jai Zariwala
Okay sir. And the second question is on technical ammonium nitrate. So like we are seeing a couple of other companies like coal India and they are a joint for this particular ammonium nitrate. So they are they are they are specified as ammonium nitrate. So I just want to know whether this technical ammonium nitrate is different from an ammonium nitrate. Like is the both the products are seen and the capacity which which are going to be live by coal India in summer f 520 six.
Deepak Rastogi
So you know, obviously what, what coal India is trying to do is that they are doing much more from a gas gasification, you know, coal gasification, that’s what they are trying to do. And they have been working with Bhen to bring that kind of a technology. And in the previous quarter, I’ve actually mentioned that, you know, the technology as for them is not commercially viable, that’s how they have actually reported in their annual report. So we have to see, you know, when they will actually bring it. But the products are, you know, technical ammonium nitrate is a product which is used for explosive, explosive purposes for the mine. And they are trying to basically obviously create some in house capabilities. You know, obviously with this joint venture, you know, going forward, but we have to see how it actually pans out.
Jai Zariwala
Okay, sure, sir. Congratulations and yeah, that’s all from my side. Thank you.
Deepak Rastogi
Thank you.
Operator
Thank you. The next question is from the line of Chintan Shah from JM Financial Family Office. Please go ahead.
Chintan Shah
Hi, thank you so much for the opportunity. So I have two questions so far on the time segment. So if we see there are two to three players who are adding capacity here and also as you mentioned earlier, significant contribution is from impose. So now this is slightly longer term once we commission our additional capacity by end of 526 and I believe all the other players are also adding some 526, 527 And do we see a case that you know, that could put pressure on pricing? And once we commission this capacity, we could see lower profitability. That is the first question and second, it’s slightly near term. So right now from a 526 perspective, just wanted to understand since we’re already operating at such high capacity utilization levels, what sort of growth levers do we have? Is it only the realization of profitability then or is there a hope for volume expansion as well? Those are my two questions. Thank you.
Deepak Rastogi
So I will take the second question first and then go to the next question. So we already have, you know, got, you know, capped in terms of the capacity. And that is one of the reasons why we have actually added, you know, 50 KTP very very recently where we took a plan shut down to increase the capacity because today we do not have a ticket capacities to actually service our own customers. That’s number one. You know, coming back and that is one of the reasons why we have actually gone for the expansion because if you really see the coal, you know, mining or mining activity, bo activity or infrastructure activity are slated to grow between 10% to 12% a year or a period of next five to six years. If not more, what this will do is that you know the current demand supply situation.
So you know, the current demand of India is close to almost 1.5 million tonnes, you know, at this point in time or 1.6 million tonnes with the space of infrastructure growth and you know, mining activity growth, you know, it would actually go to around 2.2 million or 2.3 million tonnes, you know, per annum, the current capacities which are there, you know, on the ground is closer to around a million or 1.1 million tonnes. And hence, when I was making a comment that around 15% to 20% of the capacity, you know, demand is actually fed by sports, which is the case all the time. So, you know, going forward also the new capacities which are coming in by through chamber or IRC you know, the capacities will move from including our own, you know, the capacities will move from maybe 1.1 million or 1 million to around 1.6 million or 1.7 million tonnes.
There would still be enough scope and for the imports to continue. So when we have actually, and we sized our project at Gopalpur, you know, we have assumed that a similar import will continue given the kind of obviously the demand supply situation in India. Now these are normal scenarios. Obviously, if the demand comes down because of, you know, some blue swan events or you know, some you know, because there is a cyclicality there could be a few years which are more softer than others. But on a long term basis, we are very confident that the capacities which are there on the ground will continue to be capacity utilized to the brim.
And there will be few, you know, there will be hardly any case for us to say, you know, the capacities are not utilized. In fact, the way that we have been planning is that, you know, from day one, we are thinking, you know, because of the ramping and all, you know, the things would start between, you know, 60%, 70% you know, capacity utilize from day one. That’s the way it is, you know, it is going to improve over a bit of time. So that is how we are looking at this market.
Chintan Shah
Okay. Got it understood. That was very helpful. And just one last question on our real estate venture, is there any update or what’s the plan here?
Deepak Rastogi
So the plan is that, you know, obviously the business actually, you know, we have a part of our plan that is a business which does not needs you know, to be, it’s, it’s a neutral, you know, it’s not materially you know, from a value perspective, from a revenue or profit of these things. And hence, you know, we will continue to run that business and you know, whenever we need it to, you know, we will have an asset to, you know, liquid it. If at all, we get obviously good pricing and things like that appropriately. But currently there is no need for us. There are no pressing reasons for us to take those actions.
Chintan Shah
Okay. Fair enough. Thank you so much. That’s all from my side thank you.
Operator
Thank you, ladies and gentlemen, that was the last question for today. I now hand the conference over to Mr. Deepak Rastogi for closing comment.
Deepak Rastogi
So thank you all of you for taking the time to participate in people of fertilizers and petrochemicals limited conference call. I again wish everyone on the call a very happy Diwali and a prosperous New Year to all of you. Thank you so much.
Operator
[Operator Closing Remarks]