Madhya Bharat Agro Products Limited (NSE: MBAPL) Q3 2025 Earnings Call dated Jan. 16, 2025
Corporate Participants:
Mcenro Samdan — Strategy & Investments
Pankaj Kumar Ostwal — Promoter & Director
Sourabh Gupta — Whole Time Director & Chief Financial Officer
Analysts:
Praharsh Rai — Analyst
Riju Dalui — Analyst
Heet — Analyst
Vaibhav Badjatya — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Q3F5.20 Earnings conference call of Madhya Bharat Agro Products Limited from the senior management we have with us today Mr. Pankaj Oswal, promoter and director Mr. Sourav Gupta, whole time Director and Chief financial officer and Mr. Macintoshamdani, consultant strategy and Investments. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call please signal an operator by pressing star 100 on your touchstone phone. Please note that this conference is being recorded.
I now hand the conference over to Mr. McEnto Samdani. Thank you. And over to you Mr. Samdani.
Mcenro Samdan — Strategy & Investments
Thank you Ranju. Good evening everyone and welcome to the first ever earnings call of Madhya Bharat Agro Products Ltd.
Before we begin the earnings call I’d like to mention that some of the statements made during today’s call might be forward looking in nature and hence it may involve risks and uncertainties including those related to the future financial and operating performance.
Please bear with us. If there is a call drop during the course of the conference call we would ensure the call is reconnected the soonest.
Now I’d like to hand over the call to Mr. Pankaj Oswal, Managing Director. Over to you Mr. Pankaji.
Pankaj Kumar Ostwal — Promoter & Director
Good evening everyone and welcome to the first ever earning call from Madi Bharat Agro Products Ltd. Since this is the first time we are holding an earning call and some of you might be hearing us for the first time I will give a quick snapshot of the group and the history of the company. Firstly, about the Ostwal Group. We are based in Bhilwada, Rajasthan and are into phosphatic fertilizer manufacturing. We have four fertilizer companies in the group. A holding company uswal Fastnhem India Ltd. And three subsidiary companies Madhya Bharat Agro Products Ltd. Krishna Fosniam Ltd. And Sri Ganpati Fertilizer Ltd. All the four companies are in phosphatic fertilizer business with a total fertilizer manufacturing capacity close to 1.2 million tonnes. All the companies operate at different geographical locations thereby creating a synergy at a group level.
Coming to Madhya Bharat Agro Products Limited Based in Madhya Pradesh. It was acquired by urswal family in 2004 as a SSD manufacturing unit located in Sagar, Madhya Pradesh. We turned it profitable in the first year of full operation. It followed with series of backward and forward expansions along with product diversification by manufacturing BAP and PK fertilizer in 2022. We entered this product by acquiring a close down phosphoric acid unit. It key raw material suites for DAP NPK in the past three years we have done expansions across the value chain of DAP NPK which is now giving excellent results.
Currently, Madhya Bharat Agro Products Limited has two plants located in Sagar, Madhya Pradesh with a total manufacturing capacity of single superphosphate 2,40,000 Tons and DAP NPG 2,40,000 tonnes respectively backed by raw material feed off capacities of phosphoric acid, sulfuric acid and beneficiated rock phosphates.
As a strategy, we have grown by acquiring sick or closed down supply units. This asset light strategy has kept our CAPEX low thereby enhancing our returns. We foresee ourselves to grow in similar manner CAPEX lines. Taking experience of successfully running DAP NPK plans, we entered into a definitive agreement to acquire a closed unit of DAP NPK based in Bahej, Gujarat. This plant is being dismantled from Bahej and relocated to a new location in Nardana, Maharashtra where we have acquired five 87,000 square meter area on lease from MITC. The strategy is to diversify the marketing coverage geographically to Maharashtra and below. We estimate this plan to be operational in September 26th and this upcoming manufacturing unit at Nardana, Maharashtra will have additional 3,30,000 tons of DAP NPK at a capex of 535 crores.
Further in Sagar NP at our existing manufacturing location, we plan to increase our phosphoric acid capacity in stages by 33,000 tons with a minor capex of rupees 70 crores. This brownfield expansion is targeted to be captively consumed. With this, our phosphoric acid capacity at Sagar will increase from 49,500 to 82,000 tonnes in second quarter of 26. We already have done the financial closure of rupees 248 crores for Dhule project during the quarter with SBI Access bank and Federal Bank. The closer showcases the confidence of banks on us with the project.
On the current business environment, we have witnessed a very robust markets for NPK for the beginning of Rabi season. The industry demand for the quarter is estimated to have grown 50% year on year. Our DAP NPK plant ran at 85% utilization which is optimum. We could clock thereby recording quarterly sales of 42,000 tons which was up from 40% year on year. Due to the increased NPK sales, our product mix has improved and we have been able to record a beta per ton of around rupees 5000 tons rupees 5000 tonnes for the quarter which is highest for the ES. We foresee that beta per ton from the upcoming Maharashtra plant will be much higher as it will only be manufacturing DAP NPK which is high margin product as compared to ssd.
On subsidy scenario we have observed largely stable raw material prices except for sulfur which increased recently. During the quarter we for the minor upward adjustment in the subsidy during the next subsidy cycle to offset that subsidy rise.
On the financial performance for the quarter. For the quarter our revenues were up by 16.4% year on year at rupees 283.7 crore. EBITDA was up 124% year on year at rupees 41 crore packed was up 126.9% year on year at rupees 17.9 crores. And EBITDA per ton was up 113% year on year at rupees 4823. Our total outstanding loans as of 31st December 24th is rupees 211 crores. Including long term debt of rupees 32 crores. The subsidy outstanding as of 31st December 2024 was rupees 77 crore. The NPK sales was 42,000 tons up 43 year on 43% year on year. And SSP sales for 39,000 tons up 5.4%.
With this I would like to open the floor for question and answers.
Questions and Answers:
Operator
Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on your touchstone telephone. If you wish to remove yourself from the question queue, you may press star and. Two participants are requested to use handsets while asking a question. Ladies and gentlemen, we’ll wait for a moment while the question queue assembles. A reminder to all the participants that you may press star and one to ask a question. Once again, a reminder to all the participants. Harima press star on one to ask a question.
The first question comes from the line of Parharash Rai with Arjev Partners. Please go ahead.
Praharsh Rai
Hi. Congratulations on a great set of numbers. Can you hear me?
Pankaj Kumar Ostwal
Thank you. Thank you very much. Yes. Yes, we can hear you.
Praharsh Rai
Yes, sir. I just wanted to confirm that the new Maharashtra plant which will come up. It will come up in quarter three of FY27. Right?
Mcenro Samdan
Yes. Yes.
Praharsh Rai
Because I think in your initial remarks you said 26. So I just wanted to reconfirm that
Mcenro Samdan
By 26. It is 20. 26 end.
Praharsh Rai
24 months. Right? 24 months from now.
Mcenro Samdan
Yes. Yes.
Praharsh Rai
Right. Right. Right. Right. And so the. The for asset expansion will be completed by quarter two of FY26. That is September of this year.
Mcenro Samdan
Yes,
Pankaj Kumar Ostwal
Yes, yes. September 26th quarter, second quarter of FY26.
Praharsh Rai
Would you like to give a guidance for the financial year for FY26 and 27 in terms of top line and margins?
Sourabh Gupta
So I’ll take this question. Pankaji Prash. See broadly we are, we won’t be giving guidance but what we can give is just a flavor about our EBITDA should turn up. See currently if you see our EBITDA button has clocked 4800 odd for this quarter. And we see this, we should be touching the same range for the full year, coming full for FY26. And when the Maharashtra project comes, we observe EBITDA per 10 for Maharashtra project will be much higher. It should be clocking more than 6,000 rupees per ton. So I think that will be a broad guideline on the numbers which we can give right now. In terms of top line we will see minor jump next year.
Praharsh Rai
The exit rate of SY27, the exit run rate of the margins will be quite high. If I’m not wrong.
Sourabh Gupta
Yes. From Maharashtra, our margins will be quite high
Praharsh Rai
Because post Maharashtra kicks in in the next financial year, that is FY27, the exit EBITDA margins will be quite high. Right sir?
Sourabh Gupta
Yes, yes.
Praharsh Rai
And what will be the ramp up times for that new plant? Any guidance on that? Because if the plant gets started in quarter three, I think it will take at least two, three months to stabilize and ramp up the capacity.
Sourabh Gupta
Yeah, yeah. So we on in our projections we have taken around 40 utilization in the first year and then followed by a full utilization in the coming year. That is FY28.
Praharsh Rai
So FY28 will see a jump in our top line and bottom line margins.
Sourabh Gupta
Full impact. Yes, we will see in FY28
Praharsh Rai
When the full impact comes in.
Sourabh Gupta
Yeah.
Praharsh Rai
And then what kind of working capital are you looking at for the current financial year?
Sourabh Gupta
And you mean to say working capital loan or what
Praharsh Rai
Working capital requirement
Sourabh Gupta
Will remain the same which is going on in the last quarter? I mean as of September 24th which will have the similar cycle for this year. Because see in the full year you will see a cycle of full season and low season. So September and March both are low season for us. And that is where the working capital increases.
Praharsh Rai
90 day cycle. 90 days cycle
Sourabh Gupta
For 31st March average is 90 days. But as of 31st March it is around about 100 days or more.
Praharsh Rai
Okay.
Pankaj Kumar Ostwal
Already our present working capital has been tied up. And the company has the requisite funds to do their business. And the working capital is around as. As. As Macano told it is. It is around four to five months. And there is no issues in running the present operations of the company. We have adequate funds.
Praharsh Rai
Okay. Got it, sir. And the expansion is from internal accounts, right?
Pankaj Kumar Ostwal
Both debt. Debt. Also I told you in my speech that we have already. The loans have been sanctioned from sbi Federal bank and Active bank.
Praharsh Rai
So what will be the peak debt level? What will be the peak debt level?
Mcenro Samdan
Big debt level will be 350 crores. Yeah. You. You’re. You’re including for next three years. I am saying. Okay.
Praharsh Rai
Yeah. Yeah. For the next three years. For next year doesn’t include the working capital loan, right?
Mcenro Samdan
Come again.
Praharsh Rai
This doesn’t include the working capital loan, right?
Mcenro Samdan
No. See what we foresee is our 350 crores is the term loan which we will see in a long. Yeah. In a peak period which is the term load not the working capital loan.
Praharsh Rai
Perfect. Perfect.
Pankaj Kumar Ostwal
Let me tell you the exact figures. Like we. We will be getting. We getting a loan of 248 odd crores in this new project. And right now we have only around 30. 30 crores outstanding for the present. Present present number. So the peak level for the term loan will be 248 crores. And further we. We have that fertilizer production. Fertilizer production also getting. Getting on. So the peak level will be around 350 crores which will be in the year financial year 2026
Mcenro Samdan
27
Praharsh Rai
Okay. Can you. Will you be comfortable giving a guidance on the pricing pressure of the products?
Pankaj Kumar Ostwal
The pricing. Pricing. Already as I told you there is some increase in raw material prices. So already the manufacturers have started increasing the prices. We have also increased the prices in the market. So as the prices of raw material goes up, we will increase the prices of fertilizers. And if the prices go down, we will decrease the price. Ultimately the target is to give the fertilizers to the the farmers at a reasonable price.
Praharsh Rai
Right. And so for the. For this current financial year, we’ll be maintaining our EBITDA margin, right?
Pankaj Kumar Ostwal
Definitely.
Praharsh Rai
Okay. Okay. That’s it for my side. Sir. Congratulations and best of luck for your future endeavors. Thank you.
Pankaj Kumar Ostwal
Thank you. Thank you very much.
Operator
Thank you. A reminder to all the participants that you may press star and one to ask a question. Our next question comes from the line of Riju da Louis with antique stock broking. Please go ahead.
Riju Dalui
Hi sir. Thanks for the opportunity. Few questions. For DAP and NPK, we have a capacity of 240,000 tons, right? So how much that was backward integrated and like in a percentage term. So how much DAP and NPK is backward integrated?
Pankaj Kumar Ostwal
For phosphoric acid, it is fully antigenic. For ammonia we are buying from outside the sources are Indian Indian manufacturers, also Indian media manufacturers as well as imported imported in the country.
Riju Dalui
Okay, so for phosphoric we are fully backward integrated, right? Okay. So like from where we are supplying we are procuring rock phosphate. For that
Pankaj Kumar Ostwal
We are buying rock facet from Jordan, Egypt and some of the rock which we benefited from buying from low grade and medium grades from the local mine also.
Riju Dalui
Understood? Understood. And Like in Q3 or like in the month of December there was a shop depreciation rupees against dollar. So how it will impact your future procurement? Or like how much inventory do you have in rock phosphate for a low.
Pankaj Kumar Ostwal
We keep on covering the currency as we do the contract. So there is no issue for the for the present businesses and the company’s policy is to keep on covering as we do the contract.
Riju Dalui
Okay. So. So. So sir, like. Like, can you say that we are fully fully hedged in terms of currency?
Pankaj Kumar Ostwal
Yes. Yes.
Riju Dalui
Okay. Understood. But you know, depreciating rupee can impact your your margins going forward. So like, like can you take price hike in future if government do not, you know, do not provide any additional subsidy for that?
Pankaj Kumar Ostwal
See again, in India the government objective or government target is to make availability of fertilizers in the country at reasonable prices to the farmers and that availability should be consistent continuous and regular. And in terms of quantity it should be adequate also. So it is, it is on the government’s part to increase or decrease the subsidies or allow or allow the MRPs to flow at their own. So it is both ways. There is no risk. Either you increase, either the government increases subsidy or. Or we increase the MRT.
Riju Dalui
Understood. And in Q3 you said that the EBITDA pattern for you was 5000 rupees in this Q3. So how much that was in the last year same quarter.
Mcenro Samdan
Just hold on, I’ll just pull out the figure. Yeah, so last year same quarter Q3 24 was 22 25.
Riju Dalui
So there was a sharp jump of 100% or more than 100%. So so like how that was due to, like how much would be due to the subsidy increase in subsidy or how much that would be due to the your, your raw material benefits. So so how we can analyze that like the increase broadly.
Mcenro Samdan
If you see the volume of NPK has increased substantially the contribution vis a vis last year. So last year we had manufactured 32,000 in the same quarter last year and this year we had 46,000. So the mix is more in favor of NPK. And that is one of the key reasons why I can say the attribution was there in addition, obviously there was some increase in the subsidy also yoy and that is also contributed to the increase in EBITDA pattern.
Riju Dalui
Understood. And so like, like was there any, any inventory gain for this quarter and that have that actually pushed your your EBITDA pattern
Mcenro Samdan
Inventory gains. I don’t think so. Is there anything
Pankaj Kumar Ostwal
The subsidy, the subsidy figures do not change in, in this December. It changes in September and it changes in March.
Riju Dalui
Right? Okay. Okay, understood. So so then you were saying that the gain in EBITDA pattern that we have seen this quarter. So that was mainly due to the product mix changes towards npk. So can you say that like, like shortages of gap in the Q3 that has helped a lot to increase in NPK sales volume.
Pankaj Kumar Ostwal
See, one point is this ZAP has been a traditional generic product and definitely it has been a product which has been used by farmers since last 30, 40, 50 years and across the country and across the world. But what has happened in current situation or. Or in last three, four, five years that that right from farmer to the government has understood that the requirement of soils is more of NPK rather than DAP. Because DAP has a standard composition of 1846. And with NPK it has different. Different types of combinations. So definitely the. The farmers as well as the government is trying to shift towards NPKs. And we will. We will see NPKs coming up like anything in future. Also
Riju Dalui
I understood that. But like this year those are gap shortages in the. In the domestic market. So. So like how that help to, you know increase the NPK volumes.
Pankaj Kumar Ostwal
See ultimately India’s demand for cosmetic Fertilizer is around 250 lakh thousand tons of fertilizers in the country. So. And. And which. Which in earlier years it was maximum of DAP. Then death of NPAs. But gradually it is shifting to 50:50 ratio across the country. Definitely it is both. It is. It is. It is the demand from the farmers as well as the shortage of dap.
Riju Dalui
Okay, so you are saying that mix of both.
Pankaj Kumar Ostwal
It is. It is both. It is both requirement from the soil and the shortage of dap. But definitely, but definitely in coming years NPK will be in demand. Because now the farmers have started understanding that product
Riju Dalui
Got. Got it. And the other question was like the. The new capacity expansion that you have mentioned earlier For DAP and NPK 3.3 lakh kind of capacity that you have announced. So will that be fully backward integrated or like how that would be?
Pankaj Kumar Ostwal
In terms of phosphoric acid it is fully integrated. And in terms of ammonia again we will be buying from local media manufacturers as well as importers.
Riju Dalui
Understood. So sir, for fast acid backward integration there are some. You know some byproduct or gypsum kind of thing. So how you are handling those things?
Pankaj Kumar Ostwal
See, gypsum is the only byproduct in case of phosphoric acid. And as you are already aware that most of the phosphoric acid plants are on the coastal areas, right? And we are the only manufacturers who are based in the central part of the country. We have already experience of running this phosphoric acid plants in state of Madhya Pradesh. And we are putting up another plant in Maharashtra. So. And around these plants there are lot of cement manufacturing units are there. Big, big cement manufacturers are there. And this gypsum is going to cement manufacturers and it is being in demand from cement manufacturers. So there is no issue of disposal of dips from right now.
Riju Dalui
Understood. Understood. Okay. Thank you sir. That’s all from my side.
Pankaj Kumar Ostwal
Thank you very much.
Operator
Thank you. A reminder to all the participants that you may press star and one to ask a question. Next question comes to the line of heat with Ashika. Please go ahead.
Heet
Good evening sir and congratulations for the great set of numbers. So my first question is on the structure. So in the OAL Group we have three success company. If you could help us understand how are these three subsidiaries related to each other and the scope of related party transactions as well.
Pankaj Kumar Ostwal
So let me recall history of our hospital group. We we took over this hospital first time India limited way back in 2000. 2001. And then after this we took over this Madhyavara Tiger Products Limited and Krishna Boston Limited and further last minute shrimp and Patriarchy. All these units were taken over. Taken over Completely taken over. Clients at different locations, different geographical locations. And these companies as I told you were at different geographical locations. So they had their own potential to do their business in their geographical locations. Like we talk about Madhyavara Agro Products limited that the unit was taken over as SSP plant. Then we established a beneficiary drop phosphate plant. Then sensitivity gas grade further increase in SSP single phosphate fertilizer. Then phosphoric acid and DAP NPA. And the fertilizer is being sold in that geographical area. It does not clash with any other areas. So this is the since it were taken over. So we have continued with these operations these companies and still propose to continue in the same structure only.
Heet
So we do not have any digital party transactions across the three subsidiaries
Pankaj Kumar Ostwal
Is the holding company. And this Madhya Bharat Krishna first came and then putty are the subsidiary companies. More than 50 of the shareholding in all these three companies is held by.
Heet
Understood? Understood sir and Mr. Management just wanted to confirm that the management team across all the three subsidiaries are different. And I’m saying geographically these three subsidiaries sell to different regions. But on the management structure do we have all the three subsidiaries management different
Pankaj Kumar Ostwal
In fact all the four companies I, I and Savino. Swell. And my father in Gandhi. All. All. All the C.R. director.
Riju Dalui
Okay, sir. Understood sir. And sir, next question is on this QIP. QIP such a 200 approval which the board has given. So what are the plans ielts and what are these funds going to be utilized for?
Pankaj Kumar Ostwal
We. We are coming up with a project whereby we would be in requirement of the funds. And already the funds have been tied up with the bank. But we are approaching the investors to invest in our company. We have already planned and appointed a consultant as well. So he will be taking up that whole process. And so that we can expect to complete this whole process in coming months.
Heet
So this is for the greenfield project which you are the funds which will be raised.
Pankaj Kumar Ostwal
I’m not able to hear you
Heet
Sir. I’m saying the funds which will be raised will be used for greenfield project.
Pankaj Kumar Ostwal
Yes, it will be. I told you about the project.
Heet
Hello. Yes sir.
Pankaj Kumar Ostwal
Will be used in that Maharashtra project.
Heet
Okay. Okay. So. Perfect. Perfect. And so last question is on this maintenance capex across all these three facilities. I mean so let’s just talk about sir the two factories which we are running. Sir I just wanted to understand sir what kind of maintenance capex do we incur every year at this factories
Pankaj Kumar Ostwal
Maintenance expenditure Currently approx. In existing company we have 20 crore rupees per month.
Heet
Okay. So thank you so much.
Operator
Thank you. A reminder to all the participants that you may press star and one to ask a question. Next question comes from the line of web of Bartia with honesty and integrity investments. Please go ahead.
Vaibhav Badjatya
Yeah. Thanks for providing me the opportunity. So I actually missed initial, you know, 10, 15 minutes of the call. So pardon me if I repeat something. You know, government has extended this ad hoc subsidy on dab, I think for till December this year. So given the current subsidy and the MRP fixed by the government, what’s. What’s your assessment on the. On DAP in terms of viability to import and sell domestically?
Pankaj Kumar Ostwal
See if you talk particularly about that or imports still, it is unviable. So our company is already 2013 particular product of NPK is one of the product of NPK. And let’s see what happens in April because after this extension of Rupees 3500 and it’s marking that MRP at 1350. Still with 1350 per bag, it is still difficult. Not. Not a. Not a profit right now.
Vaibhav Badjatya
Okay. Got it. Understand? Yes. Thank you. That’s it. From my size. Thank you.
Pankaj Kumar Ostwal
Thank you.
Operator
Thank you. A reminder to all the participants that you may press star and one to ask a question. Once again, a reminder to all the participants that you may press star and one to ask a question. As there are no further questions, I would now like to hand the conference over to McEnto Samdani for closing comments.
Mcenro Samdan
Yeah, thanks. Thank you everybody for attending the call and we hope to continue this call again next quarter and see you again during the next call. Thank you.
Operator
Thank you. On behalf of Madhya Bharat Agro Products Limited that concludes this conference. Thank you for joining us. You may now disconnect your lines.