Paradeep Phosphates Ltd (PARADEEP) Q3 FY23 Earnings Concall Transcript

Paradeep Phosphates Ltd (NSE: PARADEEP) Q3 FY23 Earnings Concall dated Feb. 01, 2023

Corporate Participants:

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

Sabaleel Nandy — President and Chief Operating Officer

Analysts:

Aniruddh Joshi — ICICI Securities — Analyst

Darshita Shah — Antique Stock Broking Limited — Analyst

Vihang Subramanian — Zaaba Capital — Analyst

Akshat Mehta — Sameeksha Capital — Analyst

Devvrat Himatsingka — Augmenta Research Private Limited — Analyst

S. Ramesh — Nirmal Bang Equities — Analyst

Vignesh Iyer — Sequent Investments — Analyst

Chintan Shah — JM Financial Services Limited — Analyst

Dhwanil Shah — iWealth Management LLP — Analyst

Dhruv Muchhal — HDFC Mutual Fund — Analyst

Manish Mahawar — Antique Stock Broking Limited — Analyst

Rishikesh Oza — RoboCapital — Analyst

Presentation:

Operator

Ladies and gentlemen, good day, and welcome to Paradeep Phosphates Q3 FY ’23 Earnings Conference Call, hosted by ICICI Securities. [Operator Instructions]

I now hand the conference over to Mr. Aniruddh Joshi from ICICI Securities. Thank you. And over to you, sir.

Aniruddh Joshi — ICICI Securities — Analyst

Yeah. Thanks, Lizaan. On behalf of ICICI Securities, we welcome you all to Q3 FY ’23 results conference call of Paradeep Phosphates. We have with us senior management represented by Mr. Suresh Krishnan, Managing Director; and Mr. Sabaleel Nandy, President and Chief Operating Officer.

Now I hand over the call to the management for their initial comments on the quarterly performance as well as nine month performance and then we will open the floor for question and answer session. Thanks. And over to you, sir.

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

Good afternoon, everyone, and welcome to the Q3 FY 2023 earnings call of Paradeep Phosphates. At the outset, let me wish all of you a Happy New Year. This is our first call in the year 2023. And I hope and I’m sure that all of you are staying safe and healthy. We have already circulated our earnings presentation, which is available on our website as well as stock exchange website. I hope you all have had opportunity to go through the presentation and we would be happy to take any questions afterwards.

The fertilizer industry, as you know in India, has seen significant growth in the recent years. Driven by the increased demand for food, a good support from the government, rising awareness of benefits of fertilizers and all major nutrients, including phospharic and the expansion in the industry. The government initiatives on subsidies and incentives to make farmers — fertilizers more affordable to farmers has further led to the growth of the industry. We are pleased to report another robust quarter with our highest quarterly revenue from operations of INR4,398 crores, an increase of 62% year-on year and 54% on sequential basis. The growth was primarily driven by efficient capacity utilization, successful stabilization of Goa plant given our strong supply-side linkages, notwithstanding a volatile global macro environment.

In Q3 FY ’23, we registered strong improvements in EBITDA and margins as well. The EBITDA for the quarter stood at INR3,773 million, registering a year-on-year growth of 76%. Our profit after-tax stood at INR1,803 million compared to INR1,277 million in the same quarter last year, registering a year-on year growth of 41.2%. The margins during the quarter were partially impacted by higher depreciation charges along an increase in finance costs resulting from subsidies, currency instability and slightly higher long-term borrowings compared to the previous year.

The EBITDA per tonne for Q3 FY 2023 was at INR5,985 as compared to INR4,425 in the same quarter last year. Total fertilizer production during the quarter was 621,815 metric tonnes, registering an increase of 66% on year-on year basis. We are happy to report that we have fully stabilized the Goa operations and the plant has been steadily producing both urea and phospharic fertilizers. We have been able to produce to 261,550 tonnes of finished fertilizers this quarter at our Goa plant with several NPK grades like N10, N14, N19, N20 and N24 and 124,271 metric tonnes of urea.

On the Paradeep plant, we have successfully completed the revamp of all the granulation trains. As you know, we have four granulation trains running since — and they have been running since November 2022 and we have achieved a daily average production run rate of 5,000 metric tonnes from December 2022 onwards. This has allowed us to meet our revamp targets and we are eager to continue this steady rate of production at both our plants aligned to the market need with the right product mix.

To further enhance our earning potential, we have embarked on two brownfield backward integration projects, first of which will increase our phospharic acid capacity by 2 lakh tonnes by Q1 of FY ’24. The second is to increase our sulphuric acid capacity from 1.4 million tonnes per annum to 2 million tonnes per annum, which will initially enable us to generate green captive power. At a macroeconomic level, the outlook remains positive with prices correcting and global markets improving post China’s opening up. We are confident that our strong financial results and developments will position us well for continued growth in the future.

These are our initial thoughts and the details have already been provided in our presentation. And we will be happy to take any questions from your end.

Questions and Answers:

Operator

Thank you. [Operator Instructions] The first question is from the line of Darshita from Antique Broking. Please go ahead.

Darshita Shah — Antique Stock Broking Limited — Analyst

Hi. Thank you for the opportunity. What is the — what would be the capacity utilization for 3Q FY ’23 as well as 3Q FY ’22? Hello. Am I audible?

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

Yeah, we’ve heard your question. As far as FY ’23 is concerned, both in Goa and in Paradeep, we are close to working at 95%. And the 5% gap is largely due to the fact that we were stabilizing the plants post our revamps. And as far as FY ’22 was concerned, the last year, Paradeep was operating in its full capacity. And as far as Goa is concerned, we were not running the plant then. So we don’t have the comparable number.

Darshita Shah — Antique Stock Broking Limited — Analyst

Right. Yeah, that’s okay. So what I wanted to understand was, if the capacity utilization was largely the same, what is fueling the 66% volume growth?

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

No. If you look at it… [Speech Overlap]

Darshita Shah — Antique Stock Broking Limited — Analyst

No, no. I just wanted to understand, is it largely due to the market share gain? Have we probably entered into other regions that we were not covering back then? That is what I’m trying to understand.

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

Not really to understand that last year we were running only for Paradeep. This year, we’re running Paradeep and Goa together. And Goa has added 261,000 tonnes additional to the overall volumes that we have. So that’s one of — that’s one primary reason that we get to see. The second reason for the growth is also given the fact that fertilizer prices have gone up, the input prices have gone up and hence the overall market realization has gone up as far as fertilizer is concerned. So it’s a price increase and the volume increase both adding up to the overall increase in revenue.

Darshita Shah — Antique Stock Broking Limited — Analyst

Right. No, I think in your press release you have mentioned there is a 66% volume growth. So that is what I was referring to, not the overall top-line growth.

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

So the 66% volume growth which is coming primarily from our Goa volume of 261,000 tonnes which we didn’t have last year.

Darshita Shah — Antique Stock Broking Limited — Analyst

Right. Okay. So I mean, with respect to market share, if you could give any data? What was the market share right now versus back in 3Q FY ’22? For Paradeep specifically, even that’s okay.

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

Yeah. Under normal circumstances this question would have been relevant. But in the circumstance where the Goa plant was acquired by PPL on 1st of June, 2022, the question is not quite relevant. But at a national level, PPL as an entity would be looking or aspiring to around 12% to 13% market share of fertilizers on an aggregate level.

Darshita Shah — Antique Stock Broking Limited — Analyst

Okay, okay. All right. Also, could you provide the sales volume number for manufactured and what would be the trading?

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

Pretty much everything is manufactured, we didn’t trade.

Darshita Shah — Antique Stock Broking Limited — Analyst

Okay, okay. And sales for DAP, NPK and Urea? I think the ones that you provided are manufactured volumes.

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

Yeah. So I’ll tell you. If you are talking of the numbers for the April to December, for the quarter, the total sales figure for DAP is around 193,000, for NPK it’s 171,000. This is for the quarter. For the YTD, which is April-December, the same numbers are 408,000 and 554,000. These are for Paradeep. For Goa, the numbers would be 247,000 total for the quarter. And for this year, it’s 426,000. These are all thousand.

Darshita Shah — Antique Stock Broking Limited — Analyst

And the same for 3Q FY ’22?

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

No, no. 3Q FY…

Darshita Shah — Antique Stock Broking Limited — Analyst

FY ’22, last year same quarter.

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

For the FY ’22, Goa obviously is not relevant. But as far as Paradeep is concerned, it’s 1,084.

Darshita Shah — Antique Stock Broking Limited — Analyst

Split between DAP and NPK?

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

669 is DAP, 400 is NPK.

Darshita Shah — Antique Stock Broking Limited — Analyst

All right. Okay. Thank you so much for the opportunity. Congratulations on this set of numbers. Thank you.

Operator

Thank you. [Operator Instructions] The next question is from the line of Vihang Subramanian from Zaaba Capital. Please go ahead.

Vihang Subramanian — Zaaba Capital — Analyst

Hi, sir. Congratulations on the good set of numbers, and thank you for the opportunity. Could you provide what is the gross debt, cash on hand and subsidy receivables outstanding as of 3Q?

Sabaleel Nandy — President and Chief Operating Officer

Okay. Anything else?

Vihang Subramanian — Zaaba Capital — Analyst

Yeah. That is my first question and then I have a follow-up, a couple.

Sabaleel Nandy — President and Chief Operating Officer

For fertilizer operations, as we have been maintaining in the earlier calls, we look at long-term debt as the main debt. The working capital debt continues to fluctuate. The long-term debt for us is around INR713 crores. And put together it’s…

Vihang Subramanian — Zaaba Capital — Analyst

The total debt. I want the total gross debt and the cash on hand that we have. Trying to understand what is the net debt and what’s the subsidy receivables outstanding.

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

We have a total debt of INR4,298 crores as on December 2022. And the…

Vihang Subramanian — Zaaba Capital — Analyst

INR4,298 crores?

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

Yeah. Out of this, the long-term debt is INR713 crores and the short-term working capital debt is INR3,585 crores.

Sabaleel Nandy — President and Chief Operating Officer

Subsidy receivable is INR3,457 crores.

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

And inventories are INR2,812 crores.

Vihang Subramanian — Zaaba Capital — Analyst

So the INR4,298 is gross debt, right?

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

Yes.

Vihang Subramanian — Zaaba Capital — Analyst

And what would be the cash on hand that we have?

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

So we — I mean, we primarily have a large limits available from the working capital consortium. And the limits available which we can draw upon today is over INR1,500 crores.

Vihang Subramanian — Zaaba Capital — Analyst

I mean the cash on the balance sheet, sir.

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

No, no, we’ll not show — as you know that we have borrowed. We’re not really showing any surplus cash or invested cash in the balance sheet. And all the cash has been utilized to pay down the working capital plant-based facilities.

Vihang Subramanian — Zaaba Capital — Analyst

So net debt is basically same as — net debt is broadly around INR4,300 crores?

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

Same number, and we have borrowing limits available and drawing power available and that number is over INR1,000 crores.

Vihang Subramanian — Zaaba Capital — Analyst

Got it. And sir, I really thought that the net debt sort of come down more quarter-on-quarter, right, given that we almost got like around INR2,000 crores or so of subsidy payment from the government. So any thoughts on why it didn’t come down?

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

No, it is very — look, the way it works is if debt comes down — because primary composition of the debt, as we said, the long-term debt is only INR713 crores, the primary composition of the debt is buyers’ credit or working capital which is because of subsidy receivables of INR3,500 crores. The subsidy receivables, as you know, the way it works is, the government pays the companies within 15 days of the sales happening. End of December number is not the right number to look at because Rabi has just started or had just started around that time. If the same number were to be looked at end of February or so, the numbers — end of January or so, the numbers come down. But just to give you a feel, we have had a good run in terms of subsidy received from the government. During this quarter, we got INR1,504 crores of subsidy. And the total subsidy that we received over the nine month period is INR2,885 crores. And our market collections have been pretty robust right through.

Vihang Subramanian — Zaaba Capital — Analyst

We got INR1,500 crores, you said, right?

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

Yes. INR1,504 crores during this quarter, yeah.

Vihang Subramanian — Zaaba Capital — Analyst

Got it. Sir — and given you mentioned about February, right, like any guidance on what would be the net debt number by year end?

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

Well, I think the way we look at it is that we are looking at a long-term debt as we have been giving this guidance for a long time is expected to be around INR1,000 crores for us, because by this time we would have kind of completed all our projects. As far as working capital debt is concerned, which is the cash borrowing that we will do from the banking system, it is not expected to increase over INR1,000 crores. That’s the kind of number that we’ve always planned for and that’s the kind of indication that we’re getting. The rest of it will be primarily to do with a supplier or a buyer arrangement that we will do. So these are the two critical numbers that we need to look at. And so based on the subsidy received by 31st of March, the INR1,000 crores number will go up or down and that’s the way we look at it.

Vihang Subramanian — Zaaba Capital — Analyst

So the net debt number of INR4,300 crores should go down…

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

It should not be increasing at all. It should not be increasing. We would be able to maintain those numbers, yeah.

Vihang Subramanian — Zaaba Capital — Analyst

It wouldn’t go down though, but from INR4,300 crores net debt…

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

It could. It could. The way the sales are happening, the progress that we get to see and the way the subsidies will get paid, there is a good possibility for this also to come down.

Vihang Subramanian — Zaaba Capital — Analyst

Got it, sir. Got it. And just on the EBITDA per tonne, do you think 4Q also we could maintain our current levels or do you see this dropping off?

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

Well, we always believe that as far as the phospharic business or the blended business that we look at, INR5,000 per metric tonne is a good EBITDA number to go with. And you would always see a fluctuation in a commodity freight where you would see some quarters which are better. So I think we would like to kind of maintain the same. And we are hopeful that the stability that we are seeing in prices and the improvement that we are seeing in terms of availability could well lead to some improvements.

Vihang Subramanian — Zaaba Capital — Analyst

Got it, sir. And just lastly on the finance cost, could you just give some guidance on how one should think of it?

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

Well, when you look at finance costs today, there are two elements to it. One is the long-term money that we’ve been borrowing with the average cost has been around 8.5% for us. When it comes to the short-term borrowing, in that the kind of weighted average that we’re looking at, at this point of time is about 6.75%. That’s the kind of possibly we are earning today.

Vihang Subramanian — Zaaba Capital — Analyst

Understood, sir. Sure. That’s it from my side. Thank you so much again, and good luck.

Operator

Thank you. The next question is from the line of Akshat Mehta from Sameeksha Capital. Please go ahead.

Akshat Mehta — Sameeksha Capital — Analyst

Hello.

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

Yes.

Akshat Mehta — Sameeksha Capital — Analyst

Yes, sir. Couple of questions. First thing is, can you tell what are the key drivers for this sharp jump in your EBITDA per tonne…

Operator

Sorry to interrupt, Mr. Mehta. Sir, your audio is not clear. We would request you to use the handset mode while speaking.

Akshat Mehta — Sameeksha Capital — Analyst

Am I audible now?

Operator

Sir, slightly better. Please proceed.

Akshat Mehta — Sameeksha Capital — Analyst

Yeah. So my first question is on your EBITDA per tonne. So you’ve done — there has been a sharp jump in your EBITDA per tonne from around INR5,200 normalized EBITDA per tonne last quarter to INR6,000. And so what has been the key driver of this sharp jump in EBITDA per tonne?

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

Well, you must understand here that we’ve been in a process of increasing our capacities. Our fixed cost has remained the same. So the capacity increase have already taken up which is adding to our EBITDA number without having any further increase in fixed costs.

Akshat Mehta — Sameeksha Capital — Analyst

I just wanted to understand that this you’re saying is purely operating leverage. So last — in quarter two, what were your capacity utilization numbers? Your Goa plant was still operational with the three manufacturing…

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

No, last quarter, Goa plant wasn’t operational. We have taken over Goa in the month of June. And only at the end of August that we started operating Goa. And we were stabilizing the Goa operation based on various grades and various combination that we’re looking at. It is only from the month of November that we are seeing we have reached a point where we have a stability and we have a clear plan in terms of how we’re going to use those capacities.

Sabaleel Nandy — President and Chief Operating Officer

In fact, if you remember, when we had the last investor call, this is a point that we had said that we are — our focus in the current quarter, which is October-December quarter, would be to stabilize the Goa operations because the last two quarters before that, while we had just acquired Goa, there were supply chain issues and it was not yet smoothened out. And that’s where bulk of the management attention has been, which is to stabilize and generate steady throughput out of Goa. So that has been the key contributor to the seemingly better performance. Of course, the other factor that has helped us is a generally positive scenario as far as the demand-supply is concerned and a scenario of overall softening or a gradual softening of prices.

Akshat Mehta — Sameeksha Capital — Analyst

Okay. And I just wanted to understand how sustainable is the INR6,000 per tonne number? What kind of outlook should we see for the rest of the year as well as for FY ’24? Where should this number go?

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

Let’s just say, we felt — I mean, it’s our view that as far as the phosphoric business is concerned, INR5,000 metric tonne EBITDA is a good, stable number to look at. So we would like to remain with that. And then you will always have an opportunity in certain quarters where your numbers will look better.

Sabaleel Nandy — President and Chief Operating Officer

We continue to maintain what we have been maintaining right from our pre-IPO days, which is a INR5,000 per metric tonne number. And that’s what we would like to believe will be the number going forward. That doesn’t mean that we will leave any stone unturned to increase that number.

Akshat Mehta — Sameeksha Capital — Analyst

Okay, okay. You mean somewhere we are considering that there will be a fall in number because till now you had very good numbers overall in the nine month period as well. So that can happen. Secondly, I just want to understand what is the kind of capex that you’re going to spend on the two backward-integration projects?

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

As far as the capex is concerned, the primary capex on granulation is already completed. And as far as the sulphuric — phosphoric acid capacity increase is concerned, that overall capex was on the tune of about INR225 crores. And we have spent about 50% of that and the balance will get consumed during the next few months. So that is the capex that is going to be there.

As far as the sulphuric acid project is concerned, that’s a INR425 crores project which is going to be taken up over a period of next two years. So you’re not going to have any bunching up of the capex that’s happening. We are now at an advanced stage of engineering and we would expect the project activities to take — to peak some time in the second half of this calendar year, which will be the second half of the next financial year.

Sabaleel Nandy — President and Chief Operating Officer

So as we are — again, borrowing from the arguments and the discussions that we’ve been having in the run-up to the IPO and the last two calls, bulk of our investments are — have been already put on the ground and we are looking at reaping the benefits of that. One of the points that we have also mentioned in the press release and which we have not discussed so far in the call is the fact that all the four granulation trains in Paradeep have been fully revamped. That was one of the important projects that we were running. And today, as we speak, we are able to generate or realize the targeted per day production numbers from Paradeep fully, which means Paradeep is now running at 1.8 million tonnes annualized run rate. So that’s point one.

And the other project that Mr. Krishnan just referred to, which is related to the phosphoric acid expansion, which is a very, very critical project, is also broadly on track, but running a quarter or two behind schedule, which we will catch-up and we should see that also coming on stream soon. And once that is done, the other project that will be remaining to balance out the requirement of sulphuric acid would be a sulphuric acid plant. But by and large, we are done with very major capex plans. We are in the drawing board to look at the next wave of growth for PPL. And wherever that’s ready, we’ll come back to share that with you.

Akshat Mehta — Sameeksha Capital — Analyst

Okay. So another general broad question on industrial as well. The industry is now moving towards more and more nano fertilizer production. So is there any intention of the company to go towards that production? What do you think would be the impact overall on the industry once nano fertilizer comes in couple of years at large scale?

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

As far as nano fertilizers are concerned, we believe it’s more a specialty product which is — which will be in the category of non-subsidized product. And I’m sure that we will add that to our portfolio going forward. However, nano’s potential today looks like — more like replacing about 10%, maximum of 10% starting with about maybe 3% to 5% in the case of urea. And we’ll have to get to see how much of DAP that it can replace. A good target to begin with would be 5% of the overall market size. But you must keep this in mind that as nano gets in, you also have a growth in the phospharic fertilizers. So what we can very clearly see is that our import dependence on account of growth which is there could well get partially offset by the nano category that will come in.

Akshat Mehta — Sameeksha Capital — Analyst

Okay. Thank you. Thank you for your answer.

Operator

Thank you. The next question is from the line of Devvrat Himatsingka from Augmenta Research Private Limited. Please go ahead.

Devvrat Himatsingka — Augmenta Research Private Limited — Analyst

Hi, sir. Fantastic numbers. Very impressed with the performance. Just wanted to understand a little bit more on the Goa plant acquisition. Currently — I’m sorry, I must have missed this because I had joined the call a bit late. But overall, what is the capacity utilization in Goa?

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

We are — like as you said, we are running at 2,61,000 tonnes of production that we did in the last quarter and Goa is potentially good for about 2,80,000 tonnes in the given quarter. So we’re nearly at the peak level based on the grades that we manufacture there. Urea is running full capacity, roughly 1,350 tonnes per day. And as far as phospharic capacity is concerned, it’s about 2,000 tonnes per day.

Devvrat Himatsingka — Augmenta Research Private Limited — Analyst

Okay. And going forward, if we had to look forward into FY ’24, what kind of volumes could we grow at — like if you had a year-on-year idea, like if you have a target in mind or something?

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

No. Well, we are — see, this year is going to be more like a — we’ve done already 1.4 million tonnes of sales and we could be somewhere in the ballpark of about 2 million tons of sale as we end this financial year and because the current three months are — the second half of this quarter is going to be like off season for the fertilizer market. When it comes to next year, we have a capacity which is close to 3 million tonnes. And so obviously we will be looking forward to utilizing most of it. And so our targets will be based on that. So you should see a good increase from the current levels of 2 million tonnes that we are doing this year for the next financial year.

Devvrat Himatsingka — Augmenta Research Private Limited — Analyst

Okay, okay, noted. That’s all from my side, sir. Wish you the very best for the future.

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

Thank you.

Operator

Thank you. [Operator Instructions] The next question is from the line of S. Ramesh from Nirmal Bang Equities. Please go ahead.

S. Ramesh — Nirmal Bang Equities — Analyst

Good evening, gentlemen. Can you hear me?

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

Yeah, sure. Go ahead.

S. Ramesh — Nirmal Bang Equities — Analyst

Yeah. Thanks for the call and the results. So the first thought is that the phosphoric acid prices have been showing a decline, has there been any impact because of the excess inventory from the second quarter? And how do you see the outlook for the sulphur, sulphuric acid and phosphoric acid prices to the extent that you have to buy it from the market, say, over the next few quarters? What is the sense you have?

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

Well, in terms of availability, we see a stable availability of all these projects. And we believe that the fertilizer raw materials, in general, there pretty much the prices have peaked. So we are seeing a correction downwards. And as I said, that is likely to continue for a couple of quarters the way things are. I think it — and we believe that availability will not be an issue as far as the industry is concerned. And when it comes to inventory, yes, we are a manufacturer, we do carry raw materials with us. And based on, it could well be between 20 days to a 30, 35 days inventory is something that we’re always carrying. So that gets into manufacturing and its corrected in terms of pricing over the period of time.

S. Ramesh — Nirmal Bang Equities — Analyst

Okay, okay. So in terms of the margins you have reported for this quarter, you would have had a certain level of pricing for your fertilizers net of the subsidies. So have you been able to maintain that price per bag price per tonne for the third quarter or have you cut prices?

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

As far as Q3 was concerned, we did not have to cut any prices. I mean, they were pretty stable. And I personally see that as far as the MRP for fertilizer is concerned, we will have a stable regime, maybe a greater of two might [Indecipherable] of changing. But it still looks like a stable here going forward.

S. Ramesh — Nirmal Bang Equities — Analyst

So in terms of your captive production of sulphuric acid and phosphoric acid, what is the percentage of captive production if you look at your Paradeep fertilizer unit?

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

Well, as far as sulphuric acid is concerned, we pretty much meet all our requirements from our own production. As far as phosphoric acid is concerned, we’ve already beat — we’re currently at about 70% in terms of a backward integration. And with the new capacity coming in, we could be closer to 90% as far as Paradeep is concerned. In case of Goa, we will be in for all our phosphoric acid as required.

S. Ramesh — Nirmal Bang Equities — Analyst

Okay. So the sulphuric acid expansion is primarily for your additional phosphoric acid production. Is that right?

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

Absolutely, absolutely. Yeah, that’s right, yes.

S. Ramesh — Nirmal Bang Equities — Analyst

Okay. Thank you very much, and wish you all the best.

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

Thank you.

Operator

Thank you. The next question is from the line of Vignesh Iyer from Sequent Investments. Please go ahead.

Vignesh Iyer — Sequent Investments — Analyst

Hello, sir. Congratulations on good set of numbers. I just wanted to ask about, if I’m not wrong, your capacity is around 30 lakhs MT, right? And you were saying that you had a utilization of roughly 95%. So were you speaking about all the fertilizers or DAP and NPK only?

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

When you look at it, our current run rate is at 30 lakh tonnes per annum. So when we started this year, we had only 15 lakh tonnes as far as the capacity was concerned, that’s only Paradeep. We added Goa in the month of June. And Goa has finally got stabilized. And as we had mentioned that it will take us some time to stabilize Goa. During this quarter, Goa has got stabilized.

So we have been using whatever capacity was available which was the Paradeep to over 95% capacity because we were having one train always under revamp, and all the revamps have been completed. So we are in a position to run all our four trains effectively. As far as Goa is concerned, right through from the time of acquisition, we have been able to run our urea plant to full capacity. Phospharic plant after finding out all the issues on supply chain, now since October-November, is running at a pace which is close to 90% capacity utilization.

Vignesh Iyer — Sequent Investments — Analyst

Okay. So would it be fair to assume that for the quarter four we can do somewhere around 7 lakh tonnes and for FY ’24 around 28 lakh tonnes or 27 lakh tonnes roughly?

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

Well, as far as quarter four is concerned, second half of the quarter four is an off season, so we’ll have to take all the terms of market demand. So we believe that we will — I mean, we should do a good quantity. I mean, it may not be 7 lakh tonne, but we will be more like in a 6 lakh tonne number or something is should be feasible. And we would have a complete clarity by end of February as the season ends. And based on the market requirement, we will be producing. And you’re right, I mean, we have a capability to take the capacity utilization and production to 28 lakh tonnes next year.

Vignesh Iyer — Sequent Investments — Analyst

Okay, sir. Thank you. That’s all from my side. Thank you.

Operator

Thank you. The next question is from the line of Chintan Shah from JM Financial. Please go ahead.

Chintan Shah — JM Financial Services Limited — Analyst

Hi, sir. Thanks for the opportunity. So I just wanted to see in case of the current raw material pricing scenario, just wanted your sense on how do we expect the subsidy component to play-out? And how would that impact the margins going ahead?

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

Well, if you look at it right since 2019, the subsidy per tonne per phospharic fertilizer has only gone up. And if we look at it today, it’s roughly about 70%. 67% to 70% is the subsidy for the phospharic fertilizer. We believe that going forward with prices getting corrected and MRP is being at what level that we see, the subsidy per tonne will come down and the proportion of market prices to the overall realization will keep increasing.

Chintan Shah — JM Financial Services Limited — Analyst

So on a net-net, we should maintain our profitability?

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

Yeah. I think there is every case for us to really maintain profitability in general. And — but given that the industry has been affected by geopolitical reasons in the last year since February and we are bit confident that that particular event has been handled well and the global markets are stable. And it will be good to see the sector on a quarter-to-quarter basis as you get these global situations evolve. But one big positive that we are getting to see is the stabilization in China, which we believe is on the whole good for the sector.

Chintan Shah — JM Financial Services Limited — Analyst

Okay. Got it. And secondly, DAP. How do we see the imports playing out? Could that be a spoilsport [Phonetic] in coming quarters?

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

Well, as far as imports of DAP is concerned, the availability of DAP is there. And I think India’s current position of DAP in terms of closing stock for the next season looks to be quite good. And we don’t at this point of time see challenges in import of DAP.

Chintan Shah — JM Financial Services Limited — Analyst

Okay. Got it. And lastly, with this expansion largely done, and in the quarters — probably next quarters it will probably ramp up completely. Just wanted a sense in terms of growth perspective from FY ’24 and beyond, do we have any other plans with plant capacity or we’ll look at some other product, etc., if you can throw some light on this?

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

Well, from FY’ 24 onwards, as we said, we’re going to have some of the efficiencies kicking in from the backward integration. So that’s going to make a difference. As far as Paradeep is concerned, there is phosphoric acid efficiency coming in. As far as Goa is concerned, we’re doing an energy efficiency improvement in Goa in urea, ammonia urea complex. The benefit of it will come in the fourth quarter of next year. And so these are initial benefits which are there. And as we said earlier, we are back to the drawing board in terms of looking at FY ’25 onwards. I think we got our handful as far as ’24 is there. And for what we need to do from ’25, we will work on it. And the one important project that can kick in, in FY ’25 is also the completion of the sulphuric acid project.

Chintan Shah — JM Financial Services Limited — Analyst

Okay. Got it. Understood. That’s it from my side. Thanks.

Operator

Thank you. We’ll move on to the next question that is from the line of Dhwanil from iWealth. Please go ahead.

Dhwanil Shah — iWealth Management LLP — Analyst

Congrats on a great set of numbers, and thank you for the opportunity. Sir, am I audible?

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

Yes, yes.

Dhwanil Shah — iWealth Management LLP — Analyst

Yeah. So sir, just couple of questions. First on — again, sir, on the volumes that you were saying that we did close to 6,21,000 this quarter. And ballpark, sir, on the quarterly side, at the optimum level, we can do somewhere around 7 lakh, 7.1 lakh, which is around 28 for the…

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

Yes.

Dhwanil Shah — iWealth Management LLP — Analyst

So sir, from here on, incrementally the true capex which we are doing is more on the backward integration and they won’t help us in adding more volume, right? So from here on, sir, how do we see volume growth shaping up once we reach almost — currently we are at 95%.

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

If you look at it, this financial year, we will end up with about 2 million tonnes. And so we have to travel from 2 million tonnes to 3 million tonnes, which you will get to see in the coming years.

Sabaleel Nandy — President and Chief Operating Officer

And just to add, there is no company which you will see, at least in India, which — whose sales volume is equal to production volume. Most of them also have a top up of traded volumes, which we have not yet intentionally embarked upon and the advantage or the efficiency that kicks in with an additional traded volume is because from the same fixed cost base of the sales and marketing network, we can churn out more volumes through imports. So that will also kick in. The main reason why we feel that the company has not gone into it is because we were in the middle of a very aggressive expansion program.

In Paradeep, we are moving from 1.2 to 1.8. Goa, we were taking on another 1.2. So for the next three years, see, the management team is completely — we have our hands full. As far as the volume growth is concerned, there are many areas from which this volume growth will come.

Dhwanil Shah — iWealth Management LLP — Analyst

Okay, okay. So you are saying that the imports or the trading can be done to increase the volume, correct?

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

Yes, yes.

Dhwanil Shah — iWealth Management LLP — Analyst

Which currently we aren’t doing it?

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

Yes.

Dhwanil Shah — iWealth Management LLP — Analyst

Because we are utilizing our own capacity. Got that, sir. And sir, when we do the trading, so in that case, what is the EBITDA per tonne that you generally make on that?

Sabaleel Nandy — President and Chief Operating Officer

In case of trading, contribution is equal to EBITDA is equal to PBT, because it is going to be riding on the same sales and marketing networks.

Dhwanil Shah — iWealth Management LLP — Analyst

Correct, correct. But I wanted to understand on the EBITDA per tonne. So INR6,000 is what currently we are doing…

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

It depends on global prices.

Dhwanil Shah — iWealth Management LLP — Analyst

[Speech Overlap]

Sabaleel Nandy — President and Chief Operating Officer

It will be lower manufacturer. Say, INR3,000, INR3,500 is a decent number to take.

Dhwanil Shah — iWealth Management LLP — Analyst

Got it. Got it. And just one last question. The phos acid backward integration, so how to understand the impact of that, sir? So in terms of our EBITDA per tonne would increase, how to understand that, sir?

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

It’s a deficiency improvement, so it will have to reflect on EBITDA per tonne. And I’m sure we’ll get a chance to discuss this in the next earnings call here once we’re done with MTR [Phonetic]

Dhwanil Shah — iWealth Management LLP — Analyst

Okay, okay. Because in the earlier call, you were saying that INR1,000 to INR1,500 is generally the conversion, which you will be able to get, right?

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

Yes.

Dhwanil Shah — iWealth Management LLP — Analyst

Got it. And what is the capacity, sir, we are putting in phos acid?

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

200,000 tonnes.

Dhwanil Shah — iWealth Management LLP — Analyst

And which will start from Q1?

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

We are expecting that the plant shifted into a conditioning mode in Q1.

Dhwanil Shah — iWealth Management LLP — Analyst

Q1. Great, sir. Thank you, and all the best.

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

Thank you.

Operator

Thank you. [Operator Instructions] The next question is from the line of Dhruv Muchhal from HDFC Mutual Fund. Please go ahead.

Dhruv Muchhal — HDFC Mutual Fund — Analyst

Hello.

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

Yes, we can hear you.

Dhruv Muchhal — HDFC Mutual Fund — Analyst

Thank you so much, sir. Sir, I just wanted to reconfirm the sales numbers. For Q3 this year, it is 6,11,000 tonnes and for Q3 last year it was 4,94,000 tonnes, right sir?

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

Yeah.

Dhruv Muchhal — HDFC Mutual Fund — Analyst

And sir, you mentioned the subsidy this quarter end is about INR3,400. What would this be at the end of the September quarter?

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

At the end of the September quarter, the subsidy. We got INR1,504 crores of subsidy. At the end of — subsidy outstanding at the end of September was INR2,252 crores.

Dhruv Muchhal — HDFC Mutual Fund — Analyst

INR2,252 crores, got it.

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

Our subsidy is going up today because we’re producing more. Our volumes have substantially increased. So you would see…

Dhruv Muchhal — HDFC Mutual Fund — Analyst

[Speech Overlap] versus Q4. And the number that you mentioned, INR1,500 crores, that you have received in Jan, right sir?

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

Yes. This is what we received during — for Q3 quarter, between September — October, November, December.

Dhruv Muchhal — HDFC Mutual Fund — Analyst

Thank you. And sir, just on the EBITDA number. Now if I look at the number per tonne and considering that you probably had some higher cost inventory. And also the manufacturing spreads, if I’m not wrong for phos acids have a bit lower versus the last quarter. The EBITDA per tonne number seems quite strong. Also in context of the urea volumes, you had decent urea volumes even this quarter, which I believe is not as profitable as the normal fertilizer, the NPK fertilizers, what have you. So just wanted to understand better on the EBITDA per tonne. Is it probably seasonal which is driving this or there can be further upside to — significant upside, because versus your guidance there’s no significant difference, INR7,600 probably — a further INR6,000 versus INR5,000 your guidance?

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

Well, if you look at it — as far as EBITDA is concerned, one is, manufacturing efficiency, number one. The second most important thing that I had mentioned earlier was that we started increasing our volume with the same fixed cost. That makes the difference. The fixed cost that we’re carrying in the last quarter, Q2, the similar fixed cost that we’re carrying in Q3, but our volumes are different. And so the incremental volume which is coming in, there again your contribution becomes A equal to EBITDA. It doesn’t have to have any other fixed cost at all. So that is the impact that you’re getting. So the volume — the increase in volume at the manufacturing site is what is driving this.

Dhruv Muchhal — HDFC Mutual Fund — Analyst

Sure. But the understanding is fair, right? The manufacturing split is probably where on benchmark level is probably lower. So despite that, the overall EBITDA is still better?

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

No, no, as far as the right across all product mix, I think we’ve had good EBITDA and we have made various grades of fertilizers which have kind of worked for us. So what was your question? What exactly do you want to know?

Dhruv Muchhal — HDFC Mutual Fund — Analyst

So if I just adjust for the urea volumes, your EBITDA per tonne will be even better, because that’s probably is the right way to understand, because urea is…

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

It’s always will be — it is the case. But you know, urea is a stable product with the stable EBITDA.

Sabaleel Nandy — President and Chief Operating Officer

As Mr. Krishnan mentioned earlier, we are telling you the EBITDA that we have achieved this quarter and the guidance going forward, which is around INR5,000. We’ll try to exceed that, but we’d like to maintain that as the number. The reason being, we’ve just had one quarter of steady Goa performance. We would like to repeat that for a few quarters before being able to increase that guidance, in case that’s what you’re going towards.

And the fact that we had urea, unlike some of our competition, is actually a derisking strategy, because there will be quarters, there will be years when urea will be good, especially in scenarios where gas prices are high, etc. As we are — as you are probably alluding to. So this — the balanced portfolio that PPL has compared to some others is working. And that was one of the reasons why we decided to go after the Goa plant to increase or diversify our product portfolio beyond pure phospharic place. It is going to be an advantage and we may see more of it going forward.

Dhruv Muchhal — HDFC Mutual Fund — Analyst

Sure, sir. That’s helpful. Sir, just one last thing. Is Goa your plan was to shift more towards the NPKs rather than DAP, if I’m not wrong. So based on probably your early performances, is that on track or do you see…

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

Absolutely. It is completely on track and we made some small quantities of DAP. We’ve tested all the grades including DAP as far as Goa is concerned. But if you look at it during the last quarter, we have made N14, N19, N20, all grades that we made out there.

Sabaleel Nandy — President and Chief Operating Officer

So of the 247,000 tonnes in Goa, only 19 is DAP.

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

Rest is NPKs.

Dhruv Muchhal — HDFC Mutual Fund — Analyst

Okay, perfect. Thank you so much, sir. That’s all.

Operator

Thank you. [Operator Instructions] The next question is from the line of Manish Mahawar from Antique Stock Broking. Please go ahead.

Manish Mahawar — Antique Stock Broking Limited — Analyst

Yeah, good evening, sir. In terms of EBITDA per tonne perspective, as you said, a INR5,000 per tonne of margin, it is blended, right? It’s phospharic as well as urea blended margin you talking about?

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

Yes, yes.

Manish Mahawar — Antique Stock Broking Limited — Analyst

Okay. And going forward, once your backward integration in terms of phosphoric acid and sulphuric acid will be in place in FY ’24 end I would say, ’25, the capacity available like what type of EBITDA per tonne we can make or if you can say basically what type of benefit — EBITDA benefit can come from these two projects?

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

As we look at it, the volumes are going to be — the volume growth is also going to drive the overall absolute rupees crores of EBITDA which is going to be there, which you will get to see in FY ’24 and also the benefit of the phosphoric acid capacity. And that’s certainly going to add and it is our backward integration will go up from 70% to 90% in Paradeep, yeah. But I think, Manish, the best thing is these are all commodities, volatile markets and we should be clear that all this is going to be positive as far as the company is concerned. And as we come to those quarters when we’ll start producing, we’ll discuss it. But we are very confident that all of it will be positive for us.

Manish Mahawar — Antique Stock Broking Limited — Analyst

Okay. That was my point, actually basically can we make — we can make a higher EBITDA what we are guiding for at the moment and it is conservative at the moment, right?

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

I think INR5,000 to be an average EBITDA given the kind of products which we have. Given the efficiencies that we’re going to bring in, I’m sure the objective is to increase the EBITDA, as we have mentioned earlier. We would look at a better guidance every month [Indecipherable].

Sabaleel Nandy — President and Chief Operating Officer

And just to add to what Mr. Krishnan said, EBITDA per tonne is also a function of the prices of rock phosphate phosphoric acid. And our long-term contract was such that we get [Indecipherable] percentage, etc., etc., all those things come in. This INR5,000 per tonne is an EBITDA per tonne number that we keep saying which we’re saying we’re going to maintain. But as you realize, when the prices go down, we will also shift the discussion to an EBITDA margin, which will start to show much better. So in a scenario where the prices are very high, we don’t talk of EBITDA margin, we talk of EBITDA per tonne. But when prices will go down, we will shift the discussion to EBITDA margin.

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

And as far as this industry is concerned, it’s important to note that the volumes are important and the quality of the volumes are equally important. So I think that is exactly where our focus is. And the quality of volumes that you will get to see from us will finally determine the kind of EBITDA that we will generate.

Manish Mahawar — Antique Stock Broking Limited — Analyst

Understood. And in terms of a mix perspective in finished goods, last year we sold around 7 lakh tonne of DAP. Going forward, incremental whatever volume we sell, it is towards the NPK side, most of it, right?

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

Yes. So actually, from a production capacity point of view, we are in a position to make of the 3 million tonnes or 30 lakh, you leave aside 4 lakhs, you are left with 26 lakhs. We can make 20 lakh tonnes of DAP, if it is needed. However, our choice of product is determined by what our farmers need. And of course, a consideration of what kind of contribution we’ll make from those products. That’s what determines the product market choice.

Having said that, this year, we have deliberately reduced or subdued our DAP production and DAP sales. We will continue to look at dynamically the scenario of the market and decide which products to make. The important point which we would like you to understand is the flexibility that the production plants have which many other competition does not have. They’re stuck — they kind of — they have to non-DAP product per force or a DAP product per force, which is not the case with us.

Sabaleel Nandy — President and Chief Operating Officer

Look at our last quarter performance. Our DAP was down by 10%, whereas our NPKs like N20 was up by 33%. And when it comes to other specialized grades of NPKs, which we look at in Goa, it’s like 500% increase was there in the quantity. So this has been the change that has come into the overall product mix.

Manish Mahawar — Antique Stock Broking Limited — Analyst

Okay. But my limited point is that going forward in terms of overall volume, your mix in terms of NPK will increase or it will remain at the same as what we are seeing DAP products…

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

So we could increase depending upon the needs of the farmer and how the liquidation happens. As we said, we have a very good capability today. We are a highly fungible granulation trains across Goa and Paradeep. So we will take a call as we go forward based on what market requirements are there.

Manish Mahawar — Antique Stock Broking Limited — Analyst

Okay, understood. And last point, Mr. Krishnan, if you can throw some your thought in terms of a government subsidy provision for the next year, which is…

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

What we saw in the budget was 1,75,000, which is a good number and which could be as good an estimate as you can get today. And we feel that it’s been in for a healthy number.

Manish Mahawar — Antique Stock Broking Limited — Analyst

Okay. And what’s your expectation for the phosphoric acid price maybe for coming quarter or so? It will come down?

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

For this quarter it will come down, for sure, Q4. And the trends that we are looking at it is that maybe this quarter, next quarter, you would see correction downwards. And post that, we will see.

Manish Mahawar — Antique Stock Broking Limited — Analyst

Okay. But what — the contract has yet to be finalized for the 4Q, right?

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

Yeah. I think they’re in pretty advanced stage. I’m sure you will get to hear it soon.

Manish Mahawar — Antique Stock Broking Limited — Analyst

Okay, understood, sir. Sure, sir. Thank you, and all the best.

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

Thank you.

Operator

Thank you. The next question is from the line of Rishikesh from RoboCapital. Please go ahead.

Rishikesh Oza — RoboCapital — Analyst

Hi, sir. Thank you for the opportunity. Firstly, just wanted to know if my understanding is correct here. This next year we can do 28 lakh of sales and — lakh tonnes of sales. And on that, the steady state EBITDA per tonne of INR5,000 per tonne. And assuming, provided that prices won’t go down, are we talking about like almost INR1,400 crores of EBITDA potential.

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

If you look at our investor presentation during IPO, this is the kind of growth that we have projected, yes.

Sabaleel Nandy — President and Chief Operating Officer

Does that surprise you? We have been saying that in all the calls, in all the — for the last one year or more.

Rishikesh Oza — RoboCapital — Analyst

Okay, because I’m…

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

Sure.

Rishikesh Oza — RoboCapital — Analyst

Okay. And second, sir, can you provide debt outlook for FY ’23 and FY ’24?

Sabaleel Nandy — President and Chief Operating Officer

What is it? I didn’t get the question.

Rishikesh Oza — RoboCapital — Analyst

Can you provide debt outlook for next two years, sir?

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

So what outlook do you want, sorry?

Rishikesh Oza — RoboCapital — Analyst

Debt outlook, sir.

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

See, as far as the long-term debt is concerned, we’re pretty much keeping at INR1,000 crores and it will keep coming down from there on. So we’re not expecting that to happen.

As far as cash-based working capital is concerned, as we said that our — we are trying to run at a level between INR1,000 crores to INR1,500 crores between the two units. As we speak, we are below the targeted number that we are in. We will always have a suppliers’ credit which is primarily a suppliers’ or a buyers’ credit arrangement based on the purchases that we do. That will primarily depend upon global prices. As we get to see global prices coming down, I believe that those numbers will be significantly corrected.

Sabaleel Nandy — President and Chief Operating Officer

Yeah. And as we were mentioning earlier that the number that we actually look at internally is the long-term debt because the short-term debt is well covered through, on one-side, it’s largely comprised of subsidy receivables, which is in a short money that comes and also against the subsidy receivables we have enough and more working capital limits at very attractive rates for us.

Bringing in the earlier question, if we can actually realize the kind of EBITDA number that we are talking of, we would be long-term debt-free in two years, but that’s not the position that we would like to go to, which means that we would have run out of ideas to expand the company which will not be the case with us. So by the time we reach that, we could have other ideas to expand the organization and invest in profitable areas for future growth.

Rishikesh Oza — RoboCapital — Analyst

Okay, sir. That was helpful. Thank you very much.

Operator

Thank you. Ladies and gentlemen, that was the last question. I now hand the conference over to the management for the closing comments.

Narayanan Suresh Krishnan — Managing Director and Chief Executive Officer

Well, thank you everyone for joining our call. We are confident and we are quite keen to grow the way we have indicated to you in this call and the presentations that we have made earlier. Our team remains focused on executing our strategy and delivering value to our shareholders. We appreciate your continued support and we look forward to connecting with you all in the coming days. If any question remain unanswered or do you have any further questions, please feel free to connect to our Investor Relations team. Thank you.

Operator

[Operator Closing Remarks]