Coromandel International Ltd

NSE:COROMANDEL

Q2-2026 Earnings Call

[Operator]

Ladies and gentlemen, good day, and welcome to the Coromandel International Limited Q2 FY '26 Earnings Conference Call hosted by PhillipCapital India Private Limited. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Harmish Desai from PhillipCapital. Thank you, and over to you, sir.

[Harmish Desai, analyst]

Thank you, Sarthak. Good evening, and welcome to the second quarter and half year FY '26 Earnings Call of Coromandel International Limited hosted by PhillipCapital. From the management, we have Mr. Sankarasubramanian S., Managing Director and CEO; and Mr. Deepak Natarajan, Chief Financial Officer. 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. Sankarasubramanian S., followed by Mr. Deepak Natarajan for update on financial performance, post which we'll have a Q&A session. Thank you, and over to you, sir.

[S. Sankarasubramanian, executive]

Good afternoon. Good afternoon, everyone, and thanks, Harmish, for organizing this call. I'll give a brief on business environment experience during Q2, followed by company's performance.

India as a whole received above normal monsoon at 108% of the long-term -- long period average. Widespread rains across India, except for a few pockets in Eastern India. This resulted in higher Kharif acreage of 1%. The major rains recorded in rice, pulses and core cereal, whereas the carton and oilseed there has been a degrowth, recorded [ lower sowings ]. However, excess rains, unseasonal rains which happened in August and September, has affected the standing crops and also impacted the application of crop inputs as well as specialty products.

Northeast monsoon, which brings major rains in Tamil Nadu, Rayalaseema, Andhra and Karnataka, also began on a positive note and IMD has forecasted above-normal rains at 112% of the long period average for the season.

Our reservoir levels are quite healthy, standing 4% above last year level and also 16% above normal storage. Overall, we are looking for a very bountiful rabi season. South India is 123% of the long period average in terms of reservoir level, which is very good in our key addressable markets.

On the policy front, the government has been taking proactive steps on agriculture and supporting agriculture, supporting agri-inputs, announced the MSP revision for the rabi marketing season with overall increase of 4% to 10% taken across various crops. As you know, during this quarter, the self-reliance in pulses mission was launched, which is aiming to make India's self-sufficient and pulses production. Outlay of INR 11,000 crores has been earmarked for this, and we expect to give output of [ 23 ] million tonnes of pulses in financial year '24-'25 to [ 33 ] million tonnes in 2031 through increased coverage, guaranteed procurement and quality seed distribution and enhanced value chain support.

Along with various other reforms taken on the GST front, I think agri-input sector has also been considered for the GST correction, which has been very beneficial for the sector. Several products such as micronutrients and biopesticides, agriculture machinery and solar equipment, the rates have been reduced from 12% to 5% and industry has passed on the benefits of these rate revisions to the farming community. In respect of fertilizer, as you know, we have this inverted duty structure where output is 5% and input is ranging between 5% to 18%. This time, GST announcement has come in for reduction of GST rate for ammonia and sulfuric acid from 18% to 5%.

So in the case of fertilizer industry, the inverted duty structure remains and the credit accumulation happens. We have been working with the government to give clarity for refund of this accumulated credits. But with this rate revision, the accumulation for the industry has come down, which is a good sign.

And as you all know, the NBS rate which gets announced once in 6 months, has been announced for the rabi season with a 10% increase for P and status quo maintained for N and K. While this may not be reflective of the current raw material prices, we have seen some spurt happened in the ammonia and sulfuric -- sulfur -- sulfuric acid prices in the recent past. But we do have -- expect that the raw material prices will soften over a period of time.

Certain raw material inputs like urea or rock phosphate, we have seen softness and even the international DAP prices have started softening, which will cascade into other input raw material as well. So I think as a responsible industry player, we will ensure that with this announced subsidies, with a better negotiating ability on the raw material side, we should be able to sustain the operations and production and ensure the availability of fertilizer to the farming community. The prompt announcement of the NBS rate is very helpful in giving [indiscernible] ahead of the rabi season.

Coming to industry performance, raw materials almost barely steady across the various categories, except for the spike which happened in ammonia and sulfur in the middle of the quarter. The sulfur prices went up very high and the ammonia because of unplanned shutdown happened in Middle East, hardened during the end of the quarter.

Phosphoric acid price last quarter has been negotiated better in Q2, has moved up marginally from INR 1,258 to INR 1,290 and that ensures the availability of critical input for the entering rabi season. So we do hope that there should be a downward correction in sulfur prices in the days to come. International DAP prices with improved availability has started softening and I hope this trend will continue to [ augur ] well for our sector.

If you all look at the consumption of phosphatics, overall, it remains the last year level, but it's heartening to note that the share of NPK in the overall phosphatic consumption has moved up to 64%. If you all recollect, this used to be 50-50 in favor of DAP and NPK and things, this has moved up to 64%, which is good for balanced nutrition. Slowly, the adoption of NP, NPKs in the Northern markets has started increasing trend, and this [ augurs ] well for Coromandel, which is predominantly into NP, NPK manufacturing.

I think during Q2, industry has worked very closely with the government in ensuring availability of DAP. The imports gone up significantly during this quarter. And also on a half yearly basis, adequate DAP has been procured, which ensures that the industry carries enough inventory as we move to the rabi season. So overall, because of the unseasonal rains witnessed in August and September, the consumption for the industry has dampened.

Otherwise, it have grown much better than what it has been now. Still this consumption is healthy at 121 lakh tonnes for the half year. And the imports have gone up significantly, as I mentioned, it's mainly driven by DAP. And industry continues to sustain the production of both DAP and NPK in spite of various geopolitical challenges. The industry could secure raw materials and ensure production is happening.

In the crop protection sector, overall inventory hangover has got normalized, and this is helping in improved volume offtake of key molecules. In India, here again, the excess unseasonal rains of August, September has impacted the spraying application kharif window. But however, with the improved outlook for the rabi season, these volumes will be made up in the rabi coming months.

Coming specifically to company's performance, I'm very happy to report very resilient performance by Coromandel for the quarter across all business segments, and thanks to improved offtake of agri-inputs. Company's fertilizer plants operated above its capacity, producing close to 9.1 lakh tonnes of NPK, up by 3% over last year. This could have been better except for some stock outage we had due to ammonia disturbance witnessed during September.

It's very important to note that the company's phosphoric acid facility has reported enhanced production through debottlenecking efforts, and that has also reflected in the financials, is up by 13%.

The production for the half year has been healthy at 17.5 lakh tonnes, 5% growth over last year. And phosphoric acid has grown up by 17% over last year with the same plans what we established until last year. Backward integration project for sulfuric acid and phosphoric acid is coming up in Kakinada. It's progressing well. 90% of the project targets have been achieved. And I'm sure mechanical completion will happen in the coming quarter and the commissioning of plants would happen in January. This is going to be the state of the plant with the new technology and also help in generating power which can meet the entire power requirement of Kakinada. It's completely going to change the cost profile of the Kakinada operations from being an importer of acid to integrated play.

And as you all know that we are already securing rock phosphate from Senegal. The operations are getting stabilized. The timing with the commissioning of this plant and Senegal rock will be flowing into Kakinada and blending it with other existing rocks. We are very confident of ramping up the phosphoric acid volume in a short period of time. We can see this benefit flowing into fourth quarter of this year. We have initiated activities on NPK capacity enhancement at Kakinada for 1 million tonne capacity. It is likely to be completed by third quarter of next year. The project is progressing well.

As you all know, the company also signed up strategic supply contract with Ma'aden for DAP, the Saudi Arabian phosphatic major, and also for securing long-term stock contract from Jordan.

On the marketing side, we are happy to state that we have become the largest marketer of phosphatic fertilizers in the country. Our consumption-based market share in H1 stands at 19% versus 17% last year. In Q2, we registered a volume increase of 7% and 14 lakh tonnes of NPKs and DAP. Share of unique grade stands at 36%, similar to last year. Our H1 volumes are up by 17%, in line with our approach to expand presence in North and Central India. We have enhanced our sales to 200,000 tonnes in the first half. This [ big ] marketing effort will [ augur ] as and when the new plant gets commissioned next year.

SSP volumes were close to last year level and is 6% up over last year, but they have completely changed the business profile of SSP. Instead of chasing volumes, we are focusing on value-added products like Gro Plus, Gro Alpha, which has improved the margin structure, also ensure that we provide multi-nutrient single super phosphate to the farming community to replace DAP.

This initiative of Coromandel to provide SSP plus urea, SSP plus micronutrients has been quite helpful to meet the shortage of DAP in the northern markets, and they provide a suitable alternative to crops like groundnut. These products currently account for more than 50% of our overall SSP volume, which is coming through this unique granulation, which Coromandel has been introducing over the last 2 years.

Our market collections have been quite strong, supported by strong agronomic activities and government's timely disposal of subsidies. We may see the higher elevated numbers of subsidy in early September, Q2 being the major quarter for us, the subsidy outstanding is higher, but we have since collected in October, and we should thank government for timely disbursement of subsidies which were received even up to third week of September.

Specialty Nutrient business registered a very strong quarter, improving the sales and margin. We have reported a [ 20% ] growth in revenue and focusing on improving the volume of sulfur with the capacity expansion we undertook last year. They are trying to diversify the sulfur portfolio to include sulfur plus micronutrients. They're also looking at seriously on granulation in specialty, including [seaweed granulation] and also diversified the product portfolio.

With the increased demand for the specialty nutrient business, which is coming outside the subsidy scope, provides higher EBITDA margin, company has announced investment in MAP, which is a critical raw material required for manufacturing specialty nutrients. This project is coming up in Vizag, and this will help us to reduce the dependence of one of the key raw materials for water-soluble fertilizers from China. These investments in granulation plant, MAP plant will help the company to diversify the product portfolio and promote resource efficient solution for the farmers and also offers growth opportunity by ensuring availability of these key nutrients at affordable prices to farmers.

Nano has been doing good. We have been systematically educating the farmers across India and volume during the quarter has been [ 1,100 KA ]. The response from the farming community has been very good on certain crops and fruits and vegetables. Business has been continuously focusing on facilitating the movement of these materials to the farming community and creating awareness campaigns and continuously engaging with farmers and channel partners. We have also been engaging with the [indiscernible] institutes and other technical institutes to spread the positive effects of Nano, which can be an alternative to imported DAP.

Coromandel's spraying services through drones has gained momentum. And in fact, we could cover almost 80,000 acres in the current year for the first 6 months as against 22,000 what we did last year. The retail business has been expanding its footprint of opening our store a day, and we have opened 100 stores in Q2 and totally 170 stores opened in H1. We have entered into new states like Maharashtra, Tamil Nadu, and we are on track to reach the critical store size of 1,200 stores.

All segment categories in retail have done very well. There has been an increase in volume of fertilizer sales through the retail outlets, and the business is progressing well on multiple initiatives like e-commerce, drone spraying services, diversifying to financial products, including insurance.

Company is drawing a blueprint of scaling up these retail stores to 2,000 expand the product portfolio, enhance the value and will be effectively deploying analytics and AI on the customer-facing business segments like retail to enhance the efficiency and improve the profitability of this business.

On the Crop Protection Bio business, the business delivered a very good performance, recording improvements in both sales and margins across domestic, international and B2B segments. [ Dry ] products business also achieved growth in the half year period.

Overall, revenue grew by 10% to INR 829 crores and EBIT was up by 48% to INR 162 crores in Crop Protection segment. It's very heartening to note that the key molecule Mancozeb registered a good volume growth in Latin American markets and the capacity which was implemented in Sarigam has been fully utilized, and we anticipate the demand for the molecule and the set up an additional capacity at Dahej, which has been recently commissioned in October, that will provide an additional impetus for the demand in the second half as well.

Domestic B2C segment had an exceptional quarter in a very tough business environment and achieved a critical numbers in the early part of the kharif season, but unseasonal rains has impacted the offtake. But nevertheless, the team has been going as per plan in terms of expanding the territories and introduced almost 40 new markets and also introduced new in-licensed products during this year. Our in-licensed molecule we have taken from Japan last year has been doing well. Revenues were up by 11% in the new territories that we have set up. And we are also embarking on a sales acceleration program in key markets where our margin and market share is beyond threshold percentage of 5%.

New products introduced in last year are performing well and the share in the sales remains at 25%. We continue to progress on CDMO front and have positive discussions with multiple international partners for technicals, intermediates and patented formulations.

During the quarter, the company has successfully completed the acquisition of NACL Industries, followed by the mandatory open offer emerging as one of the leading crop protection player in the country. NACL has done well in H1 with revenue growing by 18% to INR 900 crores and EBITDA by 12% to INR 83 crores. NACL is on track with meeting the KPIs as envisaged at the time of acquisition. And we are looking at various synergy areas by aligning our policies, R&D, product development, manufacturing, infrastructure and market access.

Overall, on a combined basis, Crop Protection business is likely to do well. And if everything goes well on an annualized basis, Crop Protection segment, including NACL, could reach a critical [ mark ] of INR 5,000 crores of revenue, which is significant and pushes Coromandel in the [ taking ] order to third or fourth largest crop protection company in the country.

Bio business had a good quarter, introduced 8 new biofertilizers and biopesticides to strengthen its microbial portfolio. Business is collaborating with a global player for manufacturing API, and has set up a facility to manufacture the same.

So overall, I'm quite satisfied with the way the operations have played out and we are looking forward to a very positive outlook for the rabi season.

I'll now hand it over to Deepak for commenting on the financial performance for the quarter. I'll come back for the question-and-answer session.

[Deepak Natarajan, executive]

Thank you, Sankar. Good afternoon, everyone. The company recorded a consolidated total income of INR 9,771 crores during the quarter and INR 16,897 crores in the first half of the year, registering a growth of 30% for the quarter and 38% for the first half of the year. The consolidated total income also includes INR 245 crores pertaining to NACL, which became a subsidiary of Coromandel on August 8, 2025.

Subsidy business share in the revenue stands at 83% for both first half and also Q2. It is broadly in line with what we saw last year at about 84% for the quarter and 83% for the first half of the year -- previous year.

With regard to profitability, the consolidated EBITDA for the quarter stands at INR 1,147 crores against INR 975 crores in the previous year. For H1, we recorded INR 1,929 crores against INR 1,481 crores in the previous year. Subsidy business share in EBITDA stands at 71% for the quarter and 70% for the first half of the year. This is a 2% improvement in a way from the previous quarter numbers where it was 73% -- previous year number, where it was 73% and 72% for the first half.

Net profit after tax for the quarter was INR 793 crores in comparison to INR 659 crores recorded in the corresponding quarter previous year. For H1, tax was recorded at INR 1,295 crores against INR 698 crores in the previous year.

With regard to subsidy, the company has received INR 3,336 crores towards subsidy claim. For the half year, company has received subsidy worth INR 4,637 crores. The corresponding previous year number is INR 3,855 crores.

The subsidy outstanding as on 30th September stands at INR 3,199 crores versus INR 1,714 crores in the previous year. While the closing number looks higher, it would be pertinent to note that almost INR 1,000 crores of the subsidy has been received in the month of October. Government has been prompt in settling the dues and the subsidy claims are being processed in a timely fashion.

With regard to ForEx, we continue to see rupee trading in a slightly broader range of INR 85.18 to INR 88.93. There has been volatility during this period, the entire first half. Coromandel continues to hedge its exposures on a conservative basis.

Thank you all for your continued support and interest in Coromandel. We look forward to your interactions. Thank you.

[Harmish Desai, analyst]

[Operator Instructions] Our first question comes from the line of Somaiah V from Avendus Spark.

[Somaiah Valliyappan, analyst]

Sir, my first question is on the manufactured EBITDA per tonne in the Fertilizer segment, quite robust current quarter. So if you could just help us in terms of what are the key drivers in the current quarter which helps us to be much better when compared to, let's say, Q1 or previous year quarter? And also, how do we see things based on current subsidy rates and also the raw material price movements for second half? That's my first question.

[S. Sankarasubramanian, executive]

See, we should track the EBITDA margin on a quarterly basis. As you rightly said, Q2 is the peak quarter for us. And I mentioned in my communication as well, [ phosphatic ] production has been very good, and we are able to moderate the rock price increase and efficiencies have been extremely good in all the plants. We operated the plants at more than 100% capacity and the conversion cost has been good.

So all this plays into the -- and the mix what we have, also helpful for us and the inventory of raw materials what we hold, all this flows into EBITDA. Having said that, sometimes one quarter may look up more and one quarter may be less. But I have always been mentioning as a company, we target minimum 5,500 tonnes of EBITDA per metric ton, which we are confident of doing it in the second half as well.

[Somaiah Valliyappan, analyst]

Got it, sir. Sir, second question is on this -- I mean, NPK is gaining market share versus DAP at a country level. In case -- I mean, we are initially seeing signs of DAP, which is now kind of coming off. If DAP availability improves, how much of this conversion could be sticky? And can there be some reversal as far as prices come off and availability of DAP improves?

[S. Sankarasubramanian, executive]

This is -- you are not clear. Can you please repeat the question? I couldn't hear you properly.

[Somaiah Valliyappan, analyst]

Yes, yes. Yes, sorry. Sir, my question was on this NPK is gaining market share versus DAP. So NPK has taken a bit of market share from DAP. So in case DAP availability improves, let's say, 6 months out or 12 months out, how much of this is sticky? How much of this could reverse?

[S. Sankarasubramanian, executive]

I think more and more farmers are seeing the benefit of balanced nutrition NPK. And I'm not sure when this pricing mechanism of DAP will undergo a change. And if that happens -- please understand this NPK shift is happening when DAP is INR 1,350. And I won't say availability at this point of time because the DAP is available. The imports have gone up and we have adequate inventory happening in the system. In spite of that, there is a uptick in NPK.

So if at all the availability improves, at some stage, DAP pricing gets aligned with the market, I don't think any major shift back to DAP will happen. As a country, we should move towards balanced nutrition. That's what is happening and more expansion activities and companies like Coromandel will be assisting on this. I see this shift is for good.

[Somaiah Valliyappan, analyst]

Got it, sir. Just last question from my side on the phos acid and the sulfuric acid expansion. So what is the level of utilization we can expect in FY '27? And also from BMCC, what are the current volumes and what we can expect in FY '27?

[S. Sankarasubramanian, executive]

We -- Whenever we commission the plant, as you know, the commission has to commit and then achieve 100% in the first month. And hopefully, it should repeat this track record and we're playing for 100% capacity utilization next year for both phosphoric acid and sulfuric acid. As far as Senegal rock is concerned, at least we should expect 300,000 tonnes of rock coming in this year. Our plans are to see how do we scale up the volume to 500,000 next year. Hopefully, we should try and do it. That calls for some additional investments, which we are working on. So at this point of time, I'm confident that we should aim for 500,000 tonnes next year in Senegal.

[Harmish Desai, analyst]

Our next question comes from the line of Prashant Biyani from Elara Capital.

[Prashant Biyani, analyst]

Congrats on a good set of results. Sir, post this NBS policy, do we plan to take any price hike in NPK as an industry? Or how do we plan to defend our profitability?

[S. Sankarasubramanian, executive]

All I can say NBS policy provides pricing freedom for NPK. So whatever is required to be taken to, keeping in mind the needs of the farming community and ensuring availability of fertilizers and input costs, we will take appropriate call. Not be able to put the number whether it will be done at the industry level or a company level. But finally, the industry has been very [indiscernible] in terms of price correction, and that will be followed through.

[Prashant Biyani, analyst]

Sure. Sir, while we don't talk about Dhaksha so much, but last year same time, there was a lot of excitement from Dhaksha, at least in the industry community. And last quarter we also highlighted about the Board revamp and the new team. Incrementally, sir, what are the developments in Dhaksha? And by when should we see order execution and fresh orders? And how much was the revenue from Dhaksha in H1?

[S. Sankarasubramanian, executive]

See, Dhaksha is focusing on new product development and executing [ defense ] orders and that the execution of [ defense ] order depends on evaluation of the current prototype what we have made. And these [ defense ] orders take long time, and it goes through a detailed evaluation process.

In this case, it has taken much longer time. I agree with you, we could have started this and included this order 3 to 6 months before. But what I said, that's a reality, and we are pursuing with the government. As and when the evaluation goes through, we will be able to get the order going. It is a starting trouble. Once the order comes through, then the future orders should not be a problem. And currently, we are in this stage. It has taken longer time than what we thought initially.

And besides that, Dhaksha is also focusing on agri drones and the advantage to Dhaksha being Coromandel agri-input company is buying these drones for carrying out drone spraying services, and we have given a lot of inputs in terms of improving the maintenance uptime, increasing additional features on the drones, improving the battery life, improving the economics of drone spraying. Many things have been worked out. While you may not see everything in terms of the numbers, in terms of volumes we are selling, but a lot of activities and initiatives are undertaken at Dhaksha level.

And it will take some time. Any start-up may not play out immediately, and we have patience and we'll try to work on it. It's a high-tech area, and we are getting right partners to ensure that we create a proper ecosystem. There has been change in the government guidelines as well, which we are supposed to follow through in terms of the sourcing of components. As per Murugappa Group, we are very responsible on this, and that is why it is taking time.

[Prashant Biyani, analyst]

Sure. Sir, other expenses in the last 3 quarters, every quarter has grown significantly. What would be the reason for same? And then lastly, on phos acid new plant, when are we starting with trial run, from which month and commercial production from which month?

[S. Sankarasubramanian, executive]

First question, what is that? I didn't get your point.

[Prashant Biyani, analyst]

Sir, first question was other expenses in the last 3 quarters have grown significantly between 30% to 50% every quarter on a Y-o-Y basis. What would be the reason for it?

[S. Sankarasubramanian, executive]

See, it must be in the normal course of business. I need to come back to you on whatever, but there was nothing abnormal in this. Sometimes we do have [indiscernible] speculation. And also, we have a shift in our approach in terms of recognizing the CSR expenditure. In the past, it used to be the year ended. Now it's being spent on a quarterly basis. My CFO says that could be one area where there has been an increase in the CSR expenditure and also some one-off expenses in terms of various enterprises and engagements, that is also forming part of it.

[Prashant Biyani, analyst]

And sir, on phos acid trial run, would start from which month?

[S. Sankarasubramanian, executive]

It include NACL as well. So -- and also NACL transaction has had onetime consultancy charges, as I mentioned, in terms of [ one-off ] legal charges. And those may be the numbers which may be pronounced in the last 2 quarters. So this may be one-off, which will come down as we move forward.

[Prashant Biyani, analyst]

Sir, lastly, phos acid trial run and commercial production will start from which month?

[S. Sankarasubramanian, executive]

December we are looking at mechanical completion. January will be trial run and production should start by second or third week.

[Harmish Desai, analyst]

Our next question comes from the line of Ankur Periwal from Axis Capital.

[Ankur Periwal, analyst]

Congratulations on good performance. First question on the Crop Protection side. While there is some bit of benefit because of the integration of NACL for the quarter. But if I look at the margins, which is on your Slide #12, the stand-alone CPC margin versus the consol CPC margin. So, is there a loss that NACL had made in this quarter because your stand-alone consol EBIT is lower than the stand-alone EBIT?

[S. Sankarasubramanian, executive]

]

Yes, your observation is right. And stand-alone the EBIT is quite healthy. As you rightly pointed out, 15% has moved to 20%. Including NACL, it is almost flattish. The reason being on NACL, there is one-off exceptional items and expenses were there. And also, we don't consolidate full quarter performance into the numbers. We take proportionate from the time it has become a subsidiary. So it takes, say, 40 days in a 90-day quarter. So probably it may not reflect -- while the expenses might have got captured, it may not reflect the full benefit. So it's a combination of proportionate period consolidation and onetime expenses, which has led to lower margins.

[Ankur Periwal, analyst]

Fair, sir. That's helpful. Will it be possible to share those -- the quantum of that onetime expense?

[S. Sankarasubramanian, executive]

I think it is there in the NACL published results. I think NACL results, if you look at, it is appearing as INR 18 crores as an exceptional item.

[Ankur Periwal, analyst]

Sure. And just secondly, from a growth outlook perspective, any thoughts on how are we looking at NACL's existing portfolio? Is there a need to maybe cut off some of the lower-margin product? Or how do you plan the growth expansion there? And commensurate to that, how should one look at the consolidated margins on the Crop Protection side on an annual basis going ahead?

[S. Sankarasubramanian, executive]

Good question. It needs some time in terms of how do we realize the synergy benefits of both the companies. Fortunately, not much of an overlap in molecules, except the profile of -- and the market segments, they cater to it also different. They have a very strong formulation -- domestic formulation business with a significant, but different set of molecules and Coromandel is strong in different states, complementing to each other.

So -- and also we try to synergize the R&D effort. We don't duplicate on the same chemistry. We also try and see how best we can introduce our pipeline products so that we don't repeat the same in both the companies. I think with the deputation of senior resource from Coromandel to NACL, there's been a lot of alignment. And I would say that 1% should become 3%. It will not come down. It won't be a rationalization, rather it will be a growth opportunity for both the companies.

Having said that, Coromandel CPC business has got a different margin profile, which is the high of 17% to 18%, whereas if you remember, NACL margin profiles are in the range of 9% to 11%. It's fallen off to 4%. Whatever currently the team is trying to do is get to 9% to 11%. And slowly, we need to get the pipeline products, innovative molecules, contract manufacturing to bring the margin of NACL on par with Coromandel. So that may require some time and effort, and that's what NACL team is doing now.

[Ankur Periwal, analyst]

Sure, sir. That's helpful. Just one follow-up here. From a revenue growth perspective, given that you mentioned the distribution network for NACL versus Coromandel, there is a lot of complementary per areas that we can expand into. Does that also mean the stand-alone Coromandel portfolio can grow at a much faster pace given the geographical expansion?

[S. Sankarasubramanian, executive]

Absolutely. There's an ambitious growth plan for Coromandel CPC business, both in terms of active ingredients in the global market, making a global presence on B2C in Latin America. We are seriously evaluating some opportunities. And with domestic formulation we'll be expanding territory. We are not even a 4-digit formulation business turnover in India. In INR 29,000 crore industry, we are very small. So we have put in place action plan to scale up the domestic formulation business. We have enough product portfolio with a lot of efforts put in the last 3 years. We have enough molecules in place.

Our aim is to go much faster in domestic formulation business in CPC. In global markets, we will be focusing on capacity creation and [ Mancozeb ], which will help us to increase the volume and product portfolio. And also we look at B2C light model in Latin American markets. I think each business will pursue the growth opportunity overall consolidated level also, this will be in the growth of 20%, 25% of top line which could happen across segments and across both the companies.

[Ankur Periwal, analyst]

Great, Sankar. Just last bit on the CapEx side. Now given that large part of the phos acid and sulfuric acid expansion will be over, how are you looking at our annual CapEx run rate going ahead?

[S. Sankarasubramanian, executive]

We still have this granulation [indiscernible] CapEx happening. And also we have announced quite a few CapEx in the last few quarters. MAP project at Vizag and also the joint venture in gypsum project to manufacture plaster of Paris. And also, we have additional capacity creation at Senegal mining operations. Plus we will keep looking at expanding debottlenecking capacities in both fertilizer and CPC. We'll be looking at new product registrations, new capacity creation for active ingredients and downstream projects for Mancozeb and other molecules to strengthen raw material security like how we capture value chain in fertilizers, we'll try and do that in CPC. So we have a very good pipeline of projects coming in, and we'll continue to invest profitably.

[Harmish Desai, analyst]

Our next question comes from the line of Naushad Chaudhary from Aditya Birla AMC.

[Naushad Chaudhary, analyst]

First on the -- assuming next year, sulfuric acid -- sulfur and sulfuric acid prices correct or normalize and same we experience in phos acid, how would that change in terms of your EBITDA expectation for the company?

[S. Sankarasubramanian, executive]

See, it is a function of multiple things, right, where phos acid is there, where rock price is there, how sulfur behaves. Always manufacturing of sulfuric acid using sulfur burner and generating power is the most economic thing to do. And once you create capacity, that value accretion will happen. The sulfuric acid plant what we have invested in Vizag has almost paid off. 60%, 70% balance will get paid off during this year. Similarly, the payback of the current investment which is happening in Kakinada will happen in the next 2 years.

So I think the value addition, one is ensuring the supply security of acid is very important. Power generation, which helps the running of the entire complex is second important thing. Then the value addition. I think value addition is likely to be better only in the coming -- than what we are witnessing at this point of time. So that can only positively impact EBITDA much better than what we have at this point of time.

[Naushad Chaudhary, analyst]

So irrespective of the direction of these prices, there will be a positive impact. Is that understood correctly?

[S. Sankarasubramanian, executive]

Absolutely.

[Naushad Chaudhary, analyst]

Okay. And what was the --

[S. Sankarasubramanian, executive]

Addition of phosphoric acid will bring in this year savings. And we did talk about it. When I say that INR 1,000 crores investment will pay back in 2, 2.5 years' time, you can understand the economics in terms of what it can add to the bottom line.

[Naushad Chaudhary, analyst]

At what price assumption we calculate 2 years of payback?

[S. Sankarasubramanian, executive]

See, all these prices are linked, right? DAP, DAP to acid, acid to rock. So we play on this spread. The spread will get sustained and I think 2, 2.5 years payback should be positive.

[Naushad Chaudhary, analyst]

Okay. And what was the non-subsidy EBITDA share in this quarter?

[S. Sankarasubramanian, executive]

I'm not sure what number has been there. There's no specific data point which we will not be able to share it.

[Harmish Desai, analyst]

Our next question comes from the line of Ranjit from IIFL Capital.

[Ranjit Cirumalla, analyst]

My first question is on the global dynamics. While we have been seeing a consistent inflation in the phos acid, we haven't seen any commensurate inflation in the rock. So what is leading to this disparity?

[S. Sankarasubramanian, executive]

Good question. [If that ] change, it's good for us. I thought this will appreciate. But I think new opportunities are also coming up on rock. A lot of [ sources ] are opening up and Egypt is increasing the output. Jordan output is increasing and multiple sources, and we have also expanded our mining operations. So additional resources is helping to keep the price normalized. That's what I would say.

[Ranjit Cirumalla, analyst]

And this increase in supply in rock should help us in the highest at least in the foreseeable future?

[S. Sankarasubramanian, executive]

Right.

[Ranjit Cirumalla, analyst]

Sure, sir. That's helpful. Second question is, would you be able to share any granularities with regards to TMAP capacity, even though the Board has approved, but we haven't shared any details with regards to capacity and CapEx, that would be helpful.

[S. Sankarasubramanian, executive]

We are actually planning to make modular investment. At this point of time, the first phase will be 25,000 tonnes, which involve capital outlay of INR 150 crores to INR 170 crores.

[Ranjit Cirumalla, analyst]

And the last question is on earlier, we do have plans to refine phosphoric acid so that we would be able to be a part of the battery chemical supply chain. Any further thoughts on this?

[S. Sankarasubramanian, executive]

We have been working on fine-tuning the technology. We have been talking to the technology providers. We need to ensure that how do we recycle the output of purification, and we are trying to work on the business economics. Also, it is very important when we come up with the end product, we need to have a tie-up for the customer, and it has to be for the desired quality standards. So that process is going on happen when we ready -- once we are ready with the proposal internally approved, then we'll be able to start.

[Ranjit Cirumalla, analyst]

Any time lines you can provide? It's a 1 or 2-year process?

[S. Sankarasubramanian, executive]

It's 1.

[Harmish Desai, analyst]

Our next question comes from the line of Riju from Antique Stockbroking.

[Riju Dalui, analyst]

A couple of questions regarding the price hike. So if you could share the price hike for the NPK portfolio that you have taken during 2Q?

[S. Sankarasubramanian, executive]

Can you please repeat? I couldn't understand your question.

[Riju Dalui, analyst]

The price hike that you have taken during 2Q, if you could share the numbers for the NPKs?

[S. Sankarasubramanian, executive]

This is an ongoing routine thing. I don't remember anything we have taken recently. We need to take depending on the subsidy rates which has recently announced. So we need to pay by the month depending on the cost structure and the [ subsidy level ].

[Riju Dalui, analyst]

Understood. And in your opening remarks, you have said that phos acid production gone up by 17% during this quarter because of some debottlenecking that you have done. So if you could share the current phos acid capacity that you have? So it is between 4.5 to 5 lakh tonnes capacity that you are having for the phosphate?

[S. Sankarasubramanian, executive]

Sorry, sorry, can you please repeat? Come again?

[Riju Dalui, analyst]

So phos acid capacity currently, if you could share the number?

[S. Sankarasubramanian, executive]

2 lakh tonnes. The current capacity what we have. [ Planned ] capacity what we have at 4.5 and 0.6 at Ennore, totaling to 5.1. The new one which is coming up in Kakinada would be another 200,000. So we'll have 7 lakh tonnes of phos acid.

[Riju Dalui, analyst]

So sir, 4.5 plus 0.6, this includes that -- the debottlenecking that you have done during this quarter?

[S. Sankarasubramanian, executive]

Correct. 5 plus 2, 2 is the new one which is going to come up now.

[Riju Dalui, analyst]

Understood. And sir, one bookkeeping question, if you could share in terms of the current inventory that you are having at the dealer level or the retailer level, if you could share that number?

[S. Sankarasubramanian, executive]

I don't remember now, probably in the range of 6 lakh to 7 lakh tonnes. I don't remember the exact number. I need to check. I'll ask Anuj to get back. [ Something ] in the range of 6 to 7 lakh tonnes.

[Riju Dalui, analyst]

And this is as per the manufactured volume. Is that correct?

[S. Sankarasubramanian, executive]

It will have a combination of both manufactured and [indiscernible]

[Riju Dalui, analyst]

Okay. Understood. Understood. And sir, in terms of the BMCC number, so as for the current quarter, is it fair to assume that BMCC is now profitable or it's now also making loss at the EBITDA level?

[S. Sankarasubramanian, executive]

So, it is making profit. It is making good profits. And you may not see the benefit of it in the consolidation because of various accounting treatments we give for the initial acquisition and everything. But at a base operation level, the business is doing profitable because we are scaling up.

[Riju Dalui, analyst]

Understood. And for the sir, one last question, if you could indicate the current prices of phos acid and ammonia?

[S. Sankarasubramanian, executive]

Current phos acid is INR 1,290, ammonia is in the range of INR 400 to INR 450.

[Harmish Desai, analyst]

Our next question comes from the line of Sumant Kumar from Motilal Oswal.

[Sumant Kumar, analyst]

Can you talk on the crop protection side? How is the export business performing?

[S. Sankarasubramanian, executive]

Sorry, can you please repeat that?

[Sumant Kumar, analyst]

So I'm asking the -- in Crop Protection, the export business performance?

[S. Sankarasubramanian, executive]

Export business, as I mentioned, one of the major component is the Mancozeb volumes, both in terms of volume and profitability has grown very well. And that has been one of the key drivers for this quarter profitability as well as for the half year, and that will continue to remain as the major focus for the full year as well. So export business has grown for this quarter by almost 6% to 7% and on a half yearly basis, 12%. So there's been a good traction on this Mancozeb molecule, which has been quite helpful.

[Sumant Kumar, analyst]

And profitability is better than that, the profitability growth?

[S. Sankarasubramanian, executive]

Very good. Profitability growth has been extremely good. And that is the driver why [indiscernible] PBIT margin is 15% to 20%.

[Sumant Kumar, analyst]

And any other molecule we are targeting for export market in the next couple of years?

[S. Sankarasubramanian, executive]

Sorry?

[Sumant Kumar, analyst]

Any other new molecule we are developing targeting for export?

[S. Sankarasubramanian, executive]

We are working on quite a few molecules. We have created capacities. We have got another molecule called [indiscernible] for which research is happening, Pyrax is probably another molecules we are improving the -- increasing the capacity like [indiscernible]. We have a pipeline of 2, 3 crop chemistry molecules we are trying to introduce. [indiscernible] chemistries we are working on. I think we have additional capacities both in Coromandel and the active ingredient facilities as well as in NACL. So we'll be coming up with these molecules over a period of next 2, 3 years. So we have a pipeline of products.

[Sumant Kumar, analyst]

And for domestic crop protection [ ex ] of inorganic, how is the performance in the top line and profitability?

[S. Sankarasubramanian, executive]

For Coromandel formulation business, I can say August, September has impacted the sales volume. Otherwise, it was going good. It's 11% growth. But on a half yearly basis, it's a 20% growth. And overall for the year, we expect 25% growth in formulation business over the last year. And if everything goes well, Coromandel formulation business, including what we sell through retail, should reach the critical size of INR 1,000 crores, which is very significant. And combined with B2C business of NACL, which is again in the range of INR 1,000 crores INR 1,200 crores, it's a very sizable branded formulation business.

Here again, our pipeline of new products, our co-marketing products, in-licensed molecules in Japan are going to be helpful for us. And even this year, our share of new product sale has been 23%. So we are increasing our territories, as I mentioned in my remarks, and that has paid off well. Some of the new molecules we introduced during this year, we could achieve full year budget in the first 6 months. I think Crop Protection domestic formulation provides enough opportunity with less CapEx, which we'll be focusing on. And we have enough product portfolio now to meet the customer requirement.

[Harmish Desai, analyst]

Our next question comes from the line of Dhruv Muchhal from HDFC AMC.

[Dhruv Muchhal, analyst]

Sir, you mentioned the P-acid expansion, which I believe is about INR 1,100, INR 1,000-odd crores CapEx will have a payback of about 2 years. So if I just do a rough math, I get an EBITDA per tonne just on the P acid plant, I believe that you're mentioning, including sulfuric is about $250, $300. Sir, is that a sustainable run rate now? Because I think the number historically used to be much lower.

[S. Sankarasubramanian, executive]

We are not off the target.

[Dhruv Muchhal, analyst]

So this -- I mean I'm just trying to understand this can sustain and I mean, what are the drivers? I mean, what's leading to this change versus historical trend? Is it because the -- you believe rock can remain lower for -- irrespective of the P-acid prices can remain lower given the supply dynamics have changed? Is that the -- I mean, key driver?

[S. Sankarasubramanian, executive]

We also try and produce our own rock, right, from Senegal. And we also ensure that we blend the various grades of rocks and different quality of rock. We don't depend on high-grade rock. So our blend changes. So we do many things, right? We try to see that the new plant, which is coming up has got a metallurgy which can handle a low-grade rock as well, and it's in a different technology. So accordingly, we ensure that we buy low-grade rock and bring it and sustain the margins and improve the margin. So that's the way we look at it. And that's the only way we can sustain the business.

[Dhruv Muchhal, analyst]

And sir, when you say payback of 2 years, this includes the sulfuric acid also, right? This is not just -- so effectively, what I'm trying to understand this $250, $300 per tonne margin that we tried, that is including the sulfuric acid, right?

[S. Sankarasubramanian, executive]

Yes.

[Harmish Desai, analyst]

Our next question comes from the line of Lakshmi Narayan from Tunga Investments [indiscernible].

[Unknown Analyst]

I just want to understand how we have expanded our reach in terms of fertilizers in India in the last 6 months because I understand that we had seeded certain markets sometime back when there was short supply of complex fertilizers. Just want to understand what is our reach and how is the -- geographically the revenue stacks up?

[S. Sankarasubramanian, executive]

So the new market like U.P., Rajasthan, MP, we have increased our volume from 100,000 to 200,000. And this has happened in the half year period. This trend will continue. We'll try and see how to take at least 1 million tonnes to the markets which we have not served so far so that when the new capacity comes in, we'll be able to fulfill the demand. Besides that, we are expanding our footprint in retail. As you know, we are increasing to 1,200 by the end of the year, and ultimately, we will move towards 2,000. So that also provides opportunity for us to increase the presence across the key states. Of course, they are primary markets, but that will be more ring-fenced with our own retail outlets.

[Unknown Analyst]

We do get some subsidy for transportation. So till what -- how many kilometers is actually covered?

[S. Sankarasubramanian, executive]

1,400.

[Unknown Analyst]

So effectively, we can reach most of the parts of India, right?

[S. Sankarasubramanian, executive]

The key markets where we want to serve.

[Unknown Analyst]

Got it. And in your own opinion, how is the competitive scenario in the complex fertilizers looking because we are expanding, but as an industry, others are not expanding. So how do you think this will pan out in the next 3 to 5 years?

[S. Sankarasubramanian, executive]

As a country, we need to move towards balanced nutrition, which means NP, NPKs have to increase their share and DAP needs to come down. So with the focus on unique grades, which is currently at 35%, we continue to innovate and come up with new products. We feel generic NPKs will not be sufficient. We need to come up with NPKs plus micronutrients like zincated NPKs. And also, we need to come up with store release and control release fertilizers. Over a period of time, I think this industry will get turned into more use efficiency products rather than generic grades. So that requires a lot of pricing freedom innovation and early adoption and fast approval process, which we are pursuing with the government.

That's the way we look at it, and that's the reason you can see there are only few companies who have also been branding our product Gromor and each of the products category, subcategory is also getting branded separately because we need to communicate the trust that farmers have got on the product, communicate the value proposition. We continue to do it. You're absolutely right, this competition can be intensified and which is important that we need to have that strong connect with the farmers. We're the only company to have agronomist educating the farmers on the unique features of our products.

[Unknown Analyst]

Got it. Sir, and any views on this nano fertilizers, how is this actually acceptability as well as the preparedness for us?

[S. Sankarasubramanian, executive]

We have been going steadily well on Nano DAP. Our communication right from the beginning has been instead of 2 bags, we will substitute one bag of DAP and 1 bag of Nano DAP bottle. And we have done the studies across all ICR institutes in the country. Response has been very positive. Farmer usage has been good. Adoption has been improving. We are doing very systematically. We have our own people educating the farmers. It will take a time. From a traditional bulk fertilizer of 50 kg bag, making them to accept for a 1-liter bottle will take time, and that's the process we are going through now. But we have seen the positive feedback and response from the farming community. We are quite happy with that. It is working very well on fruits and vegetables, high foliage crops. And we have also increased our volume, almost doubled the Nano DAP volume in the first half.

And I think it's one of the innovations that the Indian industry has come up with, and they should sustain. But it requires very sustained efforts and very careful education of the farmers and not to push the product or tag the product. That's very important and the industry will be responsible for doing it. And as Coromandel, we've always been focusing on proper education of farmers and let them make the choice. And it's also environment trending, and we will continue to focus on it. We are quite happy with the way the product has been accepted.

And our retail centers where we have our own agri graduate communicating the farmers, we have seen that farmers are willing to take look at this product in terms of trying out of DAP. That's a great opportunity now when there is a challenge in availability of DAP. [indiscernible] it can be a boon for the farming community.

[Harmish Desai, analyst]

Our next question comes from the line of Meghna Agarwal from Mount Intra Finance.

[Unknown Analyst]

Sir, just wanted to confirm like as we saw that there as you saw, that there is an exceptional item in NACL for around INR [ 17.25 ] crores. Can you just confirm the details? Is it a one-off, or what is it all about

[S. Sankarasubramanian, executive]

See, [indiscernible] is accounting adjustment to harmonize the accounting policies between Coromandel and NACL being auditors and we are trying to align -- and the real footnote has been given on the [ account of ] NACL. I think it may be more appropriate to refer.

[Harmish Desai, analyst]

Ladies and gentlemen, we will take that as our last question for the day. I would now like to hand the conference over to the management for the closing comments.

[S. Sankarasubramanian, executive]

Thank you very much. In fact, it's a very insightful question. I really appreciate your interest in Coromandel and thank all of you for joining the call and also thank Harmish for organizing this call and look forward to future interactions. Thank you very much.

[Harmish Desai, analyst]

On behalf of PhillipCapital, that concludes this conference. Thank you for joining us, and you may now -- [Audio Gap].