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Edited Transcript of COROMANDEL.NSE earnings conference call or presentation 24-Oct-19 4:30am GMT

Q2 2020 Coromandel International Ltd Earnings Call

Oct 27, 2019 (Thomson StreetEvents) -- Edited Transcript of Coromandel International Ltd earnings conference call or presentation Thursday, October 24, 2019 at 4:30:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Jayashree Satagopan

Coromandel International Limited - CFO & Executive VP

* Sameer Goel

Coromandel International Limited - MD & Executive Director

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Conference Call Participants

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* Ankur Periwal

Axis Capital Limited, Research Division - VP of Media and Logistics

* Bharat Sheth

Quest Investment Advisors Pvt Ltd. - Head of Equities

* Bhavin Chheda

Enam Holdings Pvt. Ltd - Analyst

* Dheeresh Pathak

Goldman Sachs Asset Management (India) Private Limited - Executive Director

* Ranjit R. Cirumalla

Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst

* Resham Jain

DSP Investment Managers Pvt. Ltd. - Assistant VP

* Sumant Kumar

Motilal Oswal Securities Limited, Research Division - Research Analyst

* Varshit Shah

Emkay Global Financial Services Ltd., Research Division - Research Analyst

* Vishnu Kumar A.S.

Spark Capital Advisors (India) Private Limited, Research Division - VP

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Presentation

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Operator [1]

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Ladies and gentlemen, good day, and welcome to Coromandel International Q2 FY '20 Earnings Conference Call hosted by Batlivala & Karani Securities India Private Limited. (Operator Instructions) I now hand the conference over to Mr. Ranjit Cirumalla from B&K Securities. Thank you, and over to you, sir.

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Ranjit R. Cirumalla, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [2]

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Thanks, Panero. Good morning, everyone. On the behalf of Batlivala & Karani Securities, I would like to welcome all the participants who have logged into the second quarter results con call of the Coromandel International. From the management team, we have with me Mr. Sameer Goel, Managing Director; and Mrs. Jayashree Satagopan, CFO of the company. Thank you, management, for giving us the opportunity to hold this call.

I would like to request Sameer sir to first begin with his opening comments and followed by which, Jayashree ma'am can take us through the quarterly numbers, post which, we will have a Q&A session. Thank you. And over to you, sir.

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Sameer Goel, Coromandel International Limited - MD & Executive Director [3]

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Yes. Good morning, everyone, and thanks, Ranjit, for organizing this conference call. I will first give an overview of the business environment experienced during the quarter, followed by the company's performance. As you all know, southwest monsoons recovered sharply during the quarter and ended up 10% above average from 32% deficit at the end of June. In the company's addressable market in South, the rainfall was 16% higher than the 5 years average. Good monsoons resulted in higher reservoir levels compared to last year and long period averages. Major reservoirs across the country are filled up to 89% of capacity, which is 17% higher than long period average and 15% higher than previous year.

The 2 major reservoirs in AP are filled to the brim at 100% capacity. And as we speak, even the main reservoir on Godavari and Telangana Sriram Sagar is overflowing. Crop sowing has picked up well and all India crop sowing is at par with last year. This was at minus 20% during mid-July.

In AP and Telangana, crop sowing area has grown by 1% over last year. And this is significant improvement from minus 23% as of mid-July. Overall, the cotton acreage in AP and TG has gone up by 5%, and the rice acreage is up by 6%. The season has got extended even up till October. On the subsidy front, DBT claims generation process has fully stabilized. Government has put emphasis on linking the soil health card with balanced nutritional consumption.

The new AP government has launched Rythu Bharosa scheme in October, which entitles each eligible farmer a sum of INR 13,500 per year for agri inputs. This is similar to the Rythu Bandhu scheme introduced earlier by the Telangana Government. With these schemes, farmers will have additional cash at their disposal to spend on agri inputs. The central government, as you know, has also announced upward revisions in the MSP for Rabi crops.

Turning now to the fertilizer industry for the quarter. Phosphatic fertilizer industry volume is at 61 lakh metric tonnes versus 60.8 lakh metric tonnes of previous year. On the regional front, South volumes have gone up by 10%, West by 5%, and North by 2%. East and Central regions volume has gone down by 25% and 7%, respectively. Complex volumes for the quarter is at 31.5 lakh metric tonnes versus 31 lakh metric tonnes the previous year. Raw materials have shown a softening trend. Phos acid prices for quarter 3 have been priced at $625 per metric tonne compared to quarter 1 price of USD 655 per metric tonnes.

For the half year, phosphatic fertilizer volumes are -- is at 97.6 lakh metric tonnes versus 97.4 lakh metric tonnes of previous years. Complex volumes for the first half is at 47.7 lakh metric tonnes versus 48.3 lakh metric tonnes of previous year. DAP volume is at 50.1 lakh metric tonnes versus 49.1 lakh metric tonnes previous year. On a regional front, for the first half, South volumes have gone up by 3%, North by 10%, West is flat, and East and Central region volume has gone down by 15% and 12%, respectively. In the last couple of months, industry has passed on the benefit of soft raw material prices to the consumer. And overall MRP has been brought down by around 10%. If you look at the MRP, in March '19, the price of DAP per rupees per metric tonne was INR 29,500, in May it was INR 28,600; July it was INR 27,000, and then October it is INR 26,000 crores.

Turning now to the company's performance. Coromandel registered a strong performance in quarter 2, driven by its superior sales mix, efficient manufacturing, improved marketing capability and effective sourcing. This was well supported by an above normal southwest monsoon in most of the addressable markets, which improved crop sowing and agri input consumption. New products have been introduced in fertilizer, Single Super Phosphates and specialty nutrition over the last 12 months and have gained momentum, and continue to help the farmers in providing superior nutrition. With continued focus on improving our offering in Crop Protection segment, we have launched 4 new products.

Coming now to the nutritional segment. For the quarter, the nutritional and allied segments registered a very good performance during the quarter. On the sales front, in quarter 2, manufactured phosphatic volumes were up by 8% to 12 lakh tonnes and overall -- all volumes for the phosphatic fertilizer was down by minus 2% as the company focused only on manufactured product sales. Total volume for the company was down by 15% over last year primarily due to urea sales, which is down by 53% over the previous year. As you are aware that we did not handled urea at Kandla Port in the West.

Company market share in quarter 2 is 20%. Company improved its POS market share to 22% from 21% of last year. The point-of-sale market share is a true reflection of the actual consumption, which is happening in the market. For the quarter, the share of unique grade stands at 39%. During the quarter, our phosphatic fertilizer plants operated 85% capacity utilization, recording a production of 7.7 lakh tonnes. Last year, the capacity utilization was 93%. We had slowed down the utilization in the month of July. The production was impacted due to some issues in availability also.

For the first half, in H1 manufacturing phosphatic volumes is down by 2%, and overall volumes for phosphatic fertilizer is down by 9%. Total volume for the company is down by 16% over last year primarily due to its urea sales and delayed monsoons in the first quarter. Market share of the company during the first half is at 17.4% versus 19% of last year. The important thing is the market share of point-of-sale has improved from 18% to 19%. The share of unique grade stands at 35% versus 39% of last year. The main reason for this is as the prices of DAP go up farmers are now shifting to NPK grades.

During the first half, our phosphatic fertilizers plants operated at 77% capacity utilization, recording a production of 13.7 lakh tonnes. Last year, it was 15.1 lakh metric tonnes at 85% capacity utilization. The company had actually looked at its capacity and based it on the consumption. Second phosphatic asset plant at Vizag was commissioned during the quarter in line with the plans and commercial production had begun successfully. With this Vizag plant will become self-sufficient for this asset requirement.

Other major infrastructure projects for improving capacity, storage and efficiencies are progressing well. The Single Super Phosphate business continued its strong performance and registered a volume growth of 13% over last year to 1.9 lakh metric tonnes. SSP performance has been driven across the states, but especially in the big markets of North Maharashtra and AP markets. We continue to be the market-leader in SSP sales and the market share is now at 17%, up by 1% over last year. SSP production went up by 25% for the quarter at 1.9 lakh metric tonnes.

On the Crop Protection side. The Crop Protection segment has a soft quarter due to the lower production from its Sarigam factory. The segment registered a turnover of INR 507 crores versus INR 570 crores for the quarter last year. Sarigam plant resumes its operation from mid-July and the production has now been fully stabilized.

The technical and formulation plants for pymetrozine at Ankleshwar was commissioned successfully and pilot trials have been conducted for WDG facility at Dahej. The business introduced 4 new products, which are the new-generation products in the market during the quarter, and we have entered into strategic tie-ups with global players for co-marketing arrangements for some of its key molecules.

During Q3, the business plans to launch the pymetrozine rice insecticide and also looking at a broad spectrum fungicide. Investment in strengthening the product development team continues during the quarter, and business is working on a strong product pipeline, including several combination products, which will further enrich its portfolio in the international markets and the domestic market. The business has further strengthened the organization front to focus on customer connect initiatives. Bio business had a good quarter and registered a growth over previous year. The business continues to focus on research and development and new delivery mechanism.

Coming now to our retail business. Performance of retail has been very good, especially as the rainfall improved in its key operating markets. Even the markets of North Karnataka and Rayalaseema received abundant rainfall, which was suffering from drought for the last couple of years. Sales from non-fertilizer business improved to 43% versus 37% in the first half of previous year. Retail business is a direct connect to more than 3 million farmers is piloting various agri tech solutions built on its value proposition of quality, trust and farm advice.

Coming now to our specialty nutrition business that has been performing well. The business continues to focus -- have a focused product approach basically on high-margin products. The crop specific water soluble products launched in the last few years have been doing well. To strengthen the portfolio, 2 to 3 new products are being launched during the year, including products, which will be locally manufactured.

As a part of the medium- and long-term growth initiative, Coromandel is focused on strengthening its core business and investing in research and development, data analytics and agri-tech intervention. Overall, it has been a very good quarter for Coromandel. With a healthy reservoir condition and prediction of a normal northeast monsoon, we expect good traction in the upcoming Rabi season. Our focus will remain on farmer connect branding and marketing initiatives, operation and supply chain efficiencies and improved customer offering. Coromandel as a leading agriculture solution provider will continue to drive the productivity and support farmers' prosperity.

I will now hand over to Jayashree, who will take you through the financial performance of the company.

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Jayashree Satagopan, Coromandel International Limited - CFO & Executive VP [4]

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Thank you, Sameer. And let me provide updates on the company's financials. For the quarter 2, company recorded a consolidated total income of INR 4,867 crores, which is 3% lower versus the same quarter prior year.

Nutrients and allied businesses contributed a 90% share and the remaining 10% comes from the Crop Protection business. Q2 last year, the share was 89% for nutrients and 11% for Crop Protection. In terms of subsidy/non-subsidy share stands at 84% and 16% during the quarter. Previous year it was 82% and 18%.

Profitability. EBITDA for the quarter is INR 713 crores against INR 666 crores of last year, which is a 7% growth on a year-on-year basis. EBITDA margin improved to 14.7% from 13.3% during the previous year. The margins were supported by good sales mix, soft raw material prices and operational efficiencies.

Subsidy business share of EBITDA was at 76%, which is at the same levels of the previous year. Net profit after tax for the quarter is INR 503 crores in comparison to INR 366 crores for the corresponding quarter last year, registering a year-on-year growth of 37%.

During the first half, company's consolidated total income is INR 7,008 crores. Half year ended September 30, 2018, was INR 7,555 crores. Subsidy revenues are 82% of the total revenue for the first half versus 80% in the previous year.

EBITDA is at INR 908 crores, which is INR 880 crores of last year, which is a 3% growth on a year-on-year basis. Subsidy share of the EBITDA is at 79% for the first half versus 73% during the previous year. Profit before tax is INR 710 crores as against INR 692 crores of last year. Net profit after tax was INR 566 crores, which was INR 456 crores in the same period last year.

Let me give you the impact of the recent tax ordinance. Company has evaluated adoption of the new corporate tax consequent to the recent tax ordinance. Coromandel does not have any carryover losses. MAT or agency benefits are limited to the next 3 years. ETR for Coromandel has been around 34% to 35% even after claiming the eligible tax benefits. Accordingly, the company has decided and opted for corporate tax rate of 25.16%. ETR for the quarter is at 18.1% with the reversal of the deferred tax liability owing to the lower tax rate.

On the subsidy front, the DBT system has stabilized fairly well and subsidy claims are online. Subsidy outstanding as on 30th September 2019 was at INR 1,849 crores vis-à-vis INR 2,626 crores during the previous year. Subsidy outstanding in the books of INR 1,849 crores includes INR 630 crores, representing the amount claimed and pending with the government. INR 740 crores relates to channel stock funding post acknowledgment.

During the quarter subsidy received from the government was healthy at INR 1,229 crores. Comparative figure last year was INR 1,107 crores. On the foreign exchange front. During Q2, rupee was volatile. It depreciated by about 6% in the month of August and subsequently reached a historical low. Currency traded in the range of INR 68.30 to INR 72.41 during this quarter. Coromandel has followed the Board approved hedging strategy and is dynamically covering the exposure and managing the portfolio well.

The company has also adopted the lease accounting standard, AS 116 during the year and this has resulted in right-of-use assets to the extent of INR 400 crores in the balance sheet. The net working capital position of the company improved during the quarter with good subsidy receipts and market collections. This has helped us in reduction of interest costs during the quarter.

Net interest cost was at INR 56 crores this quarter, which includes INR 11.25 crores. Regrouped as finance cost in line with the accounting standard AS 116. Company continues to have a strong balance sheet with no long-term borrowings. Debt-equity ratio stood at 0.45. In terms of financial performance, it has been a good quarter overall.

Thank you all for your interest in Coromandel and joining us in the call today. We will open the session for question-and-answers now.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Ladies and gentlemen, we will wait for a moment while the question queue assembles. (Operator Instructions) The first question is from the line of [S. Ramesh] from Nirmal Bang Securities.

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Unidentified Analyst, [2]

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Congratulations on the total sales. My first question is on the balance sheet. If you look at your retained earnings compared to the profit after tax, there's -- the addition to the reserves is less than INR 124 crores. Can you explain that difference?

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Jayashree Satagopan, Coromandel International Limited - CFO & Executive VP [3]

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Just give me a minute. Should we come back on this question, Ramesh?

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Unidentified Analyst, [4]

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Yes, please. And overall, in terms of your business, in terms of the routine business, we understand that the outlook for the Rabi crop would possibly be better than what it was last year, the last year was a failure. So in terms of the volume growth, what is the kind of volume growth you can expect for manufactured base in the second half?

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Sameer Goel, Coromandel International Limited - MD & Executive Director [5]

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So like you rightly said, last year, Rabi was not a good season at all. And this year, we do expect a bumper rabi, depending on how the crop protection -- how the crop sowing goes.

So therefore, we don't give any volume estimates, but we definitely are looking for a very good crop -- very good second half.

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Unidentified Analyst, [6]

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Okay. And in terms of your Crop Protection chemical business. If you look at the gross contributions, there seems to be still some lingering pain for the Crop Protection chemical business. So I understand that there are issues in terms of supply chain, especially from products you have to get from China. So when do you see the gross margins in the Crop Protection chemicals improving, say, in the next 1 or 2 years?

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Jayashree Satagopan, Coromandel International Limited - CFO & Executive VP [7]

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The gross margin in Crop Protection is a combination of 2 elements. One is the price of the products that we are exporting. The other one is the raw materials that we are buying. So as far as the quarter is concerned, we did see some price pressures in terms of the Mancozeb prices in the international markets. That has been the primary contribution for reduction in the margins.

The raw material prices, we do have a China desk, and we've been able to source it effectively during the quarter.

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Unidentified Analyst, [8]

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Okay. So one last thought on the Crop Protection Chemical business now. What is the company's strategy in terms of trying to going up the value chain. So if you were to look at the percentage share of the higher value formulations, where do you see that in the next, say, 2 years?

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Jayashree Satagopan, Coromandel International Limited - CFO & Executive VP [9]

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We do see a substantial change in terms of the product mix compared to what it was in the past. As you would have seen over the last few quarters, the company has consciously looked at some of the recently off-patented molecules, for which we have been setting up our manufacturing facilities, which will aid us both in the local and the international markets.

Also, new formulations, including patented 9(3) molecules have been introduced last year. Two products, mainly prospel and lancia, which were introduced last year have received very good response from the market. In the current quarter, we are looking at introducing another new product, which is pymetrozine.

We have also strengthened the product development team and regulatory team over the last 1 year, and they are looking into several combination molecules apart from off-patented molecules, and also co-marketing arrangements with some of the global companies, which will enrich the portfolio.

With all of these, we do believe that the contribution margins on the formulation is likely to improve.

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Unidentified Analyst, [10]

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One final question. Can you give us the share of the formulation business from the first half this year?

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Jayashree Satagopan, Coromandel International Limited - CFO & Executive VP [11]

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Could be around 30 -- 30%.

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Sameer Goel, Coromandel International Limited - MD & Executive Director [12]

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Of the total crop -- total Crop Protection.

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Operator [13]

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Next question is from the line of Sumant Kumar from Motilal Oswal.

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Sumant Kumar, Motilal Oswal Securities Limited, Research Division - Research Analyst [14]

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Sir, my question is regarding the Crop Protection. You have a given guidance of 8% to 12% revenue growth and EBITDA margin in the range of 14% to 15%. So are we maintaining this guidance?

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Jayashree Satagopan, Coromandel International Limited - CFO & Executive VP [15]

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Sumant, thank you for the question. Given the tough first quarter we had and also the production that has resumed only around mid of July at our Sarigam plant, we think that our full year estimates for Crop Protection would be at par with last year, our Sarigam plant did take little more time than expected in terms of its resumption. There could be some upsides with the new products that are planning to be introduced in the market. So that's where we stand in terms of the overall turnover.

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Sameer Goel, Coromandel International Limited - MD & Executive Director [16]

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The margins will be maintained, if not, made better because when you look at quarter 2, the margins have actually come in the -- hitting the margin has been basically quarter 1.

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Sumant Kumar, Motilal Oswal Securities Limited, Research Division - Research Analyst [17]

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So when you talk about at par, can we expect some -- the growth in formulation business, how the formulation business and export business were bifurcating due to plants are down?

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Jayashree Satagopan, Coromandel International Limited - CFO & Executive VP [18]

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The formulation business is likely to grow, and there may be some softness in the exports because in the first 4 months because of the production shutdown, we were not able to ship Mancozeb to the international markets. It would be difficult to catch it up in the balance 8 months.

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Sameer Goel, Coromandel International Limited - MD & Executive Director [19]

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We also have a banner -- we also have a B2B business in our local market, which has grown by 7% in the quarter 2. And which we expect to continue to grow. That is dependent on our Ankleshwar plant.

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Sumant Kumar, Motilal Oswal Securities Limited, Research Division - Research Analyst [20]

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The local market B2B and -- the -- how is the realized growth for -- the growth for Mancozeb. Can you quantify how the volume -- the growth in the export business?

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Sameer Goel, Coromandel International Limited - MD & Executive Director [21]

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We don't give specific listing but Mancozeb would normally come up in terms of volume at the same level as last year. There may be some pricing pressure.

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Sumant Kumar, Motilal Oswal Securities Limited, Research Division - Research Analyst [22]

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Okay. Okay. And what is the CapEx guidance for FY '20 and '21?

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Jayashree Satagopan, Coromandel International Limited - CFO & Executive VP [23]

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FY '20, '21, possibly, we'll share it with you in the Q3 earnings call. That's when our business plan will get completed. Directionally, we should look for about INR 150 crores to INR 200 crores of CapEx.

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Sumant Kumar, Motilal Oswal Securities Limited, Research Division - Research Analyst [24]

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For FY '20?

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Jayashree Satagopan, Coromandel International Limited - CFO & Executive VP [25]

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'20, '21, you were asking, isn't it?

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Sumant Kumar, Motilal Oswal Securities Limited, Research Division - Research Analyst [26]

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Yes. So I'm talking about the FY '20 also?

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Jayashree Satagopan, Coromandel International Limited - CFO & Executive VP [27]

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Okay. FY '20, we have already capitalized about INR 200 crores, which relates to the new phosphoric acid planted at Vizag. Another INR 100-odd crores will get capitalized in October. And we are looking close to about INR 120 crores in the Crop Protection. These are the main CapEx, apart from that the normal maintenance CapEx would be in the range of about INR 70 crores to INR 100 crores.

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Sumant Kumar, Motilal Oswal Securities Limited, Research Division - Research Analyst [28]

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So INR 500 crores, kind of, for CapEx?

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Jayashree Satagopan, Coromandel International Limited - CFO & Executive VP [29]

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Approximately INR 500 crores. This is pretty much in line with what we had indicated earlier.

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Operator [30]

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(Operator Instructions) The next question is from the line of Ankur Periwal from Axis Capital.

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Ankur Periwal, Axis Capital Limited, Research Division - VP of Media and Logistics [31]

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Congrats for a good set of numbers. Just continuing with the Crop Protection. Now you did mention 4 new products being launched, which is, again, with -- tied with international partners. But despite that, the revenues will be flattish or probably the contribution of these products is more back-ended and hence, may be visible in FY '21 and may not be in FY '20?

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Jayashree Satagopan, Coromandel International Limited - CFO & Executive VP [32]

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Yes. It's both, Ankur. So the products which have been launched during the quarter, so you will see the upticks coming in the coming quarters and the year. A couple of them. One is an insecticide, which is named as [Nitrit] the other one is [RE3], which is a PGR granules. Apart from that in a co-marketing arrangement, we have introduced (inaudible) both in SE form as well as granular.

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Ankur Periwal, Axis Capital Limited, Research Division - VP of Media and Logistics [33]

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Okay. Fair enough. And as I understand, the product launches will be on a pan-India basis across our distribution network?

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Sameer Goel, Coromandel International Limited - MD & Executive Director [34]

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It is as per the crops, which are there. For example, pymetrozine, which is basically for Paddy. This will be touching the South and the East paddy crops because, obviously, the paddy crop is not there -- not currently. That will be for the next season.

But the good news is because of Rabi, the Paddy acreage is expected to really increase in most of the markets. So you are catching the last of the Kharif season and the mid half of the Kharif season.

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Ankur Periwal, Axis Capital Limited, Research Division - VP of Media and Logistics [35]

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Sure. And in your initial comments, Sameer, you did mention the Kharif season is still continuing in the month of October. So probably some benefit of this will still be visible in the next quarter numbers?

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Sameer Goel, Coromandel International Limited - MD & Executive Director [36]

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Absolutely. There is a delayed Kharif and we'll have to then see when the Rabi gets [the crop] starting. There could be a couple of delays on that also because if the Kharif gets delayed, then Rabi get also delayed. But having said that, overall, it's very good crop as a full year for the business.

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Ankur Periwal, Axis Capital Limited, Research Division - VP of Media and Logistics [37]

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Sure. And now in terms of the excess rainfalls that we have seen, again, the late monsoons. What impact it had on the Crop Protection business, probably Rabi side, maybe still okay, but the rest of the Protection segment got significantly impacted in terms of lesser sprays if you can put some light over there?

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Sameer Goel, Coromandel International Limited - MD & Executive Director [38]

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Sure. So when you look at an all India basis because of the continuous rainfall and the flooding of different regions, there was a step-up stage both in the Crop Protection and also in our full year SMB business. So that's one thing. But the business has regained sharply. So that's something which is good.

In the flooded areas, obviously, does get impacted for a bit, but not really, but it's not been a big issue in terms of our own -- what is called our own addressable markets. So it actually helped to fill up the dams in the AP and Telangana.

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Ankur Periwal, Axis Capital Limited, Research Division - VP of Media and Logistics [39]

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Sure. And how well are we prepared for the Rabi season? More from a Crop Protection perspective in terms of the crops and our product portfolio?

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Sameer Goel, Coromandel International Limited - MD & Executive Director [40]

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No, we have to. I mean, the good news is that we have introduced new molecules, not just with -- as you will see, it will form a sizable portion of our business going forward. And these are high-value molecules, which are also the new generation molecules.

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Operator [41]

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Next question is from the line of Varshit Shah from Emkay Global Financial Services.

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Varshit Shah, Emkay Global Financial Services Ltd., Research Division - Research Analyst [42]

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Great set of numbers and congratulations for that. Sir, my question is a follow up of the previous questions. So on the Crop Protection side, you mentioned, you have a couple of new launches lined up in the domestic market. So I think that what you have given. On the international side, sir, what is looking ahead? I mean, in terms of the next 2 quarters or maybe FY '21. And of course, you addressed the part of the Mancozeb, where you said that the realization has been lower. Is there any new molecule, which you're trying to get from the exports market or new formulations? If you could throw some light on the growth around that part.

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Sameer Goel, Coromandel International Limited - MD & Executive Director [43]

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So like we already mentioned, our technology team and the R&D team are working on new molecules and we also got suggestions from the local markets. We have already launched -- we have already launched new combination molecules and also co-marketing molecules. And that has helped our growth.

Overall, the turnover from this is -- and if you take the new products, we are getting a 59% growth in the turnover as compared to last year, but albeit at a smaller base.

Now we expect at least these molecules to see the full light in the coming Rabi season. And therefore, we'll wait, but the initial response in the market has been very good. As far as the export markets are concerned, like we mentioned in our call, the WDG facility for Mancozeb is ready in Dahej (inaudible) that will give us a competitive advantage, and we would be able to launch some of the Mancozeb's combinations as and when we get the registration in the export markets.

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Varshit Shah, Emkay Global Financial Services Ltd., Research Division - Research Analyst [44]

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So sir, just to add to that. So is there any particular new geography. Maybe you could talk over last 1 year, how it has been? And then how -- next 1 year looking in terms of registrations across the geographies and where you're -- where you're ahead and where do you see the opportunity going ahead?

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Sameer Goel, Coromandel International Limited - MD & Executive Director [45]

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So the way we look at it is different. We look at a more longer term. We are definitely looking at particular markets as part of our retail strategy, where currently, we have -- and we have identified these key markets. Currently, we have a B2B business. We are looking at introducing what is called a B2C and B2C-like business. As you know, registration takes time, but that is something of a dramatic shift you will see. And we do expect the export business to pay a substantial portion on top of the fact that we also now have the Bio business, which we have integrated, which also takes us to the markets of North America and Europe, maybe you were not present.

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Varshit Shah, Emkay Global Financial Services Ltd., Research Division - Research Analyst [46]

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Sir, just the last -- if I could squeeze in. So the Bio business are the globally also doing well in terms of growth, although it's on a lower basis globally also, very small. Do you see that this could also form a substantial part of exports maybe 2, 3 years down the line? Not...

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Sameer Goel, Coromandel International Limited - MD & Executive Director [47]

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So all the export is a major part of the Bio business. And the Bio business, our biggest testing is not the demand in the market, it's more in terms of sourcing. And we are stepping up both the sourcing of what is called the lean seeds and also improving the efficiency of our products.

The good news is, we are the only -- globally, we are the only people who can actually (inaudible) a very high concentration of azadirachtin, which is actually a plus as compared to other competition. So we continue with -- biggest thing is to keep expanding the sourcing base of good quality neem seeds and then to get the best azadirachtin and then is to expand the market. And so currently, we are not able to feed the demand which is there in the market.

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Operator [48]

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The next question is from the line of Vishnu Kumar from Spark Capital.

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Vishnu Kumar A.S., Spark Capital Advisors (India) Private Limited, Research Division - VP [49]

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On the -- I mean if I split the EBITDA between the subsidy and nonsubsidy business, there seem to be a 7% growth in the combined nonsubsidy. Is it because of Crop Protection or the SMB, Bio, which segment will grow faster within this bucket?

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Jayashree Satagopan, Coromandel International Limited - CFO & Executive VP [50]

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We have seen growth both in SMB and Bio, Vishnu, during the quarter.

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Sameer Goel, Coromandel International Limited - MD & Executive Director [51]

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And the EBITDA is okay.

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Jayashree Satagopan, Coromandel International Limited - CFO & Executive VP [52]

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And EBITDA is also improved.

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Vishnu Kumar A.S., Spark Capital Advisors (India) Private Limited, Research Division - VP [53]

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Is it like extremely fast growth like -- I mean my calculation shows almost 30%, 40% growth on this particular bucket? Is that the right understanding?

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Jayashree Satagopan, Coromandel International Limited - CFO & Executive VP [54]

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So in terms of contribution percentages, it has gone up pretty much compared to the last year, and there has also been some amount of volume growth.

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Vishnu Kumar A.S., Spark Capital Advisors (India) Private Limited, Research Division - VP [55]

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Okay. In terms of fertilizer per ton EBITDA manufactured EBITDA per ton, is it like flat or is it higher, at least, if you could give some qualitative commentary on that?

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Jayashree Satagopan, Coromandel International Limited - CFO & Executive VP [56]

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So we normally look into a trailing 12-month's rather than a quarter's EBITDA on the manufacturing products. And if I look at the trailing 12-month compared to last year to this year, we've definitely seen improvement.

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Vishnu Kumar A.S., Spark Capital Advisors (India) Private Limited, Research Division - VP [57]

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Got it. And looking forward, what is the broad guidance that you'd give for the manufactured EBITDA?

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Jayashree Satagopan, Coromandel International Limited - CFO & Executive VP [58]

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About INR 3,500 per metric ton is something that we should look at.

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Sameer Goel, Coromandel International Limited - MD & Executive Director [59]

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We'll have to watch the prices, which, obviously, EBITDA softening, we need to watch the prices which come and the price discount. Having said that, one of the major strategic thing was to make Vizag basically self-sufficient in phos acid and that has happened. So you can expect the EBITDA to remain -- continue to remain what they are, despite the prices.

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Vishnu Kumar A.S., Spark Capital Advisors (India) Private Limited, Research Division - VP [60]

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Is there technique -- is there a possibility to add more phos acid backward integration and ship into, let's say, the other location? Or you're maxed out in terms of backward integrating on phos acid?

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Sameer Goel, Coromandel International Limited - MD & Executive Director [61]

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A very good question. We had -- we have, what is called, the approvals of doing more on phos acid and also shipping it out. We are looking into it.

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Vishnu Kumar A.S., Spark Capital Advisors (India) Private Limited, Research Division - VP [62]

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Okay. Any rough backward -- I mean how much you can technically backward integrate, let's say -- now we're probably around 45, 50 with the new plant, how much can we get it to, if your approvals go through?

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Sameer Goel, Coromandel International Limited - MD & Executive Director [63]

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See, there are other factors also, it is not just phos acid, we have to look at the sulfuric acid and other supply. So we are looking at all the angles. But just to answer your question, we have the capacity to expand the -- increase the production capacity in phos acid. Our main aim currently is to stabilize production, right. Once the old production is stabilized, that's one.

The second thing is, we do expect, also, given the fact our market share is increasing and we are now getting more and more closer to the consumer with consumption-based. And that's why I said, we have changed the way we look at market share, we're looking at it what is it at the retail end, which is basically at the POS machine, which is the true consumption figure. So as that increases, we will have to look at even, what is called, some de-bottling even in other plants. So the requirement of phos acid will increase. So -- for both states. So therefore, to say that we can completely supply phos acid on our own won't be the correct. So we are looking at that because we have to de-bottle.

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Vishnu Kumar A.S., Spark Capital Advisors (India) Private Limited, Research Division - VP [64]

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De-bottlenecking, can it technically increase our fertilizer capacity also?

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Sameer Goel, Coromandel International Limited - MD & Executive Director [65]

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That's what I was saying.

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Vishnu Kumar A.S., Spark Capital Advisors (India) Private Limited, Research Division - VP [66]

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Okay. Got it, sir. And just one question on the Crop Protection. Are there any rough plans to, like, probably, I mean, deploy a larger sum of capital, let's say, anywhere about INR 300 crores to INR 400 crores? Are there any conversations in terms of adding such kind of capacities or anything that can strategically lead to that?

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Sameer Goel, Coromandel International Limited - MD & Executive Director [67]

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So we are investing and that's the investment which you have seen in, what is called, multipurpose plants because we want to increase our share and availability of manufacturers, especially for the new molecule. And this will be both in either tie-ups with whether Chinese, Japanese or German manufacturers, our own innovators and also in terms of having molecules, which are developed from our R&D lab. So that's where we're looking at particularly on the combination site. So that is something. Therefore, you'll see a significant investment keep coming in, in a phased manner in the Crop Protection business.

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Jayashree Satagopan, Coromandel International Limited - CFO & Executive VP [68]

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See if I could just respond to Ramesh of Nirmal Bang on his question on the balance sheet retained earnings, change of INR 100-odd crores, this is primarily on account of the dividend and dividend distribution tax. That's the reason.

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Operator [69]

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The next question is from the line of Resham Jain from DSP Mutual Fund.

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Resham Jain, DSP Investment Managers Pvt. Ltd. - Assistant VP [70]

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And congratulations...

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Operator [71]

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Sir, sorry to cut you off, can you please speak a bit louder?

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Resham Jain, DSP Investment Managers Pvt. Ltd. - Assistant VP [72]

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Am I audible now?

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Operator [73]

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A little better. Go ahead.

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Resham Jain, DSP Investment Managers Pvt. Ltd. - Assistant VP [74]

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Okay. So just one question on the adjoining states where we have seen some amount of the competition, seeing some pressure on their internal finances and all, are you seeing your market share getting increased in those states like Maharashtra, Karnataka, Goa? And what can be the bottlenecks in terms of transportation and other factors, if you can just highlight on the thing?

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Sameer Goel, Coromandel International Limited - MD & Executive Director [75]

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Okay. There are couple of things. Firstly, you are talking about specifically, we have definitely seen, what is called, a point-of-sale market share go up almost both in Maharashtra and also, we are seeing traction in Karnataka, although we were not able to supply fully on Karnataka because we wanted to concentrate on AP, TG increased demand. So the good news is that overall agriculture has improved in all these states given the fact that the water availability was better.

Now specifically coming to points like Maharashtra, we are not strong in Western Maharashtra because early on, we didn't have a full marketing right or in Western MP. Now what has happened there is after the DoF has passed the order for manufacture company, we can now expand our marketplace because we never used to get freight subsidy into Western MP, Western Maharashtra and also into markets like Eastern UP and on. So we have a concrete plan in terms of introducing products, which the farmers in those areas require. And you will see a certain amount of innovation, which is happening in these markets where we are targeting with our unique grades promise, particularly for these type of crops. And this doesn't just apply to fertilizer, it also applies to -- Single Super Phosphate business has really taken a big chunk because now, thanks to the dealers intervention, only quality players will be able to roost the market. And therefore -- and that has really helped. So that's the second thing.

And the third thing would be even our SMB business, we are focusing on these markets because there is a lot of foods and vegetable there. So you will see that growth coming up. But at the same time, what we want is the market to expand and not at the sake of competition, because I'm sure some of them will recover, and we want the industry to continue to grow.

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Resham Jain, DSP Investment Managers Pvt. Ltd. - Assistant VP [76]

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Okay. Sir, just one more question on the overall acreage in AP, Telangana, we have seen some portion of this irrigation project getting completed in phases, in your assessment, have you seen or are you expecting improvement in acreage over the next few years in any compares as of now?

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Sameer Goel, Coromandel International Limited - MD & Executive Director [77]

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Can I just break it into 2? The first thing is, for the first time after a long time, the left canal of, what is called, Nagarjuna Sagar Dam started flowing, right? And same thing they've given water both in the left canal and right canal. Now that has brought in almost 1.36 lakh hectares under paddy, and that has helped to improve, obviously, the whole -- huge offtake has happened in AP, TG, which is getting extended. So currently, the whole issue is the current projects which are there would obviously have to have, and it's unfortunate that -- I'm just saying is that if Maharashtra and Kanataka had released water earlier, probably they won't have seen the flooding, which they had seen after when the rainfall really came down. And same applies for Southern Karnataka, and AP, TG could have brought an earlier benefit of the other water availability, and therefore, the Kharif would have been even better or started earlier.

So I think that's the good news about this current monsoon the way it's happened. Also both the governments have done well in terms of actually desilting the canals and also the big tanks, which again augurs well because what it does is any excess rainfall, which is there, it actually helps to regenerate the soil water. So that's a good thing. And so I'm just talking about the current products and maximizing the (inaudible).

Now there are 2 big projects which are coming. One is the Kaleshwaram project, which is there in Telangana side, and then the Polavaram project, which is there in the Andhra side. The benefit of this will have to be seen as it comes, but we are definitely tracking the amount of acreage, which will come there. So there -- the Kaleshwaram project is almost expected to get another 4 lakh hectares under irrigation. So that is something which is very good, and it will obviously change also the crop impacted, but we have to wait and see. The Polavaram project although the link canal has been made to Krishna barrage, they have to do, what is called, the secondary canals and that will get water into the dry Rayalaseema area. So the Godavari water will come into Krishna and that will then send to Rayalaseema. But again, the government currently is reviewing the Polavaram project, so -- because the new government has come. So we'll -- we have to wait and see. But definitely, in the long run, it's very beneficial to us. We look forward for this -- these and other project linkage.

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Operator [78]

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The next question is from the line of Dheeresh Pathak from Goldman Sachs.

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Dheeresh Pathak, Goldman Sachs Asset Management (India) Private Limited - Executive Director [79]

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First question is, what is our total phos acid requirement for the full year?

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Jayashree Satagopan, Coromandel International Limited - CFO & Executive VP [80]

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In terms of procurement, after the phos acid plant 2 has been installed for full year, we will have to buy about 5.5 lakh tones of phos acid. Of course, this depends upon the product mix as well.

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Dheeresh Pathak, Goldman Sachs Asset Management (India) Private Limited - Executive Director [81]

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And how much would you make yourself after the new plant?

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Jayashree Satagopan, Coromandel International Limited - CFO & Executive VP [82]

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The new plant has a lots of capacity.

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Sameer Goel, Coromandel International Limited - MD & Executive Director [83]

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Currently, we've added 1 lakh -- we have -- as per the earlier question, we could increase the capacity (inaudible).

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Dheeresh Pathak, Goldman Sachs Asset Management (India) Private Limited - Executive Director [84]

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No, sir, you added 1 lakh. Prior to that also, you are making something yourself, right? So total captive production of phos acid would increase to how much?

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Sameer Goel, Coromandel International Limited - MD & Executive Director [85]

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It will be in the range -- again, depends on the acid, it will be in the range of 350,000.

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Dheeresh Pathak, Goldman Sachs Asset Management (India) Private Limited - Executive Director [86]

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Okay.

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Sameer Goel, Coromandel International Limited - MD & Executive Director [87]

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4.5, so...

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Dheeresh Pathak, Goldman Sachs Asset Management (India) Private Limited - Executive Director [88]

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So earlier, you're making 2.5, now you added 1 lakh, right?

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Sameer Goel, Coromandel International Limited - MD & Executive Director [89]

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So we're adding both the plants. We're making 3.5 and now it will get to 4, 4.5.

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Dheeresh Pathak, Goldman Sachs Asset Management (India) Private Limited - Executive Director [90]

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Okay. 3.5 plus 1, it become 4.5 and 5.5, you will buy from outside to total 10 is the requirement.

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Sameer Goel, Coromandel International Limited - MD & Executive Director [91]

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And it varies depending on the mix what we do.

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Dheeresh Pathak, Goldman Sachs Asset Management (India) Private Limited - Executive Director [92]

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Correct. No, that I understand. Obviously, the various grades will -- it will vary, but just a broad sense, right? Okay. And what is the total capacity of the complex fertilizers that we can make?

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Sameer Goel, Coromandel International Limited - MD & Executive Director [93]

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So currently, it is 33 million -- 3.3 million.

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Dheeresh Pathak, Goldman Sachs Asset Management (India) Private Limited - Executive Director [94]

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3.3 million. This includes SSP or this is...

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Sameer Goel, Coromandel International Limited - MD & Executive Director [95]

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SSP and sulphate.

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Dheeresh Pathak, Goldman Sachs Asset Management (India) Private Limited - Executive Director [96]

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How much is SSP, sir?

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Sameer Goel, Coromandel International Limited - MD & Executive Director [97]

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So currently, SSP is operating at 6 lakhs. So -- but we have a capacity where we can take it to 1 million.

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Dheeresh Pathak, Goldman Sachs Asset Management (India) Private Limited - Executive Director [98]

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Okay. And sir, this just on the DBT, this new DBT thing that was earlier run as a pilot, now how much of the volumes are sold as per that new DBT, if you can just explain?

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Sameer Goel, Coromandel International Limited - MD & Executive Director [99]

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So the DBT is an all India scheme. So every fertilizer bag which is sold, whether it is NPK or SSP, it's sold through the, what is called, the POS machine, and therefore goes into the DBT system. And therefore, it's 100%. It's now all India, which is there. So every fertilizer has to go through that.

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Dheeresh Pathak, Goldman Sachs Asset Management (India) Private Limited - Executive Director [100]

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At the time of sale, that time the subsidy is being recognized. Earlier, it was recognized at the time you're selling to the distributor, right?

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Sameer Goel, Coromandel International Limited - MD & Executive Director [101]

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So earlier, 90% was recognized when we used to start to invoice it from the plant to the dealer and 10% was when the retailer acknowledged the thing. Now 100% is only paid when the farmer actually buys the product at the retail shop.

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Dheeresh Pathak, Goldman Sachs Asset Management (India) Private Limited - Executive Director [102]

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Okay. And so now that it is 100%, can you tell like based on the earlier working capital that was there in the business versus the working capital that is now in the business has -- is it the same? Is it gone? Is it improved?

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Jayashree Satagopan, Coromandel International Limited - CFO & Executive VP [103]

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It has actually increased. If you look at it earlier, we used to get 90% as soon as you dispatch. Now we're getting 100% only when it gets sold at a retailer level. So obviously, the working capital gets locked and that has increased. But then the factor that we have to look into was, earlier on, while we used to get 90%, the accumulated amount government used to clear at much later periods. Now what has happened with DBT, as soon as the POS acknowledgment happens and we're able to generate and submit the claims to the government, normally within a month, we are able to clear the DBT claims that are being submitted. So there is a faster processing and receipt of subsidy by the companies. So that is helping. So there are some puts and takes into it. We've just completed 1 year, 1.5 years after the DBT has come into place. So there are some positives in terms of faster processing by government. The negative, obviously, is the stocks not get liquidated at the retailer level. So on an average, we do see an increase in the working capital. However, the government currently is having a bit of a deficit in terms of disclosing the pending claims. So once that gets addressed, our total subsidy receivable from the government should improve working capital position. Currently, it is adverse, but we hope over the next 1 year, 1.5 years, it should further improve.

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Sameer Goel, Coromandel International Limited - MD & Executive Director [104]

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But the good thing is the government has cleared quite a lot of the old claims. And which you know, in our earlier call, we used to say that 10% is accumulating. So that has not really come down on that count. And also, they're clearing up the freight and the urea. So once that happens, we are also hoping that this year, the government may get some additional allocation that's what the Secretary of Fertilizer has said. So that means, for the industry, all the old claims which have been there -- which have been submitted, they can clear it.

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Dheeresh Pathak, Goldman Sachs Asset Management (India) Private Limited - Executive Director [105]

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Okay. So this is helpful. But sir, given the trade-off, the faster clearance versus the late recognition of the subsidy, can you like share like in terms of -- for the subsidy business in terms of number of days, what has been the elongation in the working capital? Is it 20...

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Sameer Goel, Coromandel International Limited - MD & Executive Director [106]

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Again, it goes by period. So firstly, let me just make a general statement, then we'll come to specific. Overall, it is beneficial for the fact that the DBT, everything is going through the POS machine and what the government is doing and we are supporting that. Because the company also, and that's what I said in a statement, has to change their focus from just doing, what is called, primary sales instead of that and therefore, loading some of the trade, which was a historical practice which used to happen and then giving all sorts of discounts for them to carry the stocks to the fact that now it is related with consumption. And therefore, you're full of your product and your branding plays a much more important role. So the faster you can get liquidation and at the same time streamline your supply chain, it will help across companies. And companies which are not able to -- you've mentioned something earlier, if they are not able to understand this model, that's where they get into a problem.

Now if the government clears all the old claims and our number has really come down, there's some technical hitches from their side, some submission from our side. And they're able to clear the whole backlog, it will be very good from everyone's point of view because that's the way the names, state of the sales are. More importantly is for what we are doing the DBT 2.0 is that they are now actually given -- they have the soil health cards. They are now giving a recommendation of balance nutrition. And the government, like you know, there were reports, they're also talking about DBT 3.0, which basically talks about even giving -- having wallet cards or cash cards with the farmers, and they'll probably going to pilot it, so that then this whole pricing thing if the industry becomes free from, what is called, the subsidy regime and let the farmer decides which product to buy. And therefore, companies who have the technology, superior products who are working closely with the farmers, who are addressing, what is called, a total crop solution, companies like us, and we have a retail outlet also with the upreach program will benefit farmer. And overall, the country will benefit because farmers' productivity will then go up.

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Dheeresh Pathak, Goldman Sachs Asset Management (India) Private Limited - Executive Director [107]

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Okay. Okay. Sir, this is very helpful. Just one last question, if I can. In the conversion from rock this thing to the phos acid, what is the value add, sir?

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Jayashree Satagopan, Coromandel International Limited - CFO & Executive VP [108]

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We have a value. We're are currently about $160.

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Dheeresh Pathak, Goldman Sachs Asset Management (India) Private Limited - Executive Director [109]

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Okay. So this $160 per ton into 1 lakh ton, that is the extra sort of EBITDA that you would capture, right, in this process. That's the way to think about it?

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Sameer Goel, Coromandel International Limited - MD & Executive Director [110]

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Sure.

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Jayashree Satagopan, Coromandel International Limited - CFO & Executive VP [111]

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Yes.

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Operator [112]

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(Operator Instructions) The next question is from the line of Bharat Sheth from Quest Investment Advisors.

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Bharat Sheth, Quest Investment Advisors Pvt Ltd. - Head of Equities [113]

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Congratulations, Sameer and Jayashree, on good set of numbers.

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Sameer Goel, Coromandel International Limited - MD & Executive Director [114]

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Thanks, Bharat.

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Jayashree Satagopan, Coromandel International Limited - CFO & Executive VP [115]

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Thank you.

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Bharat Sheth, Quest Investment Advisors Pvt Ltd. - Head of Equities [116]

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Sameer, you said that this time monsoon is good and reservoirs are all full. So -- and even northeast also is expected to be good. So in that scenario, do we -- can we really assume that next year, also, there will be some deficit of the monsoon, still we'll be able to do better?

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Sameer Goel, Coromandel International Limited - MD & Executive Director [117]

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So Bharat, interesting thing. I wish I can predict the weather. I will go into a different...

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Bharat Sheth, Quest Investment Advisors Pvt Ltd. - Head of Equities [118]

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No, subject to, I mean, let's say, plus, minus 5%, but even in that case, I mean, we can take care of, I mean, this reservoir level and some of the Kaleshwaram, some lift irrigation project has already operate -- started operating?

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Sameer Goel, Coromandel International Limited - MD & Executive Director [119]

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So there are 2 things, Bharat, what you're saying is, firstly, we are in states where the government is -- both the governments are quite pro agriculture and other governments are also looking at it. And we're not seeing even -- and you'll see the campaign being launched by even the Prime Minister on balanced nutrition. So they are obviously getting more and more into the rural and the agricultural productivity area because that's what they are talking about doubling the farmer's income. So that's on one side.

And obviously, one of the reasons for how we can double farmer income are 2 counts. One is, of course, source of irrigation. But at the same time, increasing the sales, especially in, what is called, the rain-fed area, to have whether it is crops you have increased drip irrigation, you have crops which take less water, and therefore, improve the farmers' productivity. And we're already seeing a huge shift in the business to fruits and vegetable away from cereals. So the total output of fruits and vegetables now exceed that 3 cereals. We still have a cereal mindset because all of us have born when we had this thing about famine and all happening with the first green revolution. So -- and with -- and obviously, the next round would be that -- and companies like us move into, what is called, Arctic and use of data in terms of helping the farmers to have -- double his output, at the same time reduce some of the consumption. So that is something which we are working on.

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Bharat Sheth, Quest Investment Advisors Pvt Ltd. - Head of Equities [120]

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Hello?

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Sameer Goel, Coromandel International Limited - MD & Executive Director [121]

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That is something we are working on.

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Bharat Sheth, Quest Investment Advisors Pvt Ltd. - Head of Equities [122]

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But -- and second, I mean, when do we expect this POS 3, I mean, this Phase III, we expect to start?

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Sameer Goel, Coromandel International Limited - MD & Executive Director [123]

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We can't say as such. There is a lot of talks in the government and also the PMO is looking at it. Obviously, they would have to probably pilot it out and then see what happens. But knowing the way the government in the centers taking certain hard decisions, we could expect it sooner than later.

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Bharat Sheth, Quest Investment Advisors Pvt Ltd. - Head of Equities [124]

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Okay. And what is our now -- with retail is doing well, so outlook for the retail and expansion in the retail?

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Sameer Goel, Coromandel International Limited - MD & Executive Director [125]

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No. So our basic thing currently is to ensure 2 things. One is that we have sustainable growth in retail. And therefore, we concentrate currently in our AP markets and -- AP, TG markets and look at the whole supply chain. At the same time, use retail not just to sell fertilizer, but to improve, what is called, the nonfertilizer. But more important is to improve the advisory services, which we can give, which includes, what is called, even in new technology advice to the farmers, so that their income improves. So that overall they gain. So that's where this success. In a phase manner, we are looking at expansion into some of the liquid markets.

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Bharat Sheth, Quest Investment Advisors Pvt Ltd. - Head of Equities [126]

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Okay. And just one bookkeeping question, Jayashree, what is our gross debt and net debt? And how much is this old claim is outstanding?

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Jayashree Satagopan, Coromandel International Limited - CFO & Executive VP [127]

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Okay. Subsidy, I given you the outstanding numbers. We had close to about INR 750-odd crores, which relates to the old phos spending acknowledgment. And we had close to INR 200 crores, which had -- which was September-related POS acknowledgment, which was also got submitted in October. Of the old claims, we have close to INR 500 crores. Yes. We'll not say it as old claim, I would say the balance claims, yes? That's about INR 150 crores. We are looking for some system correction from NIC. I think we're still working with the government on it. See, our credit is close to about INR 80 crores, we used to have about INR 160 crores. The balance have been submitted. On the normal freight, we are entitled to get the freight claims on an annual basis, only INR 34 crores relates to older period. The rest all is '18, '19, and it is currently under process. So we don't have much of old claims to your question, Mr. Bharat.

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Bharat Sheth, Quest Investment Advisors Pvt Ltd. - Head of Equities [128]

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Okay. And how much is the gross debt and net debt?

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Jayashree Satagopan, Coromandel International Limited - CFO & Executive VP [129]

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Look, our overall net debt is close to -- just 1 minute...

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Bharat Sheth, Quest Investment Advisors Pvt Ltd. - Head of Equities [130]

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Close -- Can you repeat, sorry?

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Jayashree Satagopan, Coromandel International Limited - CFO & Executive VP [131]

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One moment, I have to just take the numbers. I don't have -- I'll get back to you with these numbers. I don't have the balance sheet straight with me now.

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Operator [132]

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The next question is from the line of Bhavin Chheda from Enam Holdings Private Limited.

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Bhavin Chheda, Enam Holdings Pvt. Ltd - Analyst [133]

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Congrats on excellent performance. Sir, you made the statement that the Crop Protection for full year will be almost equivalent to FY '19. If I see that number, last year, we did 17 -- INR 1,781 crores of top line, which means in the second half, we have to do almost INR 1,000 crores, which is 25% growth. So is that understanding correct?

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Sameer Goel, Coromandel International Limited - MD & Executive Director [134]

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Yes. So firstly, it's not full year. You're saying full year?

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Bhavin Chheda, Enam Holdings Pvt. Ltd - Analyst [135]

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I think you said that our full year number would match with the '19 numbers.

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Sameer Goel, Coromandel International Limited - MD & Executive Director [136]

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So our -- this thing is base that we should be coming more or less back. A lot will depend on, of course, one is, in terms of production. The other thing, like you are saying, is the acceptability of the new products, which is going into the market and whether we could meet the growing demand. And third could be on the pricing front as far as Mancozeb is concerned, right? We also have a few registrations, which we're hoping will come through in the year, so that we can supply to some of our international customers.

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Bhavin Chheda, Enam Holdings Pvt. Ltd - Analyst [137]

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Sarigam plant is fully stabilized, right?

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Sameer Goel, Coromandel International Limited - MD & Executive Director [138]

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Sarigam plant has stabilized. We have to just ensure that we can keep so.

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Bhavin Chheda, Enam Holdings Pvt. Ltd - Analyst [139]

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We -- second half basis as compared to last year, we will surely be growing because...

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Sameer Goel, Coromandel International Limited - MD & Executive Director [140]

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Currently, our forecast is that. We'll have to watch, and it has also helped by the fact that we are going to also have a bumper rabi in India, and therefore, both the -- our formulation business and the B2B business will be better.

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Bhavin Chheda, Enam Holdings Pvt. Ltd - Analyst [141]

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Sure. And regarding the fertilizer business, you said that the July month had a lower production...

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Sameer Goel, Coromandel International Limited - MD & Executive Director [142]

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So what has happened was...

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Bhavin Chheda, Enam Holdings Pvt. Ltd - Analyst [143]

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Availability issue was phos acid availability issue or...

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Sameer Goel, Coromandel International Limited - MD & Executive Director [144]

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No. It wasn't that. What happened was, there are 2 things here. We had actually scaled down. If you remember, in the quarter 1 call, the concern with all the investors was that why is our raw material going up and the sales have been down. So given the fact that in July also the estimates were not looking good because everything was not as per the IMD plan, although directionally, they were right. But we had scaled down some of our buying this thing. And there were some connectivity issues, which happened for -- not phos acid, but few of our other raw materials. For example, there was -- you had this issue in -- with the tension in Middle East. So some of our connectivity of urea and of ammonia got slightly delayed.

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Bhavin Chheda, Enam Holdings Pvt. Ltd - Analyst [145]

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Which is now sorted out, right?

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Sameer Goel, Coromandel International Limited - MD & Executive Director [146]

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That is all sorted out. So that was a temporary period. We were actually wanting to operate almost more than 100% capacity because of the increased demand, which came up that this -- that the scale which has happened. And so we then focused on the AP and TG, we can meet the demand in some of the other markets.

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Bhavin Chheda, Enam Holdings Pvt. Ltd - Analyst [147]

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Sure. So due to this bumper rabi, sir, our fertilizer own manufactured volume will definitely looks to show a growth over FY '19 numbers, right, because our new...

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Sameer Goel, Coromandel International Limited - MD & Executive Director [148]

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Our focus is to increase the numbers. That's definitely there. When you see our overall numbers, one of the issues which happened to us was, we didn't get, one is, we closed down Kandla Port. And the government actually had a issue in terms of allocation into Krishnapatnam Port. Overall, (inaudible) nutritional, I think they've got the demand down. And therefore, there was a shortage as far as India is concerned and we didn't get our allocation. Good news is now they're giving us more number of ships for Krishnapatnam, which helps our retail business and also provides product to a dealer. But we just trade in Urea, it's not something which we...

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Bhavin Chheda, Enam Holdings Pvt. Ltd - Analyst [149]

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Sure. And sir, the new phos acid, this 1 lakh capacity, which month have you started this?

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Sameer Goel, Coromandel International Limited - MD & Executive Director [150]

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We started in September. We are supposed to start in October, but now under (inaudible).

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Bhavin Chheda, Enam Holdings Pvt. Ltd - Analyst [151]

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And how much time you think you will take it to reach 100% utilization here?

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Sameer Goel, Coromandel International Limited - MD & Executive Director [152]

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So we would, as per the current capacity what we have envisage it will be able to reach, but there is always scope to increase it further by using, what is called, different types of rocks. So you'll see that. So whatever is as per plan for this year, we hope that to be met.

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Bhavin Chheda, Enam Holdings Pvt. Ltd - Analyst [153]

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So how much is the plan for this year, sir? Technically, you are at 50,000 for this year in terms of 6 months for this fiscal. So you will be producing 70%, 80% of that, 60% of that? First you start the plant, how much time it takes to reach 100%?

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Sameer Goel, Coromandel International Limited - MD & Executive Director [154]

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We have been close to what we have stated.

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Jayashree Satagopan, Coromandel International Limited - CFO & Executive VP [155]

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It'll be close to 50,000 tons this year.

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Bhavin Chheda, Enam Holdings Pvt. Ltd - Analyst [156]

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50,000 tons entire. So technically, we'll be doing 100% utilization in the second half, right?

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Jayashree Satagopan, Coromandel International Limited - CFO & Executive VP [157]

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Yes, it will scale it up. We will scale it up, and we will end up around 50,000 tons in the...

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Bhavin Chheda, Enam Holdings Pvt. Ltd - Analyst [158]

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From the new plant?

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Jayashree Satagopan, Coromandel International Limited - CFO & Executive VP [159]

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Yes.

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Bhavin Chheda, Enam Holdings Pvt. Ltd - Analyst [160]

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In the second half?

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Jayashree Satagopan, Coromandel International Limited - CFO & Executive VP [161]

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Correct.

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Bhavin Chheda, Enam Holdings Pvt. Ltd - Analyst [162]

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Okay. Which technically means next year, you can easily do 1 lakh tons?

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Jayashree Satagopan, Coromandel International Limited - CFO & Executive VP [163]

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Yes. That is the plan.

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Sameer Goel, Coromandel International Limited - MD & Executive Director [164]

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That's the plan. As I said on the call, we can probably do more.

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Jayashree Satagopan, Coromandel International Limited - CFO & Executive VP [165]

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Thank you. Before we close, I just want to respond to Mr. Bharat Sheth. The net borrowings is about INR 1,728 crores as of 30 September 2019. Last year, the number was INR 2,134 crores.

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Operator [166]

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Ladies and gentlemen, due to time constraint, that will be the last question. I will now hand the conference over to the management for closing comments.

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Sameer Goel, Coromandel International Limited - MD & Executive Director [167]

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So just firstly, if anyone had any questions, you can please get in touch with Jayashree or Sourav or me anytime, and we are happy to answer those after the call. But overall, it's been a very good quarter in the second -- especially with -- given that the South -- the southeast monsoon behaved the way it is. At least, we are expecting the northeast monsoons to be normal. And therefore, we do see expansion across all our business range, especially with the new products which we are introducing, we are seeing traction in the market, both on the nutrition side, which includes SSD, includes specialized nutrition and also includes our base fertilizer, and also on the Crop Protection side. And we do hope to continue this part of growth. So overall, we are happy, and we are also happy to see what the government is doing, both in terms of the subsidy side of the business. We're hoping that they will find more money to clear all the dues for the industry. But more importantly, what they are doing to promote balance nutrition, which will be helpful for the farmers. So -- and overall, our long-term strategy is as per what we have said, and we are quite happy to see. The Board reviewed it, and we are on track on terms of our long-term strategy to be a total agri input provider to the farmers for the benefit. Thank you very much.

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Operator [168]

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Thank you very much. On behalf of Batlivala & Karani Securities, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.