Chambal Fertilisers and Chemicals Ltd
NSE:CHAMBLFERT
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Chambal Fertilisers and Chemicals Ltd
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Ladies and gentlemen, good day, and welcome to Chambal Fertilisers and Chemicals Q3 and 9 Months FY '23 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Rishab Barar from CDR India. Thank you, and over to you, sir.
Thank you. Good day, everyone. Thank you for joining us on the Chambal Fertilisers and Chemicals Q3 and 9 Months FY '23 Earnings Call. We have with us today Mr. Gaurav Mathur, Managing Director; Mr. Rajveer Singh, Vice President, Legal and Company Secretary; Mr. Anand Agarwal, CFO; Mr. Ashish Srivastava, Vice President, Sales and Marketing; and Mr. Anuj Jain, Assistant Vice President, Finance.
Before we get started, I would like to point out that some statements made or discussed in the conference call today may be forward-looking in nature and must be viewed in conjunctions with the risks the company faces. Chambal Fertilisers and Chemicals does not undertake to update that. The statement in this regard is available for reference in the presentation. We will begin the call with opening remarks from Mr. Mathur. I would now like to invite Mr. Mathur to share his views. Over to you, sir.
Thank you, Rishab. Good day, and a warm welcome to all of you participating in this call. We have already shared the presentation on financial performance of the company, which I hope you would have gone through. Overall, we are happy with the performance of our urea plants, where we have achieved better efficiency in operations. The Crop Protection Chemicals and Specialty Nutrients business continues to do well, and we have a lot of confidence to continue the journey of growth as we go ahead.
We have substantially increased the sales volumes of DAP and NPK fertilisers with encouraging performance in the new geographies.
However, the high prices of DAP and NPK fertilisers had impacted the profitability. As we look ahead, there is a declining trend in commodity prices, including prices of DAP, NPK and MOP fertilisers and also natural gas. This augurs well for the company as it will not only give stability to our P&K Fertiliser segment but will also help in substantial reduction of working capital requirement of the company.
Moreover, the timely release of subsidy by the government of India is another positive factor, and we hope that this trend will continue as we have seen for the past few years. We are also happy with the execution of our Seed To Harvest program, which continues to provide desired momentum to our growth plans, especially in Crop Protection Chemicals and Specialty Nutrients and we are -- where we are directly engaged with a large number of farmers and we are continuously increasing this program as we progress.
I would also like to share that corporate social responsibility, which has always been a high priority for the company. We have made focused interventions in different areas to make a perceptible positive change in the lives of the community at large and especially the community around our site in Gadepan.
The highlights of our efforts on this front are also provided in the presentation. Our intervention in the area of education has received accolades over the years from the government and nongovernment organizations. Further, health, safety and environment is another nonfinancial indicator, which remains the focus area for the company. We continue to benchmark ourselves with best industry standards and strive to achieve better performance on a continuous basis. With that, I would be happy to take your suggestions along with my team. Thank you.
Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Tarang Agrawal from Old Bridge Capital.
Three questions from my side. On the CPC business, if I look at your 9 month FY '23 performance, it's noteworthy. Just wanted to check, are we EBITDA positive in this business amount?
Absolutely, we have a very reasonable good EBITDA on this business. As a company, we are very clear that we will -- as we grow, we will have profitable growth. And we would not like to just grow the top line, but we would like to have profitable growth.
Got it. Got it. The second is the INR 237 crore write-off that was taken as a prudent measure in Q2. Any update on that?
No, there is no update on that yet. We continue to work with the Industry Association, FAI with the government. But as of now, there is no specific update.
Got it. And the third question is, what's happening in IMACID? I mean the contribution has been considerably low for 9 months. I understand that asset prices have come off significantly. So just an upstream on IMACID.
Yes. I'll ask Anand to respond to that, our CFO.
So there were 2 things which happened in the current quarter. One was that the prices of the phosphate reduced substantially in Q3. And second was that our sales quantity has been very high in particularly Q3. And third point was that the rock prices have not fallen coming to date with the finished good prices. So these are the 3 reasons. And one more point is there that they adjust the rock prices post the quarter, okay? So some adjustment for the previous quarters were also taken into account in this quarter.
So when you say they adjust the rock prices post the quarter, do you mean that -- I mean, if you could explain a little more.
Not really. I think we should see going forward, the differences will reduce in the next few quarters.
No. Sir, for instance, rock phosphate prices have gone down during the quarter, right? Would we see the impact of that at the end of the current quarter? And similarly, if rock phosphate prices were to go up, we would see the impact of that at the end of the quarter. So a downward trend we lose, but in an upward trend, we benefited. Is that how it works?
Yes, that is true. But we have to see how the market dynamic works on the raw material prices and the finished good prices going forward.
Got it. And last question, what's the working capital cost of debt right now for Chambal?
So for the working capital, it will be at somewhere around 7.25% to 7.5%.
[Operator Instructions] The next question is from the line of [indiscernible] Mehta from [ Sumeet Shah Capital ].
Hello?
Yes, we can hear you. Please go ahead.
Yes. So I just want to -- a couple of questions. One is about the nanofertilisers which you expected to be the main change for the industry. I just want to understand what according to you what is, what kind of opportunities, viable demand that you see from quarter 1. And how is that [indiscernible] over the next few years. If you can give any color on that?
Yes. Thanks. Yes, I suppose there's been a lot of news on nano. So we are doing trials with nano-fertilisers, ourselves as well as we are getting inputs from what's happening in the market. What I would say is that being the first sort of year, it's very early days. And so I think we will need to see the whole cycle across a few cropping seasons to come to a full conclusion as to the potential of nano and the impact it would have on the conventional fertiliser. So it is still quite early days actually. So it would not be fair for me to comment on this.
Okay. So I think we are still testing on the story that one bottle of this nanofertiliser may replace that one bag of bulk fertiliser that you are currently selling [indiscernible]. Correct me if I am wrong.
Yes. So those are the trials that are ongoing in the market, and I'm sure that the companies who have brought forth this the nano would be in a better place. But like I said, we are doing trials, but we want to make sure that we gather a reasonable data. So we are doing trials over a few cropping seasons to make sure that we understand what is being promised.
Secondly, on the traded fertilisers. I mean, how will you determine what kind of -- how do you determine the margin on the fertiliser area, is the fixed margin being the purchase cost that we do or is it early days on what would be our domestic market prices in the country and whatever you get out from a purchase price will be the margin.
So your voice is a bit muffled. You are talking about margin or what?
Sir, I was talking about margins on traded fertilisers. So I just wanted to understand how does the -- how do you determine the margin? Is there a fixed margin, which is charged on the purchase cost of this fertiliser or the margin is purely determined based on the purchase cost and the domestic price of the fertilisers that you sell at.
No, there is no fixed margin. It is determined by the purchase price, the market realization, the subsidy and other costs incurred in the process, whether it be handling costs, interest costs and so on. So it's not a fixed margin. It is variable.
Is there a kind of a normalized situation number or a sustainable number that you generally achieve 5%, 10% margin I don't know. Is there some kind of a number that you can share?
No, we don't share specific margin data as such, but the government has a cap. That's all I can tell you, they have a cap of a 12% return on cost of goods sold, which they have a cap. It is unusual for companies to normally reach that cap. And of course, margin will depend year-on-year. Right now, we are seeing 2 sort of second year of turbulence. Hopefully, in the next few years, things will stabilize.
[Operator Instructions] The next question is from the line of Vidit Shah from IIFL Securities.
Just wanted to understand a bit more on the finance cost line that we have. We've seen costs go up versus 2Q, but both working capital and subsidy levels are coming down. So what's the reason behind this sequential increase in finance first?
Yes. So what has happened that the subsidy payment started post October. So -- and still, for the quarter, it was the highest compared to the earlier quarter. So the finance cost was higher on that count. And second, due to increase in the interest rates also there was some kind of lift. And we see that now in the last 3 months, we have received substantial subsidy so that should start coming down.
Okay. Understood. And we've seen a very healthy improvement in EBITDA levels Y-o-Y, whereas urea volumes are, in fact, 2% down versus last year. So is this growth in -- while you don't disclose margins, I understand, but is this growth driven by the DAP or the trading business? Or is it driven by better efficiencies in the urea business?
Well, it is largely driven by better efficiencies in the urea business. We have implemented energy efficiency projects in our plants and that have shown the results this year. And that's something that we will keep doing going forward to keep on improving energy efficiency of our plants, which is good financially as well as good from an ESG perspective also.
Okay. So is there any CapEx that you all have in mind for these energy efficiency and improvement initiatives going forward?
Yes. We keep investing on an ongoing basis with it. So normally, we are constantly on the lookout and we keep exploring energy efficiency projects. So we keep investing capital in the range of INR 200 crores to INR 400 crores almost every year on energy efficiency as well as other capital projects to replace old assets health, safety and environment related and so on.
And any further discussions or have discussions move forward in terms of other CapEx initiatives other than the Technical Ammonium Nitrate project?
Not as yet. Once we have something, we will definitely share it with all of you.
Okay. Cool. And just one last question for me is on the tax expense. What's -- I mean, I think what's the timeline in which -- do you expect to move to the new tax regime where tax rates could come down? How much old losses or MAT credit do you have outstanding before which remove.
We hope to regain a couple of years.
So like by FY '26, do we assume you would have fully moved to the new tax regime?
Yes, somewhere around, I think, next to next year or year after that.
[Operator Instructions] The next question is from the line of Harmish Desai from PhillipCapital.
Sir, in the second quarter, we had this onetime loss that we -- the realization of DAP. So -- and there was just mentioned that we could get this overturned. So is that something that has taken place? Or can we stop expecting that to happen?
Yes. As I mentioned earlier, we are working with the Fertiliser Association of India, and the matter continues to be in discussion with the Department of Fertilizers. As of now, we don't have any specific update on that, but we do continue to pursue it, not us and selectively through FAI.
Okay. And sir, on this asset performance in the entire 9 months that we have seen, which has been impacted because of a lot of reasons. I mean in Q1, there was this -- so in Q1, Q2, Q3. So what are -- what can we expect from the performance going into FY '24. I understand there was issues with RM pricing and all that. But what can we expect from that asset from FY '24, given not considering the -- Q4 and FY '24.
Yes. Look, let me answer this in 2 parts. One is that it's given the volatile situation, which still sort of persists, right? It's -- the whole conflict situation is still there, et cetera. It's difficult to predict anything right now on this area, one. Second is that overall, if you look at in asset performance, we have to bear in mind that last year was a bit of an exceptional year because of exceptional circumstances, right? The previous year. So we need to sort of see what is a normal situation. So we may be closer to normal now than in last year.
Okay. Understood. And sir, one thing, so in the non-urea segment, we know that in the Crop Protection segment, we do not have any assets, but sir, what is our plan from this segment in FY '24? Do you plan to have any kind of CapEx and introduction of new technicals in this particular segment?
Okay. You're talking of a manufacturing facility in Crop Protection, et cetera. We continue to evaluate that, right? And obviously, if you look at CPC assets, there is a technical manufacturer, there is formulation manufacturer and so on. We continue to evaluate it. And as of now, we don't have any concrete plans to acquire or build any assets right now. We have a business model which seems to be working fine and is giving us a strong top line growth profitably. So no specific plans right now.
But sir, do we have any plans in terms of targeting some amount of CapEx for registration of off-patent molecules?
But for that, we need a manufacturing facility, we can't register off-patent molecules without having a manufacturing facility. So that is there, but we keep exploring various options in this area as we are now growing in size, and there are opportunities in various forms.
Okay. And sir, my last question, we have a urea business, we have a non-urea business. Sir, what can be the margin profile in the 9 months that you have seen the margin profile bifurcation between urea and non-urea just at the end of the year?
We don't really normally share that. And also, these are very, very unusual years. So these are not also representative of a stable situation.
[Operator Instructions] The next question is from the line of Prashant Biyani from Elara Capital.
Sir, what would be the breakup of urea production from G1 and G2, G3 for quarter 3?
So quarter 3 production from G1 was 5.35, G1 plus G2 was 5.35 lakh metric tons and from G3 was 3.46 lakh metric tons.
Sir, would you -- would we be taking any maintenance shutdown this quarter?
Yes. In quarter 4 this year, we have completed 2 years operation of Gadepan-III, and we'll be taking a shutdown in March. Hello.
Sir, the line for the participant dropped. We move on to the next participant. The next question is from the line of Dhruv Muchhal from HDFC Mutual Fund.
A question on the non-urea business. Now if I understand correctly, the government did not cut the subsidy amount significantly and the RM prices, the input prices are falling and your volumes have also increased. So based on my rough calculation themes, we should have benefited recently for the non-urea business this quarter, but it seems that's not fully reflected. So is it because we had the higher cost inventory or probably my understanding is wrong if you can probably help.
Yes. See, normally, if you see this quarter, this quarter is a key consumption quarter for Rabi and a reasonable amount of quantity arises by the end of September, early October, right, which has been contracted earlier. So what you said is right. When you look at the weighted average cost of goods, it does result in some positive movement, but not an exceptional gain.
Okay. So is this because you had already contracted the sale price or the input prices in the earlier quarter at higher prices probably because of the situation and hence, the full benefit is not getting reflected. Is that...
Yes. There's a lead time of 30 to 45 days, okay? So therefore, if you have to supply material in the peak Rabi season in October and November, we have to do the contracting in September, right? So -- and August. So the prices were still a little bit on the high side, and then they started to fall. And these are also linked to what's happening in the global situation in terms of Brazil and China and the U.S., et cetera.
The second -- 2 more questions, sir. Second is now that the global market is somewhat stabilizing and the prices have also started falling. I just wanted to understand, do you think the traded volumes will start increasing, given the availability is improving? And also wanted to get some sense on the domestic inventory or the supply situation. For the last 2 years, we were seeing the market was extremely tight. So do you think some relaxation can happen in the next 2 years from a market perspective? And how does that dynamic play out?
Sorry, what was the first part of your question?
So broadly, so the import prices have started to decline and there is some stability in the pricing, some stability, if I can call that. So do you think the traded volumes for us can increase because our trading -- there is more visibility to our trading now?
Look, if I go back a year, we had started to see the same sort of trend one year ago also, and then things again changed. So while we have seen a positive trend of decline of international prices, let us wait and see what happens over the next few months. That's one. Second is that in terms of the overall volume for the country, the change would not be very significant because with -- along with the Department of Fertilizers and all the companies put together, we ensure that adequate quantity of fertilisers was available. As regards Chambal, depending on what the international procurement prices, what announcement of subsidy from the government is, we will then plan our volumes accordingly.
Sure, sir. And sir, the last question is on the -- you mentioned there is a cap of about 12% in cost of goods sold for the non-urea fertilisers, if I'm not wrong. So that cap for you, the cap then reflects the cost of purchase of basically the imported cost of these NPKs or DAPs. Is that correct?
Yes. The 12% is based on the import price. There is a certain formula that the government uses. So they base it 12%, but it is essentially linked currently to the CFR price plus import duty.
Okay. So CFR -- and margin of 12% is maximum that you allowed.
That's right. That's the feeling.
The next follow-up question is from the line of Prashant Biyani from Elara Capital.
Sorry, my line got disconnected. Sir, this G3 maintenance shutdown will be there for a month?
Yes, it is close to a month. Yes.
Sir, in that case, in February and March can be -- in January and February, can we produce beyond 100%? Or what is the mandated limit by the government to compensate for the March production?
Actually, we run our plants at the full capacities. We don't reduce the output from the plant.
Okay. So this 12,70,000, which is the production limit, if I'm not wrong, then is that achievable in the 11 months broadly what I wanted to ask?
Yes. Once we achieve that, we will take the shutdown only thereafter, and we hope to achieve that in the first week of March.
Okay. And sir, what would be the closing inventory for urea for us during the -- at the end of Q3?
Around 24,000 tonnes.
And sir, what would be the oil gas price for Q3 and current gas prices?
It is [indiscernible] per MMBtu for quarter 3 and on NCV basis.
23.22?
Yes.
And current prices?
December final price was USD 20.5 per MMBtu on NCV basis. So January is only provisional price.
And sir, how are the current ammonia realizations?
The ammonia realization continues to be reasonably good in the range of 15% to 20% of the margins are in the range of 15% to 20%.
Sorry to interrupt you. May I request to come back for a follow up question?
Sure.
Thank you so much. [Operator Instructions] The next question is from the line of Resham Jain from DSP Investment Managers.
So just on the capital allocation part, which I'm asking every time. And I think you have announced to one CapEx on TAM. But beyond that, how are you planning to allocate such a large cash pool because it will take another 2, 3 years' time to whatever large projects you will commission. So it seems a lot of delay or I don't know what is happening on that side. If you can just explain this because this has been a general investor concern on how are you planning to deploy substantial cash flows, which is -- which you are going to generate.
Yes. Thank you, Resham. So yes, we are going ahead with the ammonium nitrate project, and we continue to explore further opportunities. As and when we come up with something, we will definitely let the investor community know. We just want to be mindful that what we do is aligned with the company's goals and focus, and we continue to work in that direction.
The next question is from the line of Falguni Dutta from Jet Age Securities.
Sir, is it possible to say like the profits in NPK trading, would they be flat on an absolute basis Y-o-Y in Q3?
We don't comment on that as such. And yes, the volumes and the situations were quite different last year compared to this year.
I just wanted to know that even as we have had quite good volumes. So would it be fair to assume that they were flat, if not fallen?
The margins were under higher pressure this year because of the procurement prices going so high and the fact that as an industry, along with the viewer, you want to provide fertiliser to the farmers at a reasonable price. So the margins are under greater pressure compared to last year.
And sir, one question, I just missed your comment. So if we have to supply for the DAP and NPK for Rabi season, when do we import, when do we need to import, which month?
So we start to contract from August onwards for Rabi season. And then that continues till October or so, August, September, October would be the main month for contracting for the Rabi season. I mean goes into the soil largely around the middle -- till the middle of December or at best the third week of December. So the idea is to get bulk of the product by them, so it gets sold and it gets used by the farmers.
Okay. And sir, one final question. What would be the -- how would be the inventory -- fertiliser inventory situation in the country as of now?
Well, now as companies, we are not driving to the overall inventory data. Earlier the data was available, but I think the department has now stopped access of that. But our understanding and discussions with the department is that the inventory situation is quite reasonable.
Okay. Meaning it's not too -- it's managed. It's not neither high nor low.
Yes. It's quite reasonable. That's what our understanding is.
The next question is from the line of Shreya Shah from ICICI Prudential Asset Management. Please go ahead.
Thanks for the opportunity, sir. Sir, my question is...
Shreya, sorry to interrupt you but your voice is not coming very clear. May I request you to speak through the handset.
I am using the handset, is it audible now?
No, ma'am. Your voice is coming very feeble.
Hello?
Go ahead.
Sir, my question is regarding energy efficiency, as I mentioned, that investing in plant more energy efficient. So if [indiscernible] despite energy efficient book, how much further then we expect it to be efficient?
From what I could understand I think you are asking about energy efficiency, right?
Yes.
Look, it's -- one is absolute energy efficiency and also the other is that if you're investing, are you getting a payback. So as of now, we consider any project, which gives us a payback of around 4 years, then we could implement that energy efficiency project, right? Then this is also a function of the gas price and so on and so forth. So while there is a number that a plant can reach, but it also depends on the kind of payback. So we look at all of that and then decide to invest. What I can say to you is that overall, Chambal, if you take the overall industry average, Chambal is significantly better in energy efficiency than the overall industry average.
Yes. So that [indiscernible] how much further can we expect to [indiscernible] already better off than the other, so how much further can we expect?
Well, it's difficult to answer that, Shreya because it depends on a number of circumstances. There is an absolute level, but it depends on a whole host of other circumstances.
Next question is from the line of [ Aman ] from Augmenta Research.
Sir, can you please highlight how the prices and the market of ammonia is behaving globally?
As of now, we are seeing a downward trend for the last 1.5, 2 months. As you might understand that ammonia is also linked to gas and gas has high usage in the winter in Europe for heating and so on and so forth. Also, obviously, ammonia goes as a raw material in a number of chemicals, a large part in fertilisers and so on. So right now, we're seeing a downward trend. Again, whether that will continue, how low that will reach will probably emerge in the next few weeks as the whole new sort of year evolves and will also depend on what happens in terms of the geopolitical situation across the world.
[Operator Instructions] The next question is from the line of Himanshu Binani from Prabhudas Lilladher.
So sir, I have 2 questions. Number one, it is on the NBS rates. What we understand is that the -- the RM prices are falling, so it is very likely that the government would be revising downwards their NBS rates for FY '24. So the question now is, if at all, this happens on a retrospective from 1st January onwards. So how does one should actually look into the margin profile? So maybe we can expect some sort of like one-offs in the 1Q, '24 number sort of that. So can you please help us with this?
Yes, you're right that as the prices are falling, there will -- the government had announced the NBS rates and normally, in any case, they announced fresh rates from the 1st of April. What we understand is that they will start to do this calculation from the middle of March. They look at the prices for the last 6 months and then basis that they do the calculation and declare a rate for the next 6 months. As regards whether that will have an impact, et cetera, again, it will depend on -- we are still in sort of early February. It will also depend on what kind of prices happen in February and March. We have seen a decline in prices, especially, let's say, in January, but the decline was less till then. So it again depends on how the prices move in February and March. There is also a discussion happening with the government on how to treat the existing stock which the industry has and whether the existing rate should apply on that or not. So there's a lot of discussion that the fertiliser industry is having with the department to streamline the subsidy process.
Okay. So just to add on that, basically, if I actually work out with the spot pricing in terms of the RM as well as on the subsidy and the MRPs. So the industry is actually making a very decent sort of margins in the current tenure. So the question was largely that, will the government allow the industry to move [indiscernible] like profits?
Yes. But I understand that this is -- this may be a situation at a point in time. But when you -- the government looks at one full year data. So when they look at the reasonability, they look at the full annual data and they calculate the return on cost of goods sold on an annualized basis.
And sir, the second question was largely on the bookkeeping side. So I just wanted to have an understanding on the excess ammonia, which we have been generating from the urea process. So how do we account that on our books basically?
So it's not very complicated. We sell that, and that's revenue. There is a formula that the government has or a policy that the government has. What we have as excess ammonia is called technical excess ammonia, which means it is generated because of the inherent design of the plant. And when that happens, the government takes a certain percentage, 35% of the profit, the government takes the 65% we, the company keeps. So it's quite straightforward in that sense.
And that is accounted into the urea revenues only?
Yes.
The next question is from the line of Ranjit from IIFL Securities.
So I have just one question. So during the quarter, there was a change in policy from the government of India rather encouraging the companies to get into a more long-term price contract for the gas sourcing. So just wanted your thoughts, how should one view this? Does this material enough? Would it change the way we have been accounting your gas sourcing?
So currently, we have, for a large proportion of our gas, we have a long-term contracts which expire in 2028 and a much very relatively small percentage is on a spot basis. Here, again, I think between the industry and the government, there has been close working to minimize the cost of spot gas. The government has also formed a small committee to look into the medium and long-term contracts for bridging the gap which exists currently between long-term contracts of the company and what is required currently in the short term, right? So -- and yes, I think overall, the government wants gas to be purchased at the lowest possible cost. It is situation dependent, whether it should be, what proportion should be long term, what proportion should be short term. But in general, we want to be a significant proportion in long-term contracts.
There are also midterm contracts.
And we also have some midterm contracts if you find an advantageous situation. We've also taken the opportunity to enter into 1-year and 2-year contracts.
But other than that also kind of highlighted [indiscernible] ability was earlier with the government to pay the higher cost, which would now get transferred to the companies. So how should one view that?
Sorry, your voice was little unclear. Can you repeat the question, please?
So this long-term contracts would be a take or pay and to that extent, it also brings a bit of liability, which was earlier done by the government, it is now getting transferred to the companies.
Yes, take -- the long-term contracts have take or pay, but that's not really an issue if that is your question.
[Operator Instructions] The next question is from the line of Tarang Agrawal from Old Bridge Capital.
Two questions, and thank you for the opportunity again. The first one is on the trading business. Do we run any NRV risk should the government decide to push down the subsidy prices?
Yes, if the subsidies revised downwards, whatever closing stock, we do have, we have that NRV risk.
At the same time, like I mentioned, we are in discussion, the Fertiliser Association is in discussion with the government to apply the existing subsidy on the stock that is available with each company, which you carry in your books at the end of the quarter.
Okay. And how much would that be by volume approximately?
It is difficult to state at this point in time because the sale is still going on. So if it moves out and the farmer picks it up, then it is no longer in stock. So it's a little difficult to state what would be the number.
Any ballpark estimate?
It's quite difficult because you see, it depends not only on us. It depends on the stock and movement other companies have and so on.
Okay. No worries. Okay. The second question is on Crop Protection. I mean, just to get a sense on the business a bit better. How -- I mean, how is that portfolio of things here? I mean are we pervasive across all pesticides, I mean, fungicide, herbicides, insecticides. Are we pervasive across cotton, corn, rice? Just some flavor on this would be helpful. Are there any specific registrations that we have, which are probably not yet in the market in terms of the other peers, and that's why we're getting traction on them?
That's a really excellent question. I'll ask Ashish, our Vice President, Sales and Marketing, to answer that.
Yes. Tarang, as you rightly asked for, whatever crops are there in our operating geographies, each and every insect, pest, fungus and we discovered in our portfolio. In fact, we have some -- in some cases, we have multiple solutions offering to the trade for some of the insecticides and fungicides. So it's broadly -- the portfolio is broadly covering the entire crop cycle of insect, pest and fungus.
Okay. And I mean, attraction in the December quarter has also been quite nice. So I mean, would it therefore be safe to presume that you have offerings for Kharif as well as Rabi?
Yes. I mean, I think what -- like Ashish mentioned, we have a comprehensive mapping of crop versus fungicide, pesticide and we decide, right, very, very intimately map across both Kharif and Rabi. So it's crop-wise map actually. So therefore, it doesn't matter whether it's Kharif or Rabi. It is crop-mapped. It's a very comprehensive portfolio that we have.
[Operator Instructions] The next question is from the line of Prashant Biyani from Elara Capital.
Yes. Sir, during the implementation of One Nation One Fertiliser, the Fertiliser Secretary had told on television that eventually they would want to restrict the movement of fertilisers implying that if we have a plant in Rajasthan, then rather than selling fertilisers to as far as UP, we should rather first exhaust the demand in Rajasthan or the nearby states. So have we seen any change in supply plan from the government for the entire industry whereby the supply to the -- to our interland markets are increasing. And to the far-off markets are reducing. Have we seen any sort of indication or change in supply plan?
Look, I think, first of all, it's very positive that the government is doing because it reduces overall logistics costs for the country, right, which was not benefiting anybody. So they are -- they have developed an optimized model for movement of fertilisers, which they are in the process of implementing. As regards movement, obviously, the consumption of one state is not -- is way less than our production. So we will continue to get supply plans, and we continue to get supply plans from multiple states, right? And also I'm sure that there is also a realization that if you make it too restrictive then in case there are shutdowns and so on and so forth, then there will be a challenge on availability. So an optimized approach is being taken. That's one. And as Chambal, while, of course, urea is a key product. But over the years, we have built a very, very strong brand, which is not just restricted to urea or other non-urea bulk fertilisers, but also our Crop Protection and Specialty Nutrients, the brand. And therefore, we are pretty comfortable with whatever optimized movement plans that the government gives.
So sir, there have been changes in the supply plan to that effect or at least the start has been made to that effect?
As of now, it is almost negligible.
Sir, if that happens, then I mean, our other products apart from [indiscernible] urea, they have been mostly tagged along with urea. So if our sale is concentrated in the interland geographies only, then would it have some sort of a question mark on growth of other business segments.
So Prashant, first of all, we do not tag any products with urea at all. So let me be very explicitly clear on that, right? That's one. Second, as I said in the first part of my answer, we have built a very, very strong Uttam brand, which is not restricted to urea at all. So if you see, we have expanded into 5 states down south, Maharashtra, West Bengal, Gujarat, Andhra Pradesh and Telangana. And we are selling non-urea bulk fertilisers, we are selling Crop Protection Chemicals Specialty Nutrients to those states. We don't have any urea there. So our recognition by the farmer of Chambal as a company of our brand Uttam are practices in the market in terms of the support that we provide. All of those also stand for themselves. So it's not -- we are not at all bothered about any changes in movement plans.
Sure. And lastly, sir, on the Crop Protection side, many companies have told that there is surplus channel inventory because of the adverse monsoon and delayed season. Sir, how has been our receivables faring in that context? And do you see that it would be prudent to slow the rate of growth in CP in the light of the industry already having higher channel inventory?
So first of all, our receivables are absolutely very, very good, very strong, no issues. We do a large proportion of our business in CPC on cash terms, right? One. Second, we don't take any returns back from the market. And third, we absolutely have no intention of slowing down. We believe we provide a lot of value through the products and the service and programs like Seed To Harvest to the farmer. And we have intentions to keep speeding along as we are.
The next question is from the line of Deepak Chitroda from ATG.
I just have one question on the national hydrogen mission policy, which has been announced by the government. So what's your thought in terms of how it is going to have impact on the port industry, especially in case of urea? Because as I understand, I think some target has been set by the government about 5% to 20% from next year onwards. So how basically it is being translated into the costing part of it? Will it basically improve the margin for the industry going forward? And -- I mean, basically, what's your thought process when you talk to interact with the government and various other organizations.
Okay. So first of all, to be very, very clear, there is no target set for any part of the fertiliser industry on use of green hydrogen between [ ammonia ]. That's one. Second is for production of urea, you not only need hydrogen, which is then converted to ammonia, but you also need carbon dioxide. So I think not only the Department of Fertilizer, but this has also been explained to the Ministry of Energy and the renewable energy department that to produce urea, you need both carbon dioxide and ammonia, which comes from hydrogen. Therefore, just producing green hydrogen is not going to suffice to produce urea. Now as regards to the broader question on green hydrogen policy, we are looking at it. That's not necessarily our core area. We are examining it as of now out of -- if we see any opportunities in it going forward. But it's very, very early days on that.
Okay. So basically, it's very early days to talk about it, and is also basically not clear in terms of the -- what is the future towards the urea industry, particularly if you could talk about in the cost in terms.
No, no. The future is very clear for the urea industry. The urea industry needs carbon dioxide also to make urea. Therefore, the use of green hydrogen and green ammonia in the urea industry is not foreseen in the future that I can think of.
I now hand the conference over to the management for closing comments.
So thank you very much all of you for your very insightful questions. It's always good to have the questions and provide clarity to our investors. Thank you. Have a good day.
Thank you very much. On behalf of Chambal Fertilisers and Chemicals Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.