Coromandel International Ltd
NSE:COROMANDEL
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Coromandel International Ltd
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Ladies and gentlemen, good day and welcome to the Coromandel International Limited Q4 FY '23 Earnings Conference Call hosted by PhillipCapital India Private Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Harmish Desai from PhillipCapital India Private Limited. Thank you. And over to you sir.
Thank you Darwin. Good afternoon and welcome to the fourth quarter and full year FY '23 earnings call of Coromandel International Limited hosted by PhillipCapital. From the management we have Mrs. Jayashree Satagopan, Chief Financial Officer; Mr. Sankarasubramanian, Executive Director Nutrient Business, Dr. Raghuram Devarakonda, Executive Director, CPC Bio and Retail Business and Mr. Shanky Bhola, DGM Finance. I'd like to thank the management for giving us the opportunity to hold this call. We will begin the call with the opening remarks from the management post which we will have a Q&A session. Thank you and over to you, ma'am.
Good afternoon, everyone and thanks Harmish for organizing the conference call. I have with me Sankar and Raghu, who will join me in responding to your queries. Let me begin with giving an overview on the agricultural environment followed by the company's performance and then we will update you in English.As far as the Indian agriculture is concerned, the country witnessed above normal rainfall during the last season. Monsoon for this year has also been -- is also expected to be normal as per IMD; with a 96% forecast on the rainfall. However, there are recent indications of El Nino for this year. Central and Northwestern regions may witness below normal rainfall. Overall with the reservoir levels at around 98% of last year and good soil moisture conditions agricultural growth is expected to be stable.Fertilizer industry performance, global supply of key commodities improved year-on-year and industry is to witness dropping of prices of major raw materials. Domestically, the fertilizer demand has remained strong, supported by good monsoon and favorable policy measures from the government.Government of India, during the year, approved Nano-Urea and Nano-DAP for the benefit of farmers in making the country self reliant over a period of time. For the quarter the industry volume DAP and complex fertilizers primary sales was above 62%. Currently, it is 46.4 lakh metric tons vis-a-vis 28.7 lakh metric tons last year with higher imported DAP sales. DAP and complex fertilizer industry consumption indicated by [indiscernible] sales was marginally up by 2%. Raw material prices continue to witness a downward trend.On a year-to-date basis DAP and complex fertilizer industry primary sales volume was up by 23% and the [indiscernible] sales volume was marginally down by 1%. As far as Coromandel's performance is concerned, during the financial year '22-'23. Coromandel delivered robust performance, registering a strong growth in turnover and profitability with its diversified portfolio of nutrients, crop protection, bio products and retail business.Record volume sales in NPKs and high subsidy rates in the Nutrients business primarily led to the increase in revenue during the year. In Crop Protection business, domestic formulation and B2B business grew during the year, which was partly offset with the headwind sales in the export market. Coromandel ensured that our input were made available to the farmers and key operating markets and promoted the use of balanced nutrition and integrated test management to help [ return ] the soil and farm productivity.Company's Nutrient segment performance Nutrient and Allied business segment revenue increased by 33% during the quarter and 63% during the year. The company's fertilizer product registered a good growth, during the year both in terms of turnover and profitability. On the sales front, the business registered a sales volume of 6.25 lakh metric tons during the quarter, which is 5% higher than the last year. For full year, DAP and complex volume was 46.45 lakh metric tons vis-a-vis 33.22 lakh metric tons, which is 10% above last year.Manufacturing DAP complex volume was lower by 1% for the quarter and higher by 10% for full year. Company's market share in Q4, including NPK and DAP was at 13.5% and for the full year at 15.4%. The market shares of complex fertilizers grew during the full year to 26.7% vis-a-vis 26.3% last year. As far as the agency is concerned, Q4 sales was at 1.9 lakh metric tons with a growth of 19% over the last year. And on a full year basis, as you see business clocked 8.1 lakh metric tons this is 7.5 lakh metric tons compared to last year. Market share went up to 14.9%, last year it was 14%.Our commercial teams will continue to ensure timely availability of raw materials to enable continuous production at the manufacturing plant by staying abreast of the latest development in approval markets. During the quarter, our DAP and complex fertilizer plant operated at good capacity levels and produced 6.46 lakh metric tons of fertilizer. On a full year basis, plants operated over 90% of capacity and had a record production of 32.91 lakh metric tons of fertilizers [indiscernible] production during the quarter was at 0.67 lakh metric tons and for the full year, it was at 4.1 lakh metric tons.During the year, Coromandel strengthened its backward integration capabilities in the Nutrient business by acquiring 45% shareholding in Rock Phosphate mining company in Senegal. Major capital expenditure projects like the sulfuric acid plant and the desalination plant are progressing well as per the schedule.Company continued its focus on developing and during the year developed a new tech project Nano-DAP. Which claim to improve nutrient uptake, lower water consumption and minimize environmental losses. Company is setting up a plant in Andhra Pradesh in and plans to release the product in the second half of 2023. With this initiative we will continue to promote balanced nutrition of crops and support the farming community.On the Crop Protection side, the business registered a growth of 7% in revenue for the quarter and 5% on a year-to-date basis. Domestic Formulation business good growth with cost attraction from the new product launches made during the year and this year. The cost lag effect and price-related challenges in [indiscernible] impacted our export business. A new pre-emergent herbicide [ Klario ] was launched during the quarter. With this a total of 8 new products have been introduced earlier in the year. The R&D and product registration teams are working closely on a rich pipeline of new and combination products to be launched in the coming year. The business is further activating some of its registrations in the global market with collaboration with its key B2B customer. Multipurpose plant at Ankleshwar for manufacture of 3 new technicals have been commissioned and 2 products have been commercialize during the last quarter.The business has purchased 50 acres of additional land at Dahej for the greenfield expansion. On the CapEx front, company recently announced an investment INR 1,000 crores where it intends to invest in crop protection business primarily in building of new multipurpose plant and also launch integrated technical expertise in manufacturing infrastructure to orient to adjacencies like CDMO and specialty chemicals. On the bio products the business is working on other plant extracts to expand its product offerings. Azamax an insecticide was launched in the market. On the manufacturing front, biobusiness is under implementation [indiscernible] filtration and concentration projects.The retail stores operated well during the quarter focusing on providing all around agri solutions, including products, farm advisory and mechanization services. The business launched a new e-commerce platform and has received good response from the end customers. Retail business has include operational efficiencies and has leveraged technology to reach out to farmers.In Q4, [indiscernible] business to a profitable as it focused on high-margin products and operated with negative working capital. The company continues to promote airtight solutions to farmers and started piloting cold storage solutions through the retail network. It set up plans to scale up the loan application for the successful completion of pilot test for this key operating markets.With that, let me take you through the company's financial performance Turnover. Company recorded a consolidated total income of INR 5,523 crores during the quarter and INR 29,799 crores during the full year vis-a-vis the corresponding period, made total income of INR 4,304 crores for the quarter and INR 19,255 crores for the full year. This represents a growth of 28% per quarter and 55% on the full year. The increase in revenues is attributable to higher raw material prices, which have driven a higher MRP and high subsidies realization as far as the Nutrient business is concerned.Nutrient and Allied business contributed to 89% share, and remaining 11% is from the Crop Protection business for the quarter. And for the full year, the ratio is at 91% and 9%, respectively. Subsidy and non subsidy of the business stands at 84% and 16% for the quarter and 87% and 13% for full year.Profitability. Consolidated EBITDA for the quarter was INR 403 crores against INR 380 crores last year and full year it was INR 2,926 crores again INR 2,150 crores in the last year.In terms of subsidy non subsidy share, it stands at 66% and 34% during the quarter and 75% and 25% for full year. Previous year, it was 59% and 41% during the quarter and 70% and 30% for the full year.Net profit after tax for the quarter was INR 246 crores in comparison to INR 290 crores for the corresponding quarter last year. And INR 2,013 crores over the full year against INR 1,528 crores last year. Subsidy during the quarter, company received subsidy of INR 4,483 crores. For full year, subsidy received amounts to INR 12,474 crores. Previous year figures INR 7,077 crores for the full year.Subsidy outstanding as on 31 March 2023 was INR 2,378 crores against INR 294 crores, which was outstanding in the previous year. Interest during the quarter, company earned interest income. This is excluding the IND AS adjustment of INR 3.8 crores. We received a net income of INR 32.7 crores in the same quarter last year. For the full year, net interest income earned is about INR 4.3 crores. During the year, the company had elevated working capital requirements, primarily due to the high raw material prices as well as a higher subsidy outstanding from the government, which the company managed through taking suppliers and buyers line of credit.Coromandel maintained a surplus funds of approximately INR 3,000 crores in Board-approved securities, and these earlier marked for specific growth-related investments apart from funding the capital expenditure program of the company.On a net basis, the company ended the year with a surplus of about INR 3,111 crores, including cash in hand. Credit rating, the company's balance sheet continues to be strong. During the quarter, company's long term credit rating by Crisil has been upgraded from Crisil AA positive to Crisil AAA stages. And the short-term debt rating continues to be a Crisil A1+. The company is on [indiscernible] taking the India [indiscernible] research a fixed group company continued to be in the AAA table and short-term rating at A1+.ForEx, during Q4 rupee traded in a broad range between 80.89 and 82.96. The company continued to follow a prudent consolidated approach of hedging the ForEx exposure, which has immensely helped in limiting the impact of currency fluctuations.Dividend. The Board meeting held on 15th May 2023 has recommended a final dividend of INR 6 per share, along with the interim dividend, which was declared and paid earlier, the total dividend for the year is INR 12 per share in line with the prior year.As the Indian economy continues to progress well, healthy reservoir levels, good soil moisture conditions and a forecast of a normal monsoon. All these augers well for the Indian agriculture sector. As a leading agri solutions provider, Coromandel will continue to promote integrated farm practices and bring prosperity to the farming community.In terms of financial performance, it has been a great year, and we expect the momentum to continue in the coming years.Thank you for your interest in Coromandel and joining on the com call today. With this, we can open the session for questions and answers, and we look forward to the interaction. Thank you.
[Operator Instructions] The first question is from the line of Prashant Biyani from Elara Capital.
Ma'am, we had announced investments in Crop Protection and Specialty Chemicals a few weeks back. Any investment that we have freezed on the fertilizer side?
What we shared with you, Prashant, is only part of the overall investments that we have for 2024 and 2025, specifically on Crop Protection and Specialty Chemicals, which is INR 1,000 crores. We also have investments planned for fertilizer, specialty nutrients and the bio products for the company. Overall, for 2024, we have CapEx projects of about INR 2,000 crores that have been identified, which includes major capital expenditure, which includes some of the normal annual CapEx as well. For fertilizers, we have plans to set up the Nano-DAP facility. There is the capacity expansions and debottlenecking that is happening in the plants like Vizag and Kakinada. Apart from that, we're also looking at increasing the valuation capacity in our SSP plant. So overall, for the company, it's about closer to INR 2,000 crores of CapEx.
So out of INR 2,000 crores around INR 1,000 crores could be for fertilizers?
I would say about INR 700 crores to INR 800 crores for fertilizers.
And by when can we set up the granulation facility?
The granulation is for SSP. We have powder, and we have [indiscernible]. So we are looking at increasing the capacity of granulated SSP. On the fertilizer front, the -- working on several actions, including use of data analytics to see how we can improve the capacity for granulation within our existing facilities.
And if we are trying to do it in-house, then would that expansion be of, say, more than 10% of the existing site?
We depend currently, we are looking at there is some work that has already happened on Kakinada. Which uses a bit of [indiscernible] also using multiple raw material process, which can actually help in throughput increase. We've seen some benefits flowing in FY '23, and we expect it to accelerate during the year. Where we continue to work on debottlenecking and increasing the capacity in house, depending on the market conditions, as we have maintained earlier, we will also look for opportunities to import. You may appreciate during the last year, most of the DAP that we sold in the market had come through our imports because we were able to then perpetually use the facility for manufacturing the NPK, other NPK groups. So we'll be looking into all these options to maximize on our capacity utilization.
And how are we placed on the channel inventory because the industry, I believe, is sitting on a higher side of the inventory. So if you can just give an idea on our channel inventory position.
Sankar, do you want to...
Channel inventory industry has got a huge amount of stocks DAP as well as NPK. Majority of these stocks are lying with importers who have contracted these volumes in the fourth quarter. At Coromandel, we focus more on manufacturing. Our imports are mainly to meet the demand [indiscernible]. So our channel unit is one of [indiscernible] and we continue to maintain that. So we do not have any issue in the channel inventory.
[Operator Instructions] The next question comes from the line of Naushad Chaudhary from Aditya Birla.
Just explanation on the previous question in terms of the cash deployment, I understood you explained your plans for FY '24, but looking at the cash flow we have an existing surplus beyond FY '24, what is the outlook? What are you planning? And how are we planning to use this cash and which part of the business would attract more investment?
Good question, Naushad. Thanks. As we had indicated in the past, we are looking into opportunities to grow the business, both organically and inorganically, right. For the current year, as I was mentioning, there is about INR 2,000 crores of capital expenditure that is being looked into. The cash flow might be during the year and spill over into next year. Having said that, we are also looking into further opportunities depending on the attractiveness, the synergies and what it could do to Coromandel in a medium- to long-term, that exercise is on. So the intent is obviously to see how we deploy the fund into business for us to get a longer-term sustainable profitable growth in Coromandel. So the management is focused and working on that aspect.
Can we get into a little bit granularity exactly which area we are looking into. You have talked about CDMO specialty positivity, but if you can help us understand broadly in which kind of chemistry, we must be targeting and which kind of any other industry we are looking at? And how would it sync to our existing competencies?
See, some of these are very strategic in nature as we would appreciate. Last year, we looked into a BCG investment, right? And we were able to come and talk to you once we were more or less there. Similarly, there are multiple proposals that the company is looking into. There are growth, high-growth opportunities like specialty chemicals and CDMO, which we have already spoken. So some investment is committed from the company. If there are interesting opportunities coming in these areas, definitely, we will be looking into it. And I'd request to hold this on until you come up with something where we can specifically come and talk to you about.
The next question comes from the line of Vivek Ramakrishnan from DSP Mutual Fund.
Congrats on the AAA rating. My questions are on the debt levels in the company. This year, like you pointed out because of increased government subsidies you've managed with striking creditors. The first question that I had is, are these creditors interest-bearing in any case in any way or there's no interest cost in it. And the second thing is, given your large INR 2,000 crores CapEx plan, do you expect that the borrowing levels will go up in the current year? Or how do you see the ebb and flow of creditors versus debt levels?
Yes. Thanks, Vivek. The elevated working capital requirements were met through extended credit terms in some cases, while the supplier has sort of accommodated in other cases where we have taken going through the [ PAM ], there is an interest component into it. As far as capital expenditure program of INR 2,000 crores is concerned, we intend to fund it internally through our existing resources. Over the last 5 years plus, we've not resorted to any long-term borrowings for capital expenditure. I think there is enough cash accruals that happens on a yearly basis. That will be then deployed in these investments.
The next question is from the line of Vishnu Kumar from Spark Capital.
Just on the NBS rates that you have taken, could you just help us understand what is the NPK rates that you have taken? And have we -- what is the impact in the first quarter -- I am sorry, this quarter, fourth quarter, how much impact you have taken?
So Vishnu, we have made an estimate of the rate based on the foreign raw material prices. As you know, the RM prices have been coming down over the last few months, and we expect that the trend to continue. I do not currently have been rates right in front of me, these are best estimates that we have taken. And based on that, the adjustments for the quarter has been done. I would also like to indicate that based on our interactions with the dealers, we expect the subsidies to be moderated 2 days, 1st of January and then in 1st of April. So there are 2 purchases that are likely to happen. On the 1st January, it will have a double impact on in terms of the subsidy income itself. The other one is in terms of the channel inventory. And obviously, [indiscernible] channel inventory impact that we form. So across DAP this has been considered and factored in. I do not have the exact rates and [indiscernible].
So both Jan and April, both numbers have been already considered. So no more, we should not expect anything in first quarter.
We have made a catchment based on what would be the best possible rate. And I do not see a reason for any major variation to come in first quarter.
And on the INR 1,000 crores investment in the chemical business, if you could just help us understand time lines of the plant commissioning, what level of contracting are we there? And very recently, China has again started. We understand from multiple companies that they started dumping a lot of products. Does it impact at least some part -- do we see some impact in our investment PCs on this side?
Okay. And again, a very good question, Vishnu. Out of the INR 1,000 crores, the first and foremost what we wanted to do was to also purchase additional land for our Crop Protection business. We have identified a 50 acre plot in Dahej at very, very short terms. The business has worked on procured the land has -- as it now ready [indiscernible]. That has happened in the last 1 week, the registration got completed. Apart from this, there are 3 proposals that the business is working on. One is for a multipurpose plant, especially for the fungicide, which is -- which will be coming up at Ankleshwar. They've submitted the business proposal and it is in the final stages of approval internally. The second large multipurpose plan launch is planned to be set up in Dahej again in our existing facilities. That will also be on the fungicide front. The third one, which is relating to herbicide is going to be set up in the newly acquired plot at Dahej. For all of this, the business has identified about 18 molecules, which were updated in the recent past. 3 of them will come out of Ankleshwar and 2 of them has already been commercialized in the last quarter. Now as the business stays with the [ left ], we also look into the global trends in terms of pricing, capacities, existing new capacities that are coming up in China and India. And accordingly, it gets factored in, in the decision to invest. So it goes through a very thorough scrutiny before we put in our money in setting up these plants. Unlike in the past, the reason that we are doing a multipurpose plant is also to give the flexibility so that we are not stuck with one product. For instance, the Mancozeb plant is only doing Mancozeb, right? Whereas, when we are looking into a plant for doing a [ acozine, picozine ] and few other molecules, right now it can be done out of a large multipurpose plant, it is to give the flexibility so that if there is a demand fluctuation or a price fluctuation, the business can accordingly tweak and produce. So we feel quite comfortable with this approach. And in terms of the projects, each of the projects as they start is expected to take between 18 to 24 months to get completed. The first set of proposal has come, and it almost in the final status. The others will come in during the year, get reviewed and updated.
Any percentage contracted, I mean is currently completely open or any contracted -- any contracting is done as of now; for the capacity.
This is not for CDMO. These are primarily technical plants. We have registrations globally and in India. On the CDMO front, there has been interest from some of our innovators. They've come and visited our plants, and we are making a very humble start in terms of getting an NDA signed and possibly looking at 1 or 2 smaller lots, which can be given to them for approval. Raghu, do you want to add something?
Yes, I think that's fine.
The next question is from the line of Tarang Agrawal from Old Bridge Capital.
2 or 3 questions from my side. Your manufactured volumes grew about 10% this year. I think it's got to do with the debottlenecking that happened in Kakinada and Vizag. How should we see the manufactured volumes from here on? Does the business have capacity to grow these volumes in the current year or 2 years to now? That's one. Second, for the Crop Protection business for FY '23, if you could give us a sense on the split between export of technicals, B2B domestic and B2C formulation. How were these in the -- in FY '22? And the third -- the INR 2,000 crores of CapEx that has been deployed, my sense is about INR 1,000 crores a second, INR 700 crores to INR 800 crores in the fourth, the balance INR 200 crores to INR 300 crores. So will all of it be deployed in FY '23, one? And second, in the other part, which is the INR 200 crores to INR 300 crores of remaining for that, what would that be in relation to?
As far as the manufacturing volumes of fertilizer is concerned, there are 2, 3 components that goes into it. One is the mix. There are certain products if you manufacture the [ precooked ] could be lower compared to others. So we optimize the mix. The second thing is a debottlenecking that happens in the plant. And the third is the raw materials that we use, which can also have an influence in the throughput. So a combination of all of this, we achieved closer to a 10% improvement in the manufactured volume last year. Going forward, there's still loss that is happening at the plant. We expect a 6% to 10% improvement in the manufacturing volumes even in the coming year, and that should be possible. As I said, the company consciously list that importing DAP versus manufacturing, which has helped us in the last year. We are continuing to explore such options to see how we can manufacture products, which can give us higher volume. As far as CTC is concerned, you were looking into the absolute numbers for domestic formulation vis-a-vis on exports. During the current year, our domestic formulation overall for this segment, is about, you can say roughly about INR 700-odd crores and the remaining coming from domestic B2B and exports. Both of them are in similar range, about INR 780-odd crores with domestic B2B and the balance coming from exports. As we have mentioned in the commentary earlier, where we have seen a good growth in domestic formulations. B2B has seen some growth. Exports where we take headwind, mainly because of the prices of Mancozeb and similar molecules having issues in terms of more supply than demand and the impact on raw material prices. Your third point was regarding the CapEx of about INR 2,000-odd crores, INR 1,000 crores goes into CPC, mainly for the multi-purpose plant and using the existing infrastructure which require modifications for specialty chemicals and CDMOs. We have a large chunk going into fertilizers and SSP and some amount that goes into bioproducts. That's how the entire INR 2,000 crores is clicked into -- and we expect the cash outflow to happen over a period of a couple of years as we place the order, some of these are going to be 18 to 24 months in terms of time taken to complete the construction. At the same time, from last year projects where we are talking about [indiscernible] as well as the desalination plant, which will get commissioned in July, August this year we're letting some cash outflow. So all of these will be funded from our own internal approvals, and we're not expecting any borrowings. I hope this clarifies your questions.
Just one follow-up. What would be the current maintenance CapEx for your current manufacturing footprint?
We can take about INR 300-odd crores.
The next question is from the line of Bharat Sheth from Quest Investment Advisors Private Limited.
Congratulations Jayashree and team. Can you give a little more color on the Nano-DAP opportunity from 2, 3 years perspective, how much CapEx we are doing and availability of input, whether again it's the same imported or is domestically available. If you can give a little more color.
Yes. I think this is an interesting question. Sankar is on the call, I want to give Sankar to give a color on Nano-DAP.
Yes. This product, we have just in the market, we are distributing to the farmers to get their first hand experience of this product. Our field trials indicate there's a possibility of 50% replacement of the current process in the various crops. And the behavior of this product also varies from crop to crop. Crops with higher foliage we have seen good response. In some crops like paddy and wheat the response has been relatively muted. So at this point of time it's very difficult to see to what extent the demand will pick up because this needs to be attractive to the farmer. Our focus will be for the next 6 months to drive this product to farmers and take their inputs and make core correction in the product. And accordingly, our capacity will be moderated depending on the market response. So as we see in the current year, we may have liquidity for INR 4 crores [ bottle ], depending on the market response, so we will scale up the volume. These investments were relatively small and is possible to make it. So we don't have any challenge if the demand really picks up.
And is the input -- I mean, input availability?
There are no challenges in input raw materials. We have a dedicated process, and we have no challenges securing those roads.
And Jayashree, one more question on this chemical side that we said that we will be going for industrial chemicals. So you give a little more sense on that?
Yes, definitely. I have Raghu with me and he can share some of his inputs. And I can add subsequent to his comments.
Yes. So some of our current products itself finds this in specialty chemicals industry. So that is our first phase so that we diversify our customer base. And subsequently, we plan to leverage our existing security infrastructure to make similar products, similar chemistries based products for different targeted infused specialty chemical space. And finally, as Jayashree mentioned that INR 1,000 crores. We are also identifying molecules for which we will be making specific investments located to the specialty chemical segment. So these are the 3 broad phases in which we are looking at this opportunity, starting with our existing products itself as is applicable in specialty chemicals.
And is it possible to give us a little more color, which industry are we targeting? I mean in the user base.
Yes. For example, paints and coatings, they use some 20 -- that's one example for you.
And Jayashree color on that CapEx for this industrial chemicals?
So the overall CapEx is about INR 1,000 crores, which include multipurpose plant and some amount of CapEx, which may be required. So those are infrastructural changes to cater to the specialty chemical industry. Because as Raghu was mentioning, there are opportunities with the current intermediates that we are doing, which could cater to multiple segments. So that's the low-hanging fruit that we want to first address. As we do it, the business is also working on further opportunities in several segments in the specialty chemicals area. They will be presenting in the next couple of months a very detailed business plan. What does it require for in terms of investment returns that once it is approved, make also further investment also. I think it will be better that we can come back to you in terms of the specifics on specialty chemicals probably in the next investor conference call or a little later, once we are internally clear and reviewed the proposals for the business is much more in detail.
And last question on CPC side. See all supply chain headwinds are almost over. So how do we now see the improvement in the profitability in this CPC business?
So in this business, one is that you rightly said on the supply chain side, but also it depends on the agro climatic conditions and different instances. There are several other external factors that we need to consider when we would say [indiscernible] the questions. So we are enough to track these strengths in the market. And we make sure that in our top line for the time and adequacy of risk is significant progress being made in the area of improving efficiencies in our operations as well as protect ourselves to a greater extent from the increase of external world. I would say we are very well placed because of the efficiency improvements and also our internal processes to respond to the market trends. So it's just not a supply chain.
The next question is from the line of Vidit from IIFL Securities.
Just had the first question on the Nano-DAP research that we're doing. Do we think that -- how much of volumes will be replaced by Nano-DAP? Are we going to push a product by replacing our existing volumes? Are we going to build upon what we are already selling in the market? And secondly, in terms of EBITDA per tonne that we have guided towards 5,500 to 6,000 does Nano-DAP also bring in the similar levels of margin? Or is it significantly different from what we are doing right now?
So on the margin then, I think we will be in a very similar range between last year, current year and the coming year. I'm going to once again refer Sankar to comment on the Nano-DAP. The adoption, what do we see now in the light of what happened with Nano-Urea that has been introduced and some of the trials that we have taken in Nano-DAP. Over to you, Sankar.
Because of replication, I will say, we need to wait for the market response. Right now, we have got a product with a full year application. And we are targeting those states which has high import content of DAP. Basically, this is going to have a substitute for DAP. And adoption makes the difference. So you early adoption of to find replacement of 50% as we see in our trial with and some of the dealers, key players, we see there can be a potential replacement of 50%, for which is high imported DAP consuming case can find better traction for this Nano-DAP. And some farmers may take this as an add-on itself because it also helps in improving the yield. So if people are habituated to DAP application at the basal stage at the soil application. This comes at a later stage. So we are not sure at this point of time to say the DAP whether it will be an add-on or a substitution. It depends on the results what they experience because it goes with the crop agro climatic conditions, moisture in the soil and the timing of application and the combinations they do with each other and this paying packages. So we need to wait in case too premature to comment that can replace DAP immediately. We do see a potential in the long run, at least in the period of 5 to 7 years, 20% replacement seem to be a definite possibility. But these are all empirical data what we have, but we need to break and see how the farmer adopts in the ground.
And just out of the FY '23 sales, how much would be the imported DAP sales currently?
Coromandel or for the industry.
For Coromandel.
Coromandel, we do predominantly imported DAP at least 4 lakh tonnes.
And we did EBITDA per tonne of roughly 6,500-odd tonnes this year. So are we maintaining that guidance going forward? Just wanted to clarify that.
Our EBITDA per tonne would be in the range of about INR 5,500 you have to look at the full year basis. And that's something that we would be in a position to follow.
The next question is from the line of S. Ramesh from Nirmal Bang Equities Private Limited.
I have the following question. One is in the Crop Protection Chemicals business, what is the kind of volume growth you have done in domestic and exports in FY '23? And how do you see the volume growth shaping up in domestic and exports say in FY '24?
So we did not have a volume growth in CPC, it's been more or less flat. As I was mentioning, there was a lot of headwinds primarily in Mancozeb and [ Proximo ]. And therefore, it was wiser on our part not to produce and try to get a lower price. And going into next year, again, while we have our own internal budget and our planning process. The call will be taken depending on how the market conditions come in as far as the largest molecule currently in our portfolio, Mancozeb is concerned. As we enrich the portfolio and bring in new products, which should actually help us in derisking from the old molecules that we currently have.
So if you're looking at your new investments in CDMO and specialty chemical and the active ingredients to start with, what is the time line for these investments to start adding to your revenues? And what is the kind of percentage margins you will expect compared to the current margins in the CPC business?
Yes. The projects once it gets approved, we are expecting anywhere between 18 to 24 months for completion because these are large plants. One of these 3 proposals is already in the final stages of approval, the other 2 would come in, in the next 3 to 6 months time. And as we phase out these projects as they get completed at -- in 3 years time, which we expect -- we have to come to a peak capacity with the multi products that we are having. We are expecting a INR 2,000 crores, INR 3,000 crores of revenue from these investments to come in. The EBITDA margins should be in the range of 16% to 18% for the new molecule. Again, as I was mentioning a little while earlier, we are building in a lot of flexibility in the plant with the capability to handle multi-products so that if there is any challenge in terms of volume, pricing, margin for one of those, we can swiftly shift to other molecules and therefore, maintain a stable margin profile. So that's the expectation as far as the CPC investments are concerned.
Sir, if I may sneak in a last thought, sir, if you're looking at talking to innovators for contracts, when do you expect to finalize contracts for the CDMO business in terms of time line?
So you must be aware that this is a little longer on process, right, establishing connect the customers coming and visiting the facility, clearing it, timing of NDAs, giving certain molecules for us to sort of work out the initial proto pack and send it to them for validation. At this time in time, one of our customers is in the final stage of getting the NDA and the initial order to us. We have hired a business development manager for CDMO who is pretty new in the system and over a period in time this team will start working with the innovators both in Europe as well as in Japan, have them visit, interact and work through it. So I think in the next couple of years, we should see some good traction in this area. At the same time, if there are any other opportunities that comes in our way, working with these innovators with our existing facilities per se, that will also be explored.
The next question is from the line of Resham Jain from DSP Asset Managers.
So I have 2 questions. So first is, a few years back, you used to have this target of having 50-50 split booking subsidy and non-subsidy EBITDA. So we haven't heard on that because the subsidy business has been doing quite well. But going forward, let's say, 3 years, 4 years out, how do you see the mix given that there is incrementally higher focus in the non-subsidy business?
So Resham, good question. While we maintain that 50-50 income from subsidy and nonsubsidy the position always has been to look into each of these businesses on its own merits. As you also observed, the subsidy business has been doing pretty well. And therefore, we are seeing a benefit of higher EBITDA coming in from that business. On the CPC front, in the past, we haven't made as much as an investment, either in terms of backward integration or setting up new multi-purpose plants. So that's currently the focus. The generic products can give us margin, but to a certain extent, we need to enrich our portfolio, which started happening in the last 2, 3 years in terms of the product development team working on multiple molecules coming up with new combinations and that has helped our domestic formulation business. However, if you have to look into the global business and exports that we have, we have to definitely enrich our portfolio, and that is the reason for us to work on a long-term strategic plan, identifying 18 odd recently of patented molecules, 30-year combinations, which will suit the requirements of both global and Indian conditions. So that a certain amount of investment has been committed. The first step in terms of setting up a plant for [indiscernible] has been done. Further investments will happen in the next 1 to 2 years. So we will see an uptick there and also foray into specialty chemicals, CDMOs in the right direction. Leave alone this, there is also a big focus on the specialty nutrient business, if we look at it because we see that the future of fertilizer could be in liquid fertilizers, special grades of fertilizers, [indiscernible] so on and so forth. The Nano-DAP is also accepted in that direction. This is nonsubsidy. As Nano-DAP picks up, while many part of the nutrient business is also ordered well with the overall attitude of the company to focus on the non-subsidy business. Those products is another very interesting area. While we have been focusing on [ Azola ] in the past, there is scope for us to do more in terms of other plant extracts and the business is actually working on them. We also have a couple of very interesting microbes, which are in the good stage of development. Tie ups with agriculture universities and research is also going to help us in some of these trends. So overall, I think there will be a good balance between subsidy and non-subsidy we go forward. However, businesses which are doing well will continue to do well and we will have our investments there, too. We don't want to be constrained by the fact that we want to do a 50-50 of subsidy and non subsidy. I hope that clarifies.
My second question is on organizational structure. We made certain changes. And now we have divisional CEOs rather than a CEO at the company level. So we have not operated in this kind of structure earlier. So if you can give or share any thoughts around this because the responsibility seems to be split, and there is no one at the top from the CEO perspective.
We have had both Sankar and Raghuram with the company for some time with us. And they have been running the operations while we definitely have on for the company. Both Sankar and Raghu comes with rich experience in their respective fields. And we have, at a corporate level Mr. Arun Alagappan, who is sort of overseeing these operations. This structure provides a lot of maintenance in terms of looking into the businesses per se making improved decision making. Both directors have been empowered to handle their respective areas. There is a monthly council, where we work together with all the businesses to look at areas where there are best practices to adopt. Each of them have their own areas to focus and grow. These are large businesses, right? Each one has their own priorities, and I think it's best to structure it in a way that can enable able good focus, growth and opportunities to excel. So as a company, we find that pretty comfortable working through this structure.
Ladies and gentlemen, that was the last question for today. I now hand the conference over to Ms. Jayashree Satagopan for closing comments. Over to you, ma'am.
Well, thank you all for your continued interest in Coromandel. I appreciate your time and all your questions. If there are any further questions that we could respond to you. Please feel free to reach out to Shanky to me, we'll be happy to connect with you. Thanks again.
Thank you. On behalf of PhillipCapital India Private Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.