Highlights of the concall

Complex fertilizer sales have been impacted due to deficient monsoons & increase in prices. The management indicated that DAP & MoP sales have been impacted, but flagship product Ammonium Nitro Phospate (ANP) sales have not been impacted significantly.

The company's net sales for Q1 FY13 has increased by 34% to Rs 631.16 crore while net profit by declined by 29% to Rs 45.5 crore.

Segment revenues for Agri-business grew by 22% to Rs 179.51 crore. Segment profitability stood at Rs 13.58 crore. The Chemicals segment showed a substantial growth of 41% at Rs 469.97 crore. Profits were recorded at Rs 96.10 crore. In the chemicals segment, steep increase in ammonia & propylene costs impacted margins, while fertiliser segment profit was impacted due to lower volumes & increase in phos acid prices.

The management said that global ammonia prices would ease from the second half of Q3 which would consequently ease the stress on company margins.

For Q1, the company has produced 25000 tonne of ammonia and has annual capacity production of 125000 tonne. The company used own produced ammonia for fertilizer while imported one was used in TAN.

Methanol production was down due to margin pressure as gas price were high.

The company is steadily ramping up the capacity utilization at the new TAN plant and is expected to produce 2L MT

Un-availability of phos acid due to delay in negotiations impacted fertilizer volumes during the quarter. However, management indicated that phos acid volumes have been contracted now & negotiation have been done at $885/mt

TAN margins declined to 21-22% compared to 25% last year. Margins were impacted due to increase in ammonia prices. Though company was able to pass on bulk of the increase in ammonia prices & maintain absolute margins, however % margins declined due to higher selling prices.

Steep increase in propylene prices impacted IPA margins during the quarter with margins dropping to 12% from 20% last year. However, management indicated that cost increases will be gradually passed on, thereby aiding margin improvement by Q3FY13. For FY13, management expects IPA to clock margins of 15%.

Modification is almost complete at Ishanya, the specialty mall and management expects performance to improve in this unit from Q4FY13.

The company produced 64,900mt of TAN solid during Q1FY13 & operated at 60% blended capacity utilization during the quarter. IPA capacity utilization stood at 100% during the quarter.