Coromandel International Q4: Profit Hit By Raw Material Spike, CEO Explains FY27 Outlook | ET Now

Ajouté : 2026-05-09

[00:00:10]Hello and welcome tuning into Midcap Masala right here on UT now. I'm Christi Sharma and viewers. This is the show where we tell you all that is happening within the broader end of the market and also get you the management voices. And uh today we going to be focusing on Cororomander International. uh and we have the management as well to talk more on the growth outlook going ahead and with this let me welcome Mr. uh S Shankar Subramanyam who is the MD and CEO of Koramandal International joining us on the show. A very good morning and thank you so much for your time and uh firstly when we look at your numbers there is an uh profit before tax before the exceptional item if we consider that has actually fell 22% in quarter 4 despite a 19% revenue growth. So why don't you help us understand what drove the margin compression in this particular quarter and what were the factors behind it.

[00:01:05]Good morning. Thanks for talking to us.

[00:01:07]And Fermental reported a very strong performance in Q4. Our revenue has put up to 6,000 crores registering growth of uh 20%. And also Yita, which is an operational performance has grown by 16% to 492 crores. So there's a healthy growth in operational performance. As you rightly mentioned, there has been an exceptional item in the previous year.

[00:01:30]Sale of property has registered an income of 300 crores plus last year.

[00:01:35]Against this in the current year we have got a provision of rupees 71 crores who was empowerment of certain investments.

[00:01:42]So there is a variation of 400 crores that has resulted in modest net profit what you have seen 115 crores but operationally this year all businesses have done well. Of course the sudden spurt in raw material prices in fertilizers not adequately compensated by the subsidy rates had led to some contraction in margin for fertilizers but other segments crop protection specialities retail we have done well overall if you look at corandal's performance we registered a record turnover of 32,000 crores for the year with a bit of 3,232 crores uh a really good performance in the history of corandal and also in terms of our investments So the last two years what we have made more than 3,000 crores started paying dividend and if you can see the Nagatina which we have acquired in the Nagatina agricum we acquired in first quarter of this year has turned out very well and generated operational profit of 103 crores against the loss they made last year. So operationally fourth quarter has been good overall has been a good year. Of course, uh the challenges on raw metal prices and exchange currency deposition do have an impact on referral margins at this point of time.

[00:02:53]>> All right. Uh thank you so much for that lowdown. But um also help us understand that how severe has the impact been because of the West Asia crisis and especially uh what's been happening on the raw material pricing front and how are you managing that?

[00:03:09]Think overall there has been a sport in raw material prices as you know ammonia has gone up almost double sulfur prices have gone up ura prices have gone up all key raw material prices have gone up has been always diversifying is sourcing beyond middle east we have got sources from Southeast Asian countries we have been procuring from Canada Russia as well as China in some cases so overall we have a diversified portfolio you can see last year we could operate the plants at 100% capacity and we never had any production outages is and even for the ensuing karif season we are reasonably covered for the first quarter due to the diversified portfolio and alternate sources what we have of course the restation crisis has really impacted because India imports more than 80% of the ammonia need as well as 70 to 80% of the sulfur needs from Saudi and Qatar and this has really impacted the availability but industry has been working closely with the government to ensure availability and we have been going around alternate sources to secure And at this point of time um we are reasonably covered for the first quarter. We need to wait and see how it's going to play out and things normalizes. So hopefully we should be able to secure adequate material for the curry season as well.

[00:04:22]>> Right. So that's as far as raw material pricing is concerned. Morning Ashisha the side since you're talking about the spike in raw material prices also wanted your thoughts on whether you're passing on the impact of spike in raw material prices or is that likely to have an impact on your margins.

[00:04:38]In fact, if you understand the portes, the government support has been quite very responsive and in fact last year government has supported DAP by compensating the entire price increase which they hope to do this year as well and to that extent the pricing for the farmer is taken care of on the main product like DAP and UA it is a pass through mechanism. In terms of NPK fertilizes while we have a freedom to pass under the price increase but as a responsible industry players we have been engaging with the government to look for compensating for the additional cost of ammonia and sulfur especially and we have been receiving variable responses and hope we should be able to continue the production where one is the price another one is availability. We are first concerned about availability.

[00:05:24]Once we secure materials, we'll ensure that purchase is made available and we should be able to factor the potential subsidy increase and then if anything is required still, we may have to pass it on. But overall, we will keep the farmers interest in mind and agriculture in our overall interest of the economy.

[00:05:42]Absolutely point noted but um just wanted to have some numbers uh and especially uh when it comes to your IITa per ton if you can give us some understanding where was the AITA per at quarter 4 because I believe that the at the at the end of quarter 3 I had told us that post backward integration ITA is expected to improve to 6500 uh rupees per turn uh so what's the status right now and what could be the outlook for FY27 David, >> you're absolutely right and uh as rightly pointed out our new project has got commissioned on time and the trial production is going on and definitely this captures the value addition on one of the key raw materials phosphoric acid which we consume for NPK manufacturing that should kick in from the current year onwards. Last year overall our average EIA is around 5,000 to 5,500. Of course on the fourth quarter we had a compression in the margins and fertilizes mainly due to sudden sport in raw material prices not adequately compensated by subsidy. As you know subsidy is getting announced once in 6 months. So we had a soft eida margin in the fourth quarter but overall still on annualized basis we have managed 5,000 PS per ton on an overall basis but going into next year these current challenges are temporary I presume and supply side once it improves prices gets normalized and we should be able to get back on track and structurally we in the same direction and once situation improves and prices normalizes we should be able to still keep track on the evida margin what we have been discussing in the So we we got your thoughts on EITA margins but also wanted your thoughts on demand because this time around monsoon is expected to be below normal. We're expecting rainfall anywhere between 92 to 94% of long period average. Will that weigh heavy on your demand this season?

[00:07:35]No, we have seen in the past as well you're right that there can be a potential reduction in the monsoon situation especially in August and September they are talking about 90 to 95% of the long period average but in the past when you look at this sort of variation of 5 to 10% and monsoon farmers are able to observe this sort of a variation it's more of a spatial distribution which matters rather than the quantum of rainfall just to recolct last year we had a good monsoon but the withdrawal late withdrawal has impacted the crop and in fact impact factory defertemical supplication rather this year the spatial distribution is good I don't see a challenge and 10% of mon doesn't impact the agree inputs big time tank the farmers switch crops and farmers go for alternate cereals to manage this and I don't think there will be any demand impact on fertilizers or agrochemicals rather I expect with a sort of in between stopage and monsoon and a can augur well for agrochemical business so I think the elino impact I mean we have to wait for the IMD forecast which generally comes region wise by May end. Uh we don't we are not worried about this because we yet to see how the Indian dipole which can utilize the Indian impact is going to play out.

[00:08:47]If that happens then India can have a reasonable karif monsoon with good acreages as well.

[00:08:55]>> All right and we look forward to that but with this we let you go. So good having you on the channel today. Thank you so much for your time and all the very best for the upcoming earnings.

[00:09:04]Thank you very much.