Chambal Fertilisers & Chemicals Ltd Management Discussions

Chambal Fertilisers and Chemicals Limited (CFCL/Company) is the largest private sector manufacturer of urea in the country, delivering annual production of around 3.46 million MT of urea. It has three state-of-the-art plants located at Gadepan, District Kota (Rajasthan). CFCL offers agri-inputs to farmers under one roof, thus, in addition to manufacturing urea, the Company markets other fertilisers and agri-inputs such as Di-Ammonium Phosphate (DAP), Triple Super Phosphate (TSP), Muriate of Potash (MOP), different grades of NPK fertilisers, Crop Protection Chemicals (CPC) and Speciality Nutrients (SN). CFCL has forayed into the seeds business during the year under review, which will substantially complete its agri-inputs profile.

The Management Discussion and Analysis Report in respect of business and operations of the Company is, as under:

1. Industry structure and developments A) Own manufactured fertiliser - Urea

In terms of usage, nitrogen is the most consumed nutrient in agriculture by Indian farmers. 80% of consumption of nitrogen for agricultural purposes is through urea. The price of urea is regulated by the Government of India, which gives subsidy to the farmers via price subvention mechanism on the urea sold for agriculture use. The use of urea, is widespread due to low nitrogen content in Indian soil, and rapid due to its a_ordability, ease of application and proven visible results. This is borne out by international experience too. Urea is now a vital fertiliser and widely accepted for farm productivity. Accordingly, many states in India have witnessed substantial increase of urea usage per acre of land.

The past five-years (2020 - 2025) growth figures (on CAGR basis) of urea sales show an increase of ~2.6 % p.a., which is primarily due to increase in gross irrigated area, gross cropped area and higher usage/acre.

Urea production in the country during the Financial Year 2024-25 was 30.64 million MT, compared to 31.41 million MT during the previous year. Sale of urea in the country during the Financial Year 2024-25 touched 38.77 million MT, as against 35.73 million MT during the previous year.

During the Financial Year 2024-25, 5.65 million MT of urea was imported in the country, compared to 7.04 million MT imported during the previous year. The price of imported urea was around USD 343.35 per MT at the beginning of the Financial Year 2024-25, which touched the level of USD 424.5 per MT during the said period.

Earlier, there were estimates that the new urea plants which were to be operational under the New Investment Policy - 2012, will significantly narrow down the demand-supply gap of urea in the country and will reach to the level of self-sufficiency. However, due to increased sale of Urea @2.6% p.a. on CAGR basis, India is still import dependent insofar as Urea is concerned.

Most of the urea manufacturing units in India are gas based, which use gas as feedstock/raw material. The requirement of gas is majorly met through imports as the supply of domestic gas to urea manufacturers has substantially reduced over a period. Gas is imported in the country in the form of re-gasi_ed lique_ed natural gas (R-LNG) and is sourced through long-term, mid-term and short-term contracts. R-LNG price is linked to crude oil prices. The cost of gas, being the major input cost, significantly impacts the cost of manufacturing of urea. However, the cost of gas is appropriately considered by Government of India while fixing the subsidy for urea units. At present, gas prices are on the lower side due to reduction in crude oil prices, and as per forecasts, they are expected to remain low, compared to the previous year.

B) Complex fertilisers

In India, around 60% of the phosphorus consumption for agricultural purposes is met through DAP, which is also regulated by the Government of India. The countrys requirement of DAP is met through mix of domestic manufacturing and imports. During the Financial Year 2024-25, the countrys imports of DAP were around 55% of the total quantity supplied in the domestic market. Due to unfavorable market conditions, during the year under review, lower quantum of 4.57 million MT of DAP was imported in the country, as against 5.57 million MT of DAP imported during the previous year. The prices of DAP in the international market were in the range of USD 559 - 560 per MT (CFR India) in April 2024, which moved in the range of USD 648 - 649 per MT (CFR India) till the end of the Financial Year 2024-25.

During the Financial Year 2024-25, there was a reduction in DAP sales due to its availability, and the demand was partly met by Ammonium Phosphate Sulphate (APS) and other NPK grade fertilisers. Sale of DAP in the domestic market was 9.28 million MT (previous year - 10.81 million MT), which was catered by domestic production of 3.77 million MT (previous year - 4.29 million MT) and the balance quantity through imports.

The countrys requirement of NPK fertilisers is primarily met by way of products manufactured in the country, and some quantities of few specific grades are imported. However, the country continues to be largely dependent on import of raw material (ammonia, rock phosphate, phosphoric acid, potash etc.) and/or the finished goods.

The entire requirement of MOP in the country is met through imports only. MOP is imported for direct application as fertiliser, as well as for manufacture of NPK fertilisers. During the Financial Year 2024-25, imports of MOP for use as fertiliser was 2.43 million MT, as against 1.99 million MT during the previous financial year. The India price of MOP for Financial Year 2024-25 was finalized at USD 283 per MT (CFR India). Sales of MOP for direct application during the Financial Year 2024-25 were 2.20 million MT, compared to 1.64 million MT in the previous year. Due to reduction in prices (MRP), there has been an increase in sales of MOP.

P&K fertilisers comprising of DAP, TSP, MOP, APS and different grades of NPK fertilisers are regulated by the Government of India, which gives subsidy on the quantity sold for agriculture use in terms of the Nutrient Based Subsidy policy of the Government of India. The Company sources DAP, TSP, MOP, APS and different grades of NPK fertilisers from the international market and sells in the domestic market.

C) Crop Protection Chemicals (CPC), Speciality Nutrients (SN) and Biologicals

CPC business in India is largely dominated by manufacturers who cater to domestic and international markets and who manufacture technical grade agrochemicals as well as formulated products such as insecticides, fungicides, herbicides, etc. for agriculture use. The Company procures CPC from reputed formulators/manufacturers (including international players), which are then sold under the Companys own brands. The Company procures SN from manufacturers of repute in India and abroad, and these products are marketed under the "Uttam" brand umbrella. The focus of the Company is to offer quality products to the farmers, at a reasonable price and under one roof.

The domestic market of CPC (primarily insecticides, fungicides, herbicides) and SN is in the range of Rs. 36,000 Crore, which is likely to grow at 8 - 9% CAGR to touch Rs. 42,000 Crore by the Financial Year 2026-27. The supply of CPC is largely import dependent, which is either technical material and/or intermediates. The CPC business is based on continuous research and introduction of new molecules; however, around 65 - 70% market is captured by generic products, which are developed and are well established over a period. The Company is now a significant player in the CPC & SN market by leveraging its brand and channel strength.

In the ‘Biological Segment, the Company has introduced one new product namely, "UTTAM PRANAAM" (Bio Nano Phosphorus) during the year, which is showing acceptance in the market.

During the year, the Company entered into an Agreement for Research with The Energy and Resources Institute, New Delhi (TERI) for establishment of a research centre namely, "CFCL – TERI Centre of Excellence for Advance and Sustainable Agriculture Solutions" for carrying out research to support the farmer community, soil and climate, advanced formulations of nano fertilizers, biopesticides and, next-gen Ecto Mycorrhiza Fungi & Arbuscular Mycorrhizal Fungi based consortia, specific to climate conditions and/or crop categories. TERI will carry out end-to-end research and develop product(s) to provide biological solutions as a complement to chemical agri-inputs. Aligned with Indias BioE3 initiative, this effort aims to support food security, environmental health, and climate resilience. The Centre of Excellence aligns with the Govts initiative under the PM PRANAM scheme to promote alternative fertilisers and biogenic agri-inputs.

2. Opportunities and Threats

Government schemes and subsidies promote fertiliser usage. Expansion of rural infrastructure and irrigation facilities, growing awareness of micronutrients & speciality fertilisers and rising adoption of digital platforms for agri-input delivery, are going to be the key driver for growth in fertiliser consumption in years to come. Besides own manufactured Urea, the Companys portfolio includes other bulk fertilisers such as DAP, TSP, NPKs and MOP. Long term MOUs and agreements with trusted partners, established brand and channel strength offer an opportunity to grow the volumes of bulk fertilisers, CPC, SN and biologicals business. Increasing demand for NPK fertilisers and availability of imported products also provide opportunity for growth in the NPK segment. The geographical expansion of marketing territory and deeper penetration in existing territory, offer an opportunity to grow the business of marketed products. The new territories have sizeable demand of NPK fertilisers, crop protection chemicals and speciality plant nutrients, which gives opportunity to the Company to grow. The Companys continued focus on product quality and high level of customer satisfaction is likely to deliver positive results in the future. The Company is running the marketing campaign "Hamara Naam Hamara Nishaan" to popularize the Companys registered name, so that farmers can easily identify/recall the Companys brand name by logo and its name.

Demand variation due to change in monsoon pattern, availability constraints, volatility in prices of DAP, MOP and NPK fertilisers, and regulation of prices of products by the Government of India, are few challenges which the Company faces in the non-urea fertiliser business. The Company continuously evaluates these factors and strives to mitigate them through dynamic sourcing and pricing of the products.

3. Segment-wise or product-wise performance

Segment-wise performance of the Company on a standalone basis, is summarized below:

(Rs. in Crore)

Particulars	Financial Year
	2024-25	2023-24
1. Segment Revenue
a) Own Manufactured Fertilisers	13,158.68	12,722.65
b) Complex Fertilisers	2,561.41	4,483.30
c) Crop Protection Chemicals and Speciality Nutrients	926.11	760.46
2. Segment Results
Profit before Finance Costs and Tax from each Segment:
a) Own Manufactured Fertilisers	1,836.00	1,500.31
b) Complex Fertilisers	173.71	159.79
c) Crop Protection Chemicals and Speciality Nutrients	213.63	152.80

4. Outlook

The strong demand of Companys products in the market, geographical expansion of marketing territory, diversification of business by way of implementation of Technical Ammonium Nitrate plant and timely release of subsidy by the Government of India gives leg room for growth of the Company.

Focused approach on improving product basket and supply chain of CPC and SN is continually contributing to growth of the non-subsidy business. The entry into the seeds business will substantially complete the agri-input profile.

Consistent performance of Urea business shall continue to give stability to the business of the Company. Geographical expansion and deeper penetration in existing marketing territory shall enable the Company to achieve sustainable growth in non-urea fertilisers, CPC and SN space.

5. Risks and Concerns

The fertiliser industry is dependent on the extant policies of the Government of India. The third Urea plant of CFCL was set up under the New Investment Policy 2012, which is effective for eight years from the commencement of production. Changes or delay in notification of policies of the Government of India may, sometime adversely affect the Company. The volatility in the price of marketed fertilisers, coupled with regulation of prices of the products by the Government of India may also adversely impact the Company in the short run.

For urea production beyond Re-assessed Capacity (RAC), as per prevailing policy of Government of India, subsidy is calculated considering cost of natural gas and a fixed cost component (common for the entire industry), which is subject to Import Parity Price (IPP) of urea along with fixed incidental expenses. Therefore, in case of high prices of natural gas on the one hand and low IPP of urea on the other, it may impact production of urea beyond RAC.

Application of CPC depends on weather conditions, pest attacks and cropping patterns, which may vary year by year. SN is exposed to cropping patterns, import prices, supply chain disruptions in international market and a_ordability of farmers, which also varies from time to time.

6. Internal control systems and their adequacy

The Company has a strong internal control system comprising various levels of authorisation, supervision, checks & balances and procedures through documented policy guidelines and manuals. The Companys internal control systems are adequate and operating effectively. The internal audit department regularly monitors the efficacy of internal controls and compliances with Standard Operating Procedures (SOP) and manuals with the objective of providing to the Audit Committee and the Board of Directors, an independent, objective and reasonable assurance that all material transactions are authorized, recorded and reported correctly and policies, laws and regulations are complied with.

The business function heads and managers exercise their control over business processes through operational systems, procedure manuals and financial limits of authority manual. These processes are reviewed and updated, if required to improve their efficacy and meeting business needs.

The internal audit function draws a risk-based annual audit plan which is aligned to the previous years observations, suggestions from the management and operating managers and auditor. The internal audit programme is approved by the Audit Committee.

The audit approach is based on random sample selection and takes into consideration the generally accepted business practices. The internal audit reports are discussed by the Management Committee and subsequently placed before the Audit Committee along with the directions/action plan recommended by the Management Committee. The directions of the Audit Committee are implemented by the respective departments and Action Taken Report is placed before the Audit Committee.

The Internal Audit Department also assesses opportunities for improvement in business processes, systems and controls, gives recommendations and reviews the implementation of directions issued by the Management, Board of Directors or its Committees.

7. Discussion on financial performance with respect to operational performance

The operational and financial performance of the Company on standalone basis, is summarized below:

Particulars	Financial Year
	2024-25	2023-24
Urea Production (in Lakh MT)	34.62	33.83
Urea Sales (in Lakh MT)	34.71	32.56
Sales including other Agri-inputs (Rs. in Crore)	16,646.12	17,947.63
Profit before Interest, Depreciation and Tax (Rs. in Crore)	2,837.59	2,428.44

Sales of various marketed products are as under:

Product	Financial Year
	2024-25	2023-24
DAP & TSP (in Lakh MT)	1.86	5.56
MOP (in Lakh MT)	1.65	1.54
NPK Fertilisers (in Lakh MT)	2.13	1.56
Crop Protection Chemicals and Speciality Nutrients (Rs. in Crore)	926.11	760.46

The Gadepan-III Urea plant underwent planned annual turnaround in February & March 2025. All the three Urea plants operated efficiently, and overall production was higher during the year under review. Urea revenue was higher due to higher quantum of sale, though gas costs were lower as compared to last year.

The revenue from branded marketed products was Rs. 3,487.44 Crore during the Financial Year 2024-25, compared to Rs. 5,224.98 Crore in the previous year. This was lower due to the reduction in volume of P&K fertilisers. In view of headwinds in pricing, DAP volumes remained low; however, all efforts were made to supply DAP, NPK and MOP products to meet the requirement of the channel in the overall interest of farmers of the country.

CPC & SN continued their growth momentum despite challenges. The continued focus on product portfolio, channel width and depth, robust supply chain, capability building of field force and demand generation activities, have enabled the Company to achieve good performance in sale of these products.

Crop-wise product mix, launching new generation products, channel loyalty scheme, increasing market width, demand generation program – ‘Seed to Harvest and digital intervention is helping the Company to grow rapidly. In ‘Biological Segments, the research activities under the Centre of Excellence are progressing well.

During the year under review, the Company achieved revenue of Rs. 926.11 Crore from CPC and SN business, as against Rs. 760.46 Crore in the last year, and this is expected to grow further.

Despite the lower sales volume of P&K fertilisers, on an overall basis, the Company has performed better in the Financial Year 2024-25 by registering higher profits in comparison to last year.

8. Material developments in HR/Industrial Relations front, including number of people employed

In CFCL, human resources are integral to achieving operational excellence, innovation, and long-term sustainability. The Company upholds strong commitment to safety, efficiency, and continuous improvement, with people at the core of its success. As a performance and merit-driven organization, CFCL fosters a culture of accountability, empowerment, and recognition. The Companys HR practices are strategically aligned to attract, develop, and retain high-calibre talent. Structured recruitment, comprehensive onboarding, and clear performance expectations ensure that employees are well-prepared and motivated to deliver their best.

Capability-building remains a key priority. Employees undergo focused technical training, including classroom sessions, and on-the-job exposure, particularly at the manufacturing site. Training needs are periodically assessed, and learning is imparted through leadership development programs, behavioral workshops, coaching sessions, and partnerships with leading institutes. The self-development scheme also encourages employees to pursue relevant certifications and upskill themselves.

The Companys employee engagement and development initiatives have helped maintain high retention levels and a positive and collaborative work environment. As on March 31, 2025, the Company had a permanent employee strength of 1102. Industrial relations across all locations remained positive and collaborative, supported by the Companys strong emphasis on worker well-being, a robust framework of labour compliance, and a culture of mutual respect.

9. Details of significant changes (i.e. change of 25% or more compared to the immediately previous financial year) in key financial ratios, along with detailed explanations therefor

Sr. No. Key Financial Ratio	Financial Year 2024-25	Financial Year 2023-24
1. Debtors Turnover Ratio	59.51	18.39
2. Inventory Turnover Ratio	9.38	12.11
3. Interest Coverage Ratio	51.79	12.22
4. Current Ratio	3.07	2.00
5. Debt Equity Ratio	-	0.25
6. Operating Profit Margin (%)	15.06	11.78
7. Net Profit Margin (%)	9.95	7.41

There were significant changes in the Debtors Turnover Ratio (224%), Interest Coverage Ratio (324%), Current Ratio (54%), Debt-Equity Ratio (100%), Operating Profit Margin (28%) and Net Profit Margin (34%), compared to the previous financial year. The reasons for these changes are, as under:

(i) Change in Debtors Turnover Ratio

Decrease in prices of natural gas, lower volume of complex fertilisers, compensated by higher volume of own manufactured fertilisers contributed to around 7% decrease in the turnover. The average debtors of the Company for the Financial Year 2024-25 were around 71% lower compared to the previous year on account of better collections and subsidy de-escalation due to lower gas prices. Thus, the Debtors Turnover Ratio improved on account of decrease in average debtors, which was partly offset by decrease in the turnover.

(ii) Change in Interest Coverage Ratio

Average borrowings during the Financial Year 2024-25 were around 65% lower compared to Financial Year 2023-24 due to prepayment of entire borrowings, resulting into lower interest cost. Further, the Company delivered better financial performance during the Financial Year 2024-25, compared to the last financial year. Both these factors resulted in a higher Interest Coverage Ratio.

(iii) Change in Current Ratio

Current assets decreased by around 11% mainly on account of decrease in investment in mutual funds, which was partly compensated by increase in inventories. Current liabilities decreased by around 42%, mainly on account of repayment of borrowings and lower trade payables. These factors resulted into a higher current ratio.

(iv) Change in Debt Equity Ratio

During the year under review, the Company repaid its entire borrowings, and as on March 31, 2025, there was no debt.

(v) Change in Operating Profit Margin

The turnover for the Financial Year 2024-25 decreased by around 7% mainly on account of lower prices of natural gas, lower quantity of complex fertilisers, compensated by higher volume of own manufactured fertilisers. On the other hand, the performance of the Company improved during the same period, and the finance costs were also lower. All the above factors contributed to a higher operating profit margin.

(vi) Change in Net Profit Margin

The turnover of the Company for the Financial Year 2024-25 decreased by around 7% mainly on account of lower prices of natural gas, lower quantity of complex fertilisers, compensated by higher volume of own manufactured fertilisers. On the other hand, the performance of the Company improved during the same period, and the finance costs were also lower. The above factors contributed to a higher net profit margin.

10. Details of change in Return on Net Worth as compared to the immediately previous financial year along with a detailed explanation thereof

Return on net worth is calculated by dividing profit after tax for the financial year by average net worth during the financial year on standalone basis. The Return on Net Worth during the Financial Year 2024-25 was 21.16%, compared to 19.02% during the Financial Year 2023-24.

The standalone profit after tax of the Company during the Financial Year 2024-25 was higher compared to the previous financial year. This is attributable to improved performance of the Company on account of higher sales volumes of own manufactured urea and better performance of CPC and SN business as compared to the previous year and lower finance costs. Accordingly, the average net worth for the Financial Year 2024-25 was higher compared to the previous year due to higher profit after tax. Despite higher net worth, higher profit after tax has contributed to higher return on net worth during the Financial Year 2024-25 in comparison to the previous year.

	For and on behalf of the Board of Directors of
	Chambal Fertilisers and Chemicals Limited
	Rita Menon	Abhay Baijal
Place: New Delhi	Director	Managing Director
Date: May 08, 2025	DIN: 00064714	DIN: 01588087

CAUTIONARY STATEMENT

This report may contain certain statements, which the Company believes are, or may be, considered to be "forward-looking statements" that describe its objectives, plans or goals. All these forward-looking statements are subject to certain risks and uncertainties, includingbut not limited to government action, economic developments, risks inherent to the Companys growth strategy and other factors that could cause the actual results to differ materially from those contemplated by the relevant forward-looking statements.