Coromandel International outlines Rs 2,000 crore capital expenditure in Q1

During the first quarter of the financial year, the company had posted profit before interest and tax for the quarter was Rs 55 crore

Coromandel International, a top-tier fertiliser manufacturer and a subsidiary of the Murugappa Group, has announced a capital expenditure (capex) plan of Rs 2,000 crore for the ongoing financial year. It is expected that a substantial proportion of this will fund capacity expansion in the crop protection segment, which could see an investment of approximately Rs 1,000 crore over the next two years.

"In terms of the company's growth, we foresee a capex of around Rs 2,000 crore during the year, compared to the near Rs 700 crore in the last financial year. We anticipate an investment of around Rs 1,000 crore for three units in the crop protection sector over the next 18-24 months. However, the cash flow may not occur within the current year and could be spread out," explained Jayashree Satagopan, President of Corporate and Chief Financial Officer, Coromandel International.

In the first quarter of the financial year, the company reported a profit before interest and tax of Rs 55 crore, down from Rs 85 crore in the quarter ending June 2022 for the crop protection business. The revenue for the quarter ending June 2023 from the segment stood at Rs 556 crore, compared with Rs 654 crore in the quarter ending June 2022.

Additionally, the company plans to establish a Nano DAP (Di-Ammonia Phosphate) production facility in Andhra Pradesh with the capacity to produce 20 million bottles per year. This venture is expected to require an investment of around Rs 60-80 crore.

"We have recently undertaken a soft launch of nano-DAP. At present, field trials are in progress. This is to ascertain the dosage to be administered to farmers to optimise yields. We are setting up a nano-DAP facility at our Kakinada plant. We plan to launch this product at a commercial level during the second half of the year," Satagopan added. She also anticipates subsidy adjustments from the government in the near future. "By October, one could expect another round of subsidy adjustment by the government as prices decrease," she added.

Beyond fortifying its core business operations, the company is exploring new opportunities in adjacent and step-out areas. As part of this strategy, Coromandel recently acquired a majority share in Dhaksha Unmanned Systems (Dhaksha), a leading drone start-up based in Chennai. Dhaksha provides a comprehensive range of unmanned aerial systems (UAS) technology solutions across agriculture, defence, surveillance, and enterprise applications. When asked about this, Satagopan said, "Coromandel is keen on venturing into adjacent spaces and step-out areas. Dhaksha is an adjacent entity as it is related to agriculture. It also presents a step-out opportunity as it expands across defence, logistics and many other sectors. We are evaluating numerous other areas as well for potential growth opportunities."