Zuari Agro Chemicals Posts Strong Q2 FY25 Profit of Rs. 81.23 Cr

Zuari Agro Chemicals Posts Strong Q2 FY25 Profit of Rs. 81.23 Cr

Company Overview 

Zuari Agro Chemicals Ltd, incorporated in 1967, is a leading manufacturer and trader of chemical fertilizers and agricultural products under the Adventz Group. Serving farmers across India under the ‘Jai Kisaan’ brand, the company provides a range of fertilizers, pesticides, seeds, and water-soluble fertilizers to meet diverse agricultural needs. The company operates as a single-window agricultural solution provider, manufacturing high-quality complex fertilizers, including Single Super Phosphate (SSP), which enhances soil productivity. SSP, a phosphatic multinutrient fertilizer, contains 16% citrate-soluble P205, 14.5% water-soluble P205, 12% sulphur, and 21% calcium. 

In FY23, Zuari Agro achieved significant production and sales volumes across various products, including Urea (~38,203 MT), Other Complex Fertilizers (~42,816 MT), and Single Super Phosphate (SSP) (~100,029 MT). Sales figures for Urea reached ~46,674 MT, while Di-Ammonium Phosphate sales stood at ~8 MT and Other Complex Fertilizers at ~187 MT. The company’s total SSP sales were ~90,174 MT, broken down into Granular SSP (~77,886 MT) and Powdered SSP (~12,288 MT), with Maharashtra contributing ~75,640 MT and Karnataka ~14,534 MT. For FY24, Zuari Agro plans to boost SSP sales to ~1.25 lakh MT, including 103,407 MT Granular and 21,864 MT Powdered. 

The revenue composition for FY23 showed Finished Products accounting for 61% of revenue, Traded Products at 8%, Interest Income at 4%, and Profit from Asset Disposal at 23%. In FY22, Zuari Agro executed a Business Transfer Agreement with Pradeep Phosphates Limited (PPL), approving a slump sale of its Goa fertilizer plant and associated business assets for USD 280 million. PPL is a subsidiary of Zuari Maroc Phosphates Pvt Ltd, a 50:50 joint venture with Office Chérifien des Phosphates (OCP). 

In addition, the company provided Inter-Corporate Deposits (ICDs) amounting to AED 60,000 to its wholly-owned subsidiary, Adventz Trading DMCC in FY23, with total ICDs of AED 1.025 million written off, pending Reserve Bank of India (RBI) approval. On February 26, 2024, Zuari Agro signed a sale deed with Zuari Infinity Pvt Ltd for 216,015 sq. meters of land in Sancoale, South Goa. All these highlights Zuari Agro’s diverse fertilizer portfolio, strategic transactions to streamline operations, and financial arrangements aimed at supporting its growth in the agricultural solutions market. 

Industry Outlook 

Zuari Agro Chemicals is expected to experience steady growth in FY25 and beyond, supported by multiple positive trends in the agriculture and fertilizer sectors. Key drivers for this growth include a growing emphasis on sustainable farming practices, a rise in demand for nutrient-efficient fertilizers like Single Super Phosphate (SSP), and government policies that favor balanced fertilizer use to improve crop yields. The expansion of Zuari’s Jai Kisaan brand and investments in production capacity are well-aligned with these industry trends, as they position the company to capitalize on both policy support and increasing demand for high-quality agro-inputs. 

The company’s strategic move to divest non-core assets, like the sale of its Goa fertilizer plant to Paradeep Phosphates in FY22, enables it to focus on core operations, streamline its business model, and potentially improve profitability through efficient resource allocation. This restructuring aligns with its broader strategy of enhancing operational efficiency and targeting sustainable growth opportunities. 

Looking at the sector overall, the Indian fertilizer market is projected to grow at a CAGR of approximately 4.3% from 2024 to 2032. This growth is largely due to increasing demand for biofertilizers and complex fertilizers as well as government incentives encouraging balanced nutrient use across the agricultural sector​. Government programs like the Mission for Integrated Development of Horticulture (MIDH) and Pradhan Mantri Kisan Samman Nidhi are promoting crop diversification and increased productivity, which in turn boost demand for quality fertilizers. The sector also benefits from investments in cold storage and logistics, which are essential for minimizing post-harvest losses, thereby enhancing efficiency. The rise of digital tools, such as the Krishi-Decision Support System (Krishi-DSS), is helping farmers with vital data on soil health, weather, and crop management, which further supports growth in the fertilizer sector. 

Moreover, demand is rising for specialty fertilizers, particularly phosphatic and potash-based products, as these are crucial for high-yield crops and improve soil productivity. The government’s backing of biofertilizers also reflects a growing focus on sustainable farming practices. This sectoral push for enhanced crop productivity and environmentally responsible fertilizers underlines the promising growth trajectory for companies like Zuari Agro Chemicals​. 

Business Segments 

Zuari Agro Chemicals operates through multiple business segments, focusing primarily on manufacturing, trading, and marketing of fertilizers and other agricultural products under its Jai Kisaan brand. Here’s a breakdown of its main business activities as of FY25: 

• Fertilizers: Zuari produces a variety of fertilizers, including urea, diammonium phosphate (DAP), and nitrogen-phosphorus-potassium (NPK) complex fertilizers. Additionally, it offers Single Super Phosphate (SSP), a significant product aimed at enhancing soil productivity. Specialty fertilizers, which are used for specific crop needs, and water-soluble options also fall under this segment. In FY23, the company produced approximately 100,029 metric tons (MT) of SSP, among other products. 

• Crop Protection: Besides fertilizers, Zuari supplies pesticides and micronutrients, enhancing crop resilience and health. This segment includes both traded and manufactured goods, catering to the diverse agricultural needs of Indian farmers. 

• Agri-Retail: Zuari’s retail division provides an extensive range of agricultural inputs, including seeds, agrochemicals, and farming equipment. Its Jai Kisaan Junction outlets serve as hubs for agricultural solutions, offering direct access to Zuari’s products and valuable agricultural guidance. 

This strategic alignment positions Zuari well to leverage growth opportunities driven by rising demand for balanced fertilizers and government support for sustainable farming. The Indian fertilizer market is expected to grow at a very fast pace, supported by government incentives and the shift towards sustainable, high-yield farming practices​ 

Key Subsidiaries and Their Information 

Zuari Agro Chemicals Limited (ZACL) operates with a network of key subsidiaries and joint ventures, which enhance its market reach, production capabilities, and product portfolio across the agri-solutions sector. Here are the primary subsidiaries and joint ventures of Zuari Agro Chemicals and their contributions: 

• Mangalore Chemicals and Fertilizers Limited (MCFL): MCFL is a significant subsidiary of Zuari Agro and one of India’s leading chemical fertilizer manufacturers, based in Karnataka. It produces various fertilizers, including urea, diammonium phosphate (DAP), muriate of potash (MOP), and complex fertilizers. Urea and complex fertilizers are among MCFL’s core offerings. It also supplies micronutrients and soil conditioners, providing comprehensive fertilizer solutions. MCFL’s production and distribution capabilities expand Zuari Agro’s footprint in South India, specifically enhancing its presence in the southern agricultural markets and aligning with government initiatives to promote balanced fertilizer usage. 

• Zuari FarmHub Limited (ZFL): ZFL as a subsidiary of Zuari Agro focuses on agricultural retail and serves as Zuari Agro’s direct channel to farmers, offering a wide range of inputs and advisory services. Through the Jai Kisaan Junction outlets, ZFL provides fertilizers, seeds, pesticides, and agricultural equipment, creating a one-stop solution for farmers. It also offers crop-specific advice and farming solutions, promoting modern and efficient agricultural practices. ZFL strengthens Zuari’s outreach to Indian farmers, helping farmers access high-quality inputs and valuable information, ultimately enhancing farm productivity. 

• Zuari Maroc Phosphates Private Limited (ZMPPL):  It’s a Joint Venture with Office Chérifien des Phosphates (OCP) from Morocco. ZMPPL focuses on phosphatic fertilizers, with a notable stake in Paradeep Phosphates Limited. This JV leverages OCP’s global expertise in phosphates, supporting Zuari Agro’s supply chain and product diversification. This partnership helps ensure a reliable supply of phosphate, a crucial component for fertilizer production, which supports Zuari’s business resilience against supply chain fluctuations. 

• Paradeep Phosphates Limited (PPL): It is the Subsidiary of ZMPPL, with a major share owned by Zuari Maroc Phosphates. PPL operates one of India’s largest fertilizer plants in Paradeep, Odisha, producing DAP, NPK, and other phosphatic fertilizers The acquisition of Zuari’s Goa plant strengthened PPL’s production base, contributing to its role as a major supplier of fertilizers in eastern India. This boosts the group’s overall production capacity and its reach within the Indian market. 

• Zuari Yoma Agri Solutions Limited (ZYASL): ZYASL is an associate of PPL, with expertise in high-tech agricultural solutions. ZYASL specializes in crop protection and digital agriculture, supplying farmers with the latest tools and products for efficient crop management. The company works on innovations in crop protection and promotes the use of environmentally friendly products. ZYASL supports Zuari’s expansion into advanced agri-tech solutions, helping meet the growing demand for modern agricultural products and services across various Indian regions. 

These subsidiaries and joint ventures position Zuari Agro as a comprehensive agri-solutions provider, enhancing its market reach, product range, and production capabilities across India. Through strategic collaborations, Zuari is able to support sustainable farming practices, align with government agriculture policies, and address the diverse needs of the Indian agricultural sector. 

Q2 FY25 Highlights 

• Revenue and Total Income: Revenue for Q2FY25 rose slightly to ₹1,123.32 crore from ₹1,096.65 crore in Q1FY25, reflecting a 2.4% increase. Total income also increased from ₹1,106.55 crore in Q1FY25 to ₹1,140.02 crore in Q2FY25, indicating mild growth. When comparing year-over-year, revenue in Q2FY25 dropped 31.9%, down from ₹1,648.97 crore in Q2FY24. Total income similarly declined from ₹1,672.10 crore in Q2FY24 to ₹1,140.02 crore in Q2FY25, likely due to market fluctuations or changes in demand. Although there was quarter-on-quarter growth, the significant year-over-year decline indicates revenue pressure. 

• EBITDA: EBITDA rose from ₹1,058.26 crore in Q1FY25 to ₹1,096.05 crore in Q2FY25, suggesting improved operational efficiency and cost management. However, compared to Q2FY24, EBITDA in Q2FY25 was significantly lower, down from ₹1,617.15 crore. This decline corresponds with the revenue drop, indicating that higher costs have impacted profit margins over the year. 

• Interest and Tax Expenses: Interest expenses decreased to ₹43.97 crore in Q2FY25 from ₹54.95 crore in Q2FY24, reflecting effective cost management and financing cost reductions. The interest cost also fell slightly from ₹48.29 crore in Q1FY25 to ₹43.97 crore in Q2FY25. Tax expenses also declined in Q2FY25 to ₹20.04 crore compared to ₹39.03 crore in Q2FY24, consistent with the lower profits. Reduced tax and interest expenses helped mitigate some of the effects of reduced revenue on profitability. 

• Profit After Tax (PAT) and Consolidated Profit: The PAT for Q2FY25 was ₹28.94 crore, close to ₹27.72 crore in Q1FY25, reflecting stable profit levels quarter-to-quarter. However, PAT dropped from ₹44.63 crore in Q2FY24 to ₹28.94 crore in Q2FY25 due to lower revenue and total income. Despite the PAT decline, consolidated profit in Q2FY25 increased to ₹81.23 crore from ₹35.49 crore in Q2FY24, largely due to contributions from associates. This growth from associate contributions in Q2FY25 positively impacted consolidated profit, providing some resilience to overall earnings. 

Financial Summary 

INR in Cr.	Q2FY25	Q1FY25	Q2FY24	Q-o-Q(%)	Y-o-Y(%)
Revenue	1,123.32	1,096.65	1,648.97	2.4%	-31.9%
Other Income	16.70	9.90	23.13	68.7%	-27.8%
Total Income	1,140.02	1,106.55	1,672.10	3.0%	-31.8%
Total Expenditure	1,022.15	978.50	1,510.18	4.5%	-32.3%
EBITDA	1,096.05	1,058.26	1,617.15	3.6%	-32.2%
Interest	43.97	48.29	54.95	-8.9%	-20.0%
Exceptional Items
PBDT	73.90	79.76	106.97	-7.3%	-30.9%
Depreciation	24.92	25.21	23.31	-1.2%	6.9%
PBT	48.98	54.55	83.66	-10.2%	-41.5%
Tax	20.04	26.83	39.03	-25.3%	-48.7%
Profit after Tax	28.94	27.72	44.63	4.4%	-35.2%
Minority Interest	-12.19	-20.21	-31.12	-39.7%	-60.8%
Share of Associate	64.48	1.65	21.98	3807.9%	193.4%
Consolidated Profit	81.23	9.16	35.49	786.8%	128.9%
Equity Capital	42.06	42.06	42.06	0.0%	0.0%

SWOT Analysis

Strengths

1. Established Brand with Strong Market Presence
2. Broad Product Range Catering to Various Segments
3. Integrated Manufacturing and Efficient Supply Chain
4. Strategic Alliances and Subsidiary Support

Weaknesses

1. Revenue Fluctuations Due to Market Dynamics
2. High Dependence on Government Policies
3. Elevated Debt Levels and Related Financing Costs
4. Limited Reach in International Markets

Opportunities

1. Government Support for Agriculture Sector Growth
2. Growing Demand for Sustainable Fertilizer Options
3. Advancements in Agricultural Technology
4. Expanding Infrastructure and Rural Development

Threats

1. Volatile Raw Material Costs
2. Intense Market Competition
3. Potential Regulatory Challenges
4. Environmental and Sustainability Pressures