Deepak Fertilisers & Petrochemicals has announced that its wholly owned subsidiary, Deepak Mining Solutions Limited (DMSL), has revised the estimated cost of its Technical Ammonium Nitrate (TAN) Project in Gopalpur. The project's cost has increased from the initial estimate of ₹2,223.00 crores to ₹2,675.00 crores, as approved by DMSL's Board of Directors on July 28, 2025.

Factors Contributing to Cost Increase

The company cited several factors for the ₹452.00 crore increase:

1. Geopolitical Issues and Price Hikes:

   • Stainless Steel prices surged from ₹250.00/kg to ₹370.00/kg
   • Carbon Steel prices rose from ₹43.00/kg to ₹77.00/kg
   • Increased manpower and construction costs
   • Currency fluctuations, with USD to INR exchange rate moving from 74.55 to 85.13

2. Safety and Efficiency Investments: Additional investments were made to improve safety, efficiency, reliability, sustainability, and export-compliant quality.

3. Ammonia Pipeline Development: Extra costs were incurred due to changes and delays in the Ammonia Pipeline development, partly attributed to the ownership change of Gopalpur port from Shapoorji to Adani.

4. Environmental Compliance: Investments in Effluent Treatment Plant (ETP), Zero Liquid Discharge (ZLD), and Ammonium Nitrate recovery systems were necessary as the Common Effluent Treatment Plant from Tata SEZ was not made available.

Project Status and Outlook

Despite the cost increase, DMSL remains optimistic about the project:

• The project is over 90% complete, with most requirements already ordered or arrived.
• The company states that further cost revisions are unlikely at this stage.
• DMSL maintains that the project's financial metrics remain robust, with the Internal Rate of Return (IRR) continuing to exceed internal threshold benchmarks.
• The project is described as strongly aligned with the company's strategic growth objectives and is expected to generate significant long-term value for stakeholders.

This development marks a significant milestone for Deepak Mining Solutions Limited and its parent company, Deepak Fertilisers & Petrochemicals, as they navigate global challenges to bring the Technical Ammonium Nitrate Project to fruition.

Note: This information was disclosed by the company in compliance with SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Deepak Fertilisers , a prominent player in the fertilizer industry, has recently shared key guidance points during a conference call, offering insights into its strategic plans and financial projections for the coming years.

Capex Outlook

The company has unveiled an ambitious capital expenditure (capex) plan, projecting a total investment of approximately ₹4,500.00 crore by FY26. Notably, ₹1,400.00 crore of this amount has already been capitalized, indicating significant progress in the company's expansion efforts.

Growth Expectations

For the current fiscal year, Deepak Fertilisers anticipates single-digit volume growth. This growth is expected to be primarily driven by debottlenecking initiatives within the company's operations. Management emphasized that margin expansions are likely to play a more significant role in the company's performance compared to volume growth.

Looking ahead, the company expressed optimism about its future performance, projecting improved results in FY26 compared to FY25. This positive outlook suggests a confident stance on the company's strategic direction and market positioning.

Debt Projections

In terms of financial leverage, Deepak Fertilisers provided insights into its expected debt levels. The company projects to reach peak debt levels of around ₹5,000.00 crore. This information is crucial for investors and analysts in assessing the company's financial structure and risk profile.

Operational Ramp-up and Returns

The company outlined its expectations for operational ramp-up, projecting a 70% utilization in the first year of new capacities coming online. This is considered a normal ramp-up rate in the industry. More importantly, Deepak Fertilisers anticipates a significant improvement in its Return on Capital Employed (ROCE), expecting it to increase to 80-85% in subsequent years.

This guidance from Deepak Fertilisers provides a comprehensive view of the company's strategic direction, focusing on expansion, operational efficiency, and financial performance. As the company moves forward with its plans, stakeholders will be keenly watching how these projections materialize in the coming years.