About
Deepak Nitrite Ltd
Deepak Nitrite Limited (DNL) is a prominent chemical manufacturing company. The Company manufactures Advanced Intermediates. It has a diversified portfolio of chemical intermediates that cater to various end-user industries and falls under Strategic Business Units (SBUs) of Basic Chemicals (BC), Fine and Speciality Chemicals (FSC) and Performance Products (PP). Its manufacturing facilities are located at Nandesari and Dahej in Gujarat, Roha and Taloja in Maharashtra, and Hyderabad in Telengana. Even as the operations are now predominantly domestic, it enjoys significant footprint offshore, especially into Europe, USA, Japan, Latin America, South East, and Far-East Asia - an export network spanning over 45 countries.
Deepak Nitrite Limited was incorporated in the year June 06th, 1970. During the year the 1984-1985, the company started to manufacture 3000 TPA concentrated nitric acid and in the same year the company commissioned its hexamine plant. During the year, the company acquired 31 acres of land in village Kareli in District Bharuch. During the year 1986-1987, the company started the production of new items namely, Guanidine Nitrate and Hydroxylamine Sulphate.
During the year the 1987-89, the company commissioned of the second CAN plant. During the year 1994-1995, the company successfully achieved rated capacity utilization for the whole year the Nitroaromatic plant's capacity being enhanced in a phased manner and in the same year the company developed a new hydrogenation plant being set up at Taloja.
During the year 1995-1996, the company's Sahyadri Dyestuffs & Chemical Division developed new product for exclusive customers in Europe and USA. During the year 1996-1997, the company's Taloja Chemical division established the plant for Hydrogenation of Nitromatics at Taloja and started commercial production of Toluidines.
During the year 1999-2000, the company acquired 68.76 % equity capital of Aryan Pesticides Ltd (APL). In the same year, the company increased installed capacity of Nitro Aromatics from 16,500 MTS to 19,000 MTS. During the year 2000-2001, the company's Taloja Chemical division commissioned the second stream of hydrogenation thereby giving an additional capacity. Also, the company increased the installed capacity of Aromatics Amines from 4500 MTS to 6,600 MTS.
During the year 2003-2004, Aryan Pesticides Ltd amalgamated with Deepak Nitrite Limited with effect from 31 March 2004. During the year 2004-2005, the company increased installed capacity of Inorganic Salts from 36,100 MTS to 36,430 MTS, Nitro Aromatics from 20,000 MTS to 24,000 MTS and Aromatics Amines from 6,600 MTS to 9,600MTS.
During 2006-07, the company acquired the DASDA business of Vasant Chemical Limited, with effect from 1 August 2006 on a going concern basis, for a consideration of Rs. 55 crores.
In 2010, the company launched products in the Fuel Additive Space. The company commenced first stream for commercial production of Optical Brightening Agent (OBA) for the year ended 2013.
During the financial year ended 31 March 2014, Deepak Nitrite registered its highest ever turnover of Rs 1,269.62 crore. During the year, your company decided to realign its operations into Strategic Business Units (SBUs) to intensify focus on individual businesses to drive accelerated growth of top and bottom line. The company's present business segments of Organic Intermediates, Inorganic Intermediates and Fine & Speciality Chemicals will be reorganised into three SBUs, viz. (i) Bulk Commodities & Chemicals, (ii) Fine & Speciality Chemicals and (iii) Fluorescent Whitening Agent (FWA).
The Brownfield expansion at the company's Nandesari facility was commissioned in June 2013 and commenced commercial production during the first half of FY 2013-14. This expansion has enhanced the production capacity for Inorganic Salts in which the company is the market leader in India.
During the year under review, Deepak Nitrite incorporated a wholly owned subsidiary Deepak Nitrite Corporation, LLC in North Carolina, USA to take care of marketing & operations part of customers in Northern and Southern American region.
During the financial year ended 31 March 2015, Deepak Nitrite's Greenfield Plant at Dahej, Dist. Bharuch in the State of Gujarat, for manufacturing Optical Brightening Agents (OBA) was fully commissioned.
With a view to broadbase the investor base by encouraging the participation of the small investors and also to increase the liquidity of Equity Shares of the company, the Board of Directors of Deepak Nitrite at its meeting held on May 2, 2014 have recommended the sub-division of each Equity Share of face value of Rs. 10/- of the company into 5 Equity Shares of face value Rs. 2/- each.
The Board of Directors at their meeting held on May 2, 2014 have recommended the issue of Bonus Shares in the proportion of 1 new Equity Share of Rs. 2/- each fully paid-up for every 1 existing Equity Share of Rs. 2/- each of the company (post-sub-division of the Equity Share Capital of the company) held by the shareholders on the Record Dates to be fixed by the Board / Committee of the Board.
The company's Board of Directors at their meeting held on May 2, 2014 decided to repay all the Fixed Deposits accepted by the company along with the interest thereon and accordingly, all the Fixed Deposits outstanding as on April 1, 2014 along with interest thereon have been repaid by your Company during the Financial Year.
The Board of Directors of Deepak Nitrite's at their meeting held on August 7, 2014 approved to undertake a Greenfield project for manufacturing Phenol and Acetone at Dahej, in the State of Gujarat. The said Project is to be funded with a mix of Debt and Equity of 60:40 and is being implemented through the company's Wholly Owned Subsidiary Company - Deepak Phenolics Limited. The capacity of the Phenol Plant shall be 200,000 TPA and that of co-product Acetone shall be 120,000 TPA. Phenol is widely used in the manufacturing of various commercial products and finds applications in Laminates, Foundry, Automobile lining, etc. while Acetone finds applications in Pharmaceuticals, Paints, and Adhesives & Thinners etc. Currently, a majority of India's Phenol and Acetone requirement is met by imports.
In order to raise the funds for the proposed Phenol and Acetone Project at Dahej, Deepak Nitrite's Board of Directors at their meeting held on January 22, 2015 approved issuance of Equity Shares for an aggregate amount upto Rs 200 crores on private placement basis through Qualified Institutions Placement (QIP).
Deepak Nitrite launched a special grade of Sodium Nitrite for exports market in FY 2015-16.
During the financial year ended 31 March 2016, Deepak Nitrite strengthened its Fine & Speciality Chemicals segment by successfully foraying into high-potential and fast-growing segments of pharma and personal care intermediates. Within pharma and personal care, the company started offering multiple new drug intermediates for which it received favourable response from multinational companies. During the year, deeper customer engagement in Fluorescent Whitening Agent (FWA) segment and finalisation of the plan for Phenol & Acetone project has been other notable achievements.In order to monetise the value of the company's unutilised assets and improve shareholders value by freeing up capital to facilitate growth, the company's Board of Directors had approved the sale of freehold land and surrender / assignment of leasehold rights in respect of lands situated at Sinhagad Road, Pune, Maharashtra. During April 2016, the said transactions were concluded for a total consideration of Rs 79.26 crore.
During FY 2015-16, Deepak Nitrite offered Equity Shares to the Qualified Institutional Buyers (QIBs) on private placement basis through Qualified Institutions Placement (QIP). Accordingly, 11,750,000 Equity Shares of Rs 2/- each were allotted to QIBs on January 6, 2016 at an issue price of Rs 70.90 per Equity Share (including premium of Rs 68.90 per Equity Share). The QIP issue proceeds aggregating to Rs 83.31 crore will be utilized in accordance with the objects stated in the offer document.
During the financial year ended 31 March 2017, Deepak Nitrite encountered multiple headwinds in the form of temporary closure of one of the three units at its Hyderabad facility due to excessive flooding and the resulting issues related to pollution. In October 2016, Deepak Nitrite faced an accidental fire at one of the distillation columns of the manufacturing facility at Roha, which impacted the performance.
During the year under review, the company leveraged its strength to switch to enhance the volumes of value added products to mitigate impact from down-cycle of existing product categories. Towards the end of the year, there was some disruption in demand in end-user industries of certain customers as a result of the demonetisation initiative.
There were several positives as the company witnessed encouraging demand in some of its key products and witnessed favourable trends in newer products launched in the complementary sub-segments. The company was able to incorporate a turnaround in its performance in the fourth quarter driving a rapid recovery from impact of the developments which took place in the third quarter through diversification in products, geographies, customer segments and end-user industries.
As a part of ongoing transformation, the company has during the year renamed its Bulk Chemicals and Commodity segment as Basic Chemicals' and the Fluorescent Whitening Agents segment as Performance Products' segment. With this, the product portfolio now comprises of expanded range of offerings thereby helping the company to further strengthen its position in the market.
During FY 2016-17, Deepak Nitrite offered Equity Shares to the Qualified Institutional Buyers (QIBs) on private placement basis through Qualified Institutions Placement (QIP), in accordance with Chapter VIII of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009. Accordingly, 1,44,23,076 Equity Shares of Rs 2/- each were allotted to QIBs on March 7, 2017 at an issue price of Rs 104 per Equity Share (including premium of Rs 102 per Equity Share). The QIP issue proceeds aggregating to Rs 150 crores will be utilised in accordance with the objects stated in the offer document.
In October 2016, Deepak Nitrite had faced an accidental fire at one of the distillation columns of the manufacturing facility at Roha, which had impacted the performance. During the financial year ended 31 March 2018, all the units at Roha resumed full operations which enabled the company to deliver balanced growth with contribution from all the three Strategic Business Units (SBUs), thereby recovering from the one-off events that occurred last year.
During FY 2017-18, Deepak Nitrite received Rs 7.50 crores as an interim payment against insurance claims due to fire at one of the distillation columns of the manufacturing facility at Roha.
During the year under review, the company undertook several initiatives to fortify its offerings by increasing integration of manufacturing process for select high value products in the Fine & Speciality Chemicals (FSC) segment and has received regulator's clearances for commencing operations, which will enable the company to further enhance profitability.
During FY 2017-18, Deepak Nitrite's wholly owned subsidiary Deepak Phenolics Limited (DPL) started seed marketing of Phenol/Acetone.
During FY 2017-18, Deepak Nitrite offered Equity Shares to the Qualified Institutional Buyers (QIBs) on private placement basis through Qualified Institutions Placement (QIP). Accordingly, 56,81,775 Equity Shares of Rs 2/- each were allotted to QIBs on January 30, 2018 at an issue price of Rs 264/- per Equity Share (including share premium of Rs 262/- per Equity Share). The QIP issue proceeds aggregating to Rs 150 Crores will be utilized in accordance with the objects stated in the offer document.
During FY 2017-18, Deepak Nitrite sold 77,500 shares held in Deepak Gulf LLC (DGL), a limited liability company incorporated in the Sultanate of Oman, being 31% of total share capital of DGL. Post the said transaction; Deepak Nitrite's shareholding in DGL is 45,000 shares, representing 18% total share capital of DGL. Consequently, DGL ceased to be Associate of Deepak Nitrite with effect from March 16, 2018.
During FY 2018-19, Deepak Phenolics Limited (DPL), commenced commercial production at a plant at Dahej to manufacture 200,000 MTPA of Phenol and 120,000 MTPA of its co-product Acetone on November 1, 2018.
During the year 2019, the Company entailed a capital expenditure of around Rs 67 Crore towards Brownfield expansions in Basic Chemicals and Fine & Specialty Chemicals segments, to enhance capacities of major products and also towards increasing operational efficiencies. It achieved a key milestone by replacing the bulk of imports of Phenol and Acetone in the local market having a market share of around 55% in the country. It has been producing and selling pharma grade acetone.
In FY 2019-20, Deepak Phenolics Limited (DPL), a subsidiary, completed its operations of about 90% capacity utilisation, a testament to plant operators and domestic customers' desire to partner with an Indian supplier.
During the Financial Year 2020-21, Company commenced land development at its newly procured site in Dahej, which is approximately 127 acres. In April 2020, Deepak Phenolics Limited (DPL), subsidiary of the Company, commissioned commercial production of IPA plant at Dahej. With effect from October 9, 2020, it had established a wholly-owned subsidiary, Deepak Clean Tech Limited' (DCTL), to produce chemical and pharma intermediate products, interwoven with their existing products and process chemistry knowledge, also towards creating new platforms like fluorination and photochlorination.
In FY'22, Company commenced the production of Isopropyl Alcohol (IPA) at its manufacturing facility in Dahej and doubled production capacity to 60,000 MTPA. It commissioned a brownfield expansion project of IPA at Nandesari, Roha and Taloja plants in Dec' 21.
During 2022-23, the Company commissioned the installation of Sulfuric Acid Concentration (SAC) unit at Nandesari Plant; undertook debottlenecking and commissioning of capacity of Phenol plant.
Deepak Nitrite Ltd
Chairman Speech
We have recently signed an MoU with Government of Gujarat for
additional investment of 5,000 Crores in the State of Gujarat to set up Greenfield
Projects of Advance Intermediate Products, Phenol, Acetone and Bisphenol-A. This will be a
big step forward towards making Bharat Aatmanirbhar in manufacturing these materials.
Deepak C. Mehta
Chairman and Managing Director
Dear Stakeholders,
We are pleased to share our 52nd Annual Report for the
Financial Year 2022-23, highlighting Deepak's sustained performance through our
manufacturing expertise, integrated facilities and agile operations. We are committed to
strengthening our financial position and continue to invest in the Company in means that
align with our vision and strategy. Our focus continues to be on building world-class
facilities, innovative products and processes, while balancing market access and cost
optimisation to achieve our goals. While doing so, we remain mindful of fulfilling our
social as well as environmental obligations. The Company believes in growing responsibly
while making an impact in the society. In addition to employee welfare and environment
protection, your Company has consistently supported sustainable livelihoods with better
healthcare facilities and offering education to marginal segments of the society. The
objective is to contribute in a positive way by conserving natural resources while
touching as many lives as possible and making them a part of our growth journey.
SUSTAINABILITY: KEY DRIVER OF INNOVATION
For Deepak, sustainability is neither a corporate social responsibility
nor a cost line-item, rather it is a business imperative that is at the forefront. It
forms a core of what we do and how we grow as an organisation. In the past, we have
received several accolades demonstrating our efforts of growing responsibly by making a
visible change on the ground. Recently, one of our units in Dahej achieved a milestone of
receiving 100% score in its very first attempt in Together for
Sustainability (TfS) Audit conducted by DQS India. This speaks volumes
of our commitment to offer best-in-class solutions to our customers by using sustainable
manufacturing practices. This achievement adds to other steps undertaken such as a
signatory of prestigious ‘Responsible Care', ‘Nicer Globe alliance' as
well as receipt of a silver medal with 60% assessment score from EcoVadis, which is a
leading provider of business sustainability ratings. All this is a testament to our
dedication of achieving the core objectives of people, planet and profit.
We firmly believe that sustainability is the critical ingredient of
organisational and technological innovations that generate positive impact on both
financial performance as well as overall business growth. In-line with this, we are
steadily investing to innovate our product portfolio and expand our process expertise to
deliver sustainable outcomes. We want sustainability and innovation to go hand-in-hand,
which is why we have strengthened our R&D infrastructure with an endeavour to innovate
new compounds, upgrade the existing processes and efficiently recover by-products from
effluents. This is a right move towards a circular economy thereby limiting the damage
caused to the environment.
Your Company is convinced that the creation of value in medium-to-long
term, relies on effective integration of business, social and environmental performance.
This will create sustained shareholder value and will be critical driver to continued
success in the future.
INDIAN ECONOMIC SCENARIO
The Indian economy is poised to be one of the world's
fastest-growing economies, despite global uncertainties and challenges. The International
Monetary Fund (IMF) has revised its growth projection for India in 2023-24 to 5.9%. This
revision is primarily due to expected decrease in consumption and tighter monetary
policies, thereby impacting global growth. Slower consumption growth, coupled with
external factors such as rising borrowing costs and sluggish income growth, is likely to
impact private and Government consumption, as fiscal support measures introduced during
the pandemic are phased out. Nevertheless, the recently presented Union Budget 2023
focusses on stability, sustainable development, inclusive growth and introducing policies
to stimulate demand for various chemicals in sectors such as construction, emission
control, polyurethanes, bio-pesticides and more.
Despite facing challenges on account of after effects of pandemic-led
disruption, the Russia-Ukraine conflict and related supply side shocks, inflation global
monetary tightening, and the Indian economy has demonstrated a resilient recovery across
multiple sectors, positioning itself for a return to the pre-pandemic growth levels in FY
2022-23. India's impressive average growth rate of 7.5% per year over the past two
decades, second only to China's 9.6% growth, further underscores its promising growth
trajectory.
INDIAN CHEMICAL INDUSTRY
Over the last decade, the chemical industry in India has demonstrated
remarkable growth, surpassed expectations and generated substantial wealth for its
shareholders. This impressive foundation has positioned India as a promising contender to
become a leading global hub for chemical manufacturing. The sector's outperformance
has opened up new opportunities in the upstream and downstream industries. Such growth has
been fostered by consistent revenue expansion, increasing profit margins and enhanced
valuations.
The Global Chemical sector is expected to grow significantly from 2021
to 2040, with a strong growth rate of 11 to 12% in the period of 2021-2027 and a 7 to 10%
growth rate from 2027-2040. This growth will triple the sector's global market share
by 2040. India's contribution to global chemical consumption growth is projected to
be over 20% in the next two decades, with domestic demand for chemicals in India surging
from USD 170 billion in 2021 to an impressive USD 850 billion to USD 1,000 billion by
2040. India's chemicals sector is well-positioned to become a preferred destination
for Companies seeking to fortify their supply chains due to its compelling value
proposition and the changing geopolitical landscape. Additionally, India's speciality
chemicals segment, particularly the Agrochemicals and Food and feed ingredient chemicals
subsegments, demonstrates robust performance and strong market attractiveness, with
projected significant growth rates. The Agrochemicals market in India is valued at USD 5.5
billion and is expected to represent nearly 40% of India's total chemicals exports by
2040. The Food and feed ingredient chemicals sub-segment, valued at USD 3 billion,
anticipates a growth rate of 7 to 9%.
Despite global challenges, the Indian chemical industry has shown
resilience and is moving towards becoming a player on the global stage. The industry is a
crucial contributor
The Global Chemical sector is expected to grow significantly from 2021
to 2040, with a strong growth rate of 11 to 12% in the period of 2021-2027 and a 7 to 10%
growth rate from 2027-2040. This growth will triple the sector's global market share
by 2040. India's contribution to global chemical consumption growth is projected to
be over 20% in the next two decades to India's ‘Make in India' and
Atmanirbhar Bharat Abhiyaan initiatives and the recent budget policies are expected to
generate demand for various chemicals. The proposed customs duty rate structure and basic
custom duty changes aim to boost domestic production, exports and the Government's
green initiative programme. Given the industry's role in providing building blocks
and raw materials for many sectors, it will benefit from India's strong macroeconomic
indicators. The Indian chemical sector is now seen as a reliable supplier for global
companies pursuing a China+1 and Europe+1 strategy to de-risk their operations.
India has the potential to become a major player in the global
chemicals industry due to its rapid economic growth, expanding middle-class population and
lower labour costs. The country has demonstrated impressive growth in this sector,
positioning itself as a potential global powerhouse in chemicals manufacturing and
utilisation. Although challenges exist, India's enormous potential should not be
underestimated. It is crucial to harness this potential and strive towards building a
thriving chemicals industry that contributes significantly to the nation's growth and
prosperity.
DNL's GROWTH & PERFORMANCE
In FY 2022-23, your Company exhibited resilient performance, delivering
healthy topline growth driven by stable demand and high plant efficiency products continue
to improve, as we scale new production and delivery volume benchmarks for the portfolio
products.
Despite persistent inflationary pressures, we remain committed to
deliver sustainable profitability and following the core objectives of people, planet and
profit.
Amid operational and macroeconomic challenges, our business model has
proven its strength and resilience backed by immense agility. Incremental investments have
boosted our capacity, while sustained demand from end-user industries has driven growth in
revenue. Notably, Deepak Nitrite has emerged as a dominant player across various business
verticals, with over ~70% of the domestic market share for basic intermediate sodium
nitrate/ nitrite. Its subsidiary, Deepak Phenolics, similarly commands over ~56% of the
market share for Phenol, Acetone & IPA. With sharp focus on import substitution of key
chemicals, the Company has developed specialised expertise and strives for market
leadership.
Our emphasis remains on extending our product portfolio by graduating
new products from our R&D pipeline, thereby sustaining momentum across established as
well as new high-potential chemistries. Our teams have successfully overcome the setback
caused by Nandesari full production capacity and fulfilling supply commitments of
customers. Large-scale investment plans reflect our enthusiasm for the opportunities
created by India's global potential.
We are excited about our prospects and committed to consistently
enhancing the stakeholders' value proposition. The introduction of novel solvents
will diversify our product offering, broaden our clientele and improve our overall value
proposition. Our robust financial position, deep client relationships and towering growth
aspirations position us well for future success.
NEXT PHASE OF DNL
We have announced investment aggregating to 2,500 Crores for expanding
our capacity, enabling assured availability of inputs, backward integration for improved
efficiency, widening of product portfolio and assimilation of new chemistries within our
operations –
• To enhance market share and maintain our leadership position, we
have planned brownfield projects for certain key products. These projects aim to meet the
growing demand and improve the overall business proposition
• A Greenfield exp ansion in Polycarbonate compounding will help
us venture into the Polycarbonate business. This expansion will provide valuable insights
into the market, including niche and major players. It will also enable the catering of
specialised demand in new-age applications such as 5G boxes, EV batteries, medical devices
and more
• Another project focussed on backward integration will
incorporate new chemistry platforms like photochlorination and fluorination, we aim to
reduce supply chain risks in the agro space and expand the range of products using these
chemistries. It will strengthen the backward integration e opportunities capabilities for
key inputs
• The MIBK-MIBC project involves forward integration. These
products are derived from acetone and the objective is to introduce new chemistries
thereby enabling utilisation of a higher proportion of acetone internally to manufacture
MIBK and MIBC. This move enables the production of other downstream value-added products
These projects will contribute to our robust revenue growth, expand its market share,
improve margins, mitigate business risks through a diversified product mix and strengthen
customer and supplier relationships.
The Board has approved an investment of up to 51% of the Equity Share
Capital of Deepak Oman Industries FZC LLC to set up a facility in Oman to manufacture key
chemicals and benefit from low-cost inputs of raw materials and energy to serve global
markets. As global supply chains are being redrawn, we are developing new relationships to
allow more global customers to ‘Depend on Deepak'.
We have recently signed an MoU with Government of Gujarat for
additional investment of 5,000 Crores in the State of Gujarat to set up Greenfield
Projects of Advance Intermediate Products,
Phenol, Acetone and Bisphenol-A. This will be a big step forward
towards making Bharat Aatmanirbhar in manufacturing these materials.
Additionally, we are excited to announce the forthcoming establishment
of a world-class research and technology centre. This state-of-the-art facility will house
versatile pilot plants, compact plants, an environmental laboratory and scalable
technology platforms. We are proud to uphold the trust and expectations of all our
stakeholders and with enthusiasm and humility, we are dedicated to fostering inclusive,
top-quality growth in the short and long term.
VOTE OF THANKS
I express my sincere gratitude to our stakeholders, including
shareholders and investors, for their unwavering support. Our dedicated employees have
played a vital role in achieving our objectives and fulfilling our vision, while the
esteemed Board members has been invaluable. Deepak Nitrite and Deepak Phenolics Limited
have consistently delivered value to customers worldwide, thanks to our productive
workforce.
mor Lookingahead,weareconfident ofseizing and accelerating our growth
trajectory. Our focus remains on maintaining agility to capitalise on changing industry
landscape.
To conclude, we thank everyone for being part of our Company's
prosperous journey. We are honoured to be associated with you as we pursue sustainable
growth and value creation.
Best Regards,
DEEPAK C. MEHTA
Chairman and Managing Director
Executive Director & CEO's Message
DNL is poised to capitalise on the ‘Make in India for the
World' initiative and the growing trend of the China+1 strategy, as a multitude of
opportunities emerge in the industry.
Maulik D. Mehta
Executive Director and CEO
Dear Stakeholders,
During the fiscal year 2023, the operating environment experienced
significant volatility due to the outbreak of the Russia-Ukraine war. This led to
disruptions in global supply chains and a surge in commodity prices, resulting in high
inflationary pressures on inputs. Additionally, the Company Nandesari plant, which caused
around 40-day loss in production and sales. Despite these obstacles, the Company's
business model remained resilient, with incremental investments enhancing throughput and
sustained demand from end-user industries driving growth.
In this backdrop, DNL reported strong double-digit revenue growth and
improved plant efficiencies that will yield consistent bottom line benefits while reducing
the carbon and water footprint of all sites. However, profitability was impacted by lag in
transmission of high input prices, inflationary environment and normalisation of spread in
certain products from exceptional levels in the preceding fiscal. DNL has taken
significant steps to mitigate risks in its business model by ensuring a secured supply of
additional inputs, establishing captive power supply and deriving value from waste.
Moreover, contracted supply arrangements with customers for products from both business
segments provide high visibility for continued growth.
COMMITMENT TO VALUE CREATION FOR STAKEHOLDERS
In FY 2022-23 we asked key stakeholders a question: "how can we
create more value for you?" Their answers prompted us to create succinct value
drivers for 4 pillars i.e. shareholders, customers, people and community and we pledge to
align ourselves with these statements.
In an ever-changing economic landscape influenced by global events
alongside internal challenges, our adept teams successfully navigated through the
uncertainties and evaluated our mission from the perspective of our key stakeholders.
Understanding the valuable investments of resources made by each stakeholder, including
finances, time, business and trust, we pledge to demonstrate their importance by grounds
to ‘Depend on Deepak'.
We remain dedicated to safeguarding the health and well-being of our
employees and the communities we operate in. Our unwavering commitment remains steadfast
on prioritising these 4 pillars:
• Shareholders – We have developed a roadmap based on our
core fundamentals and values, ensuring responsible growth and a clear ‘Right to
Win' by balancing process excellence with high returns on capital. Our focus is on
sustainable and high-quality growth, considering future potential and long-term
strategies.
• Customers – We prioritise responsiveness and leverage our
deep process expertise to become the preferred partner, supplying complex chemicals
manufactured through safe and sustainable practices. We aim to be the first choice for
customers and align our processes with their environmental, social and governance (ESG)
values. We have taken several initiatives by completing a customer insight through
industry expert and initiated on co-developing molecules with customers in the
agrochemical and personal care products.
• People – Our people practices foster agile and adaptive
leaders who build teams driven by action and guided by principles. We reward proactive
action-taking and prioritise doing what is right over adhering to traditional hierarchies.
We have taken several initiatives by appointing best professional agency to ensure
effective and transparent professional growth across the group, an initiative on
Diversity, Equity and Inclusivity which is governed by a fellow member of the Board of
Director, empanelled coaches and co-created programs at all levels with reputed management
institutes,
• Community – We strive to make a positive impact on society,
ensuring that our presence benefits the communities we operate in. We aim to contribute to
the betterment of society rather than merely existing within it.
FINANCIAL PERFORMANCE OVERVIEW – FY 2022-23 persuasive
Despite the challenging macroeconomic conditions, it is heartening to
note that our credibility, strategy and customer wallet share remains intact. Deepak
achieved remarkable growth in its top line performance. Building upon a sturdy base, we
strategically employ gradual capital injections to strengthen processes, enhance
capabilities and meet the ongoing needs of various industries. As a result, we have
achieved remarkable progress, witnessing a 17% year-on-year growth in our overall revenue,
surpassing the milestone of 8,000 Crores in turnover, in contrast to the previous fiscal
year's 6,845 Crores. This growth can be attributed to the Company's ability to
maintain stable demand and maximise plant efficiency. EBITDA for the year stood at 1,337
Crores, reflecting a 19% decrease compared to the previous year mainly due to very high
input cost, particularly of commodity building blocks. These results are to be viewed in
light of the impact of ongoing war, sharp rise in commodity prices and consequent rise in
input prices, leading to inflationary pressures.
Furthermore, the global supply chain for crude, fertilisers,
petrochemical derivatives and speciality chemicals had been especially disrupted due to
the Russia-Ukraine conflict, further impacting the Company's performance.
Segmental Highlights
In line with Ind AS 108 guidelines, we have combined our strategic
business units. As a result, our Group's activities are now categorised into two
segments: Advanced Intermediates and Phenolics. Over the course of the year, both segments
showcased noteworthy improvements, resulting in impressive financial expansion as a
collective entity. Despite the challenges presented by the surroundings, the growth was
attained through increased demand and a positive reception of our fundamental offerings.
DNL remains unwavering in its dedication to nurturing development and expanding its
endeavors to seize promising opportunities.
• Advanced Intermediates –
In the fiscal year 2023, our revenue experienced a remarkable growth of
21% to reach 3,074 Crores.
Despite the current challenging circumstances, we managed to achieve an
EBIT of 555 Crores, resulting in a margin of
18%. The Advanced Intermediates unit particularly stood out with its
impressive revenue growth, driven by strong demand from end-user industries.
During the year, we actively pursued opportunities with both domestic
and international customers. Given the global shift in the supply chain towards Asia and
positive demand trends, we anticipate this segment to continue its strong performance.
However, it is important to acknowledge the hurdles we face in terms of logistics, which
may cause delays in passing on the prices.
Looking ahead, our future performance will be influenced by several
factors, including new multiyear contracts, successful pilot projects and the introduction
of new products in our portfolio.
• Phenolics –
In FY 2022-23, Deepak Phenolics reported a healthy financial
performance, with revenue reaching 4,986 Crores and EBITDA amounting to 712 Crores, the
Company achieved a margin of 14%. This success was primarily driven by improved plant
efficiency, leading to a significant increase in volume for the phenolics division.
The phenol plant showcased exceptional performance, achieving an
average utilization rate well over 120% for the year. Continued process improvement
through the year supported by the captive power plant, resulted in the highest-ever
quarterly domestic sales in Q4, along with the highest daily production of phenol. The
impressive growth in volume was primarily attributed to improved acceptance of the
Company's products and improved operational efficiency. Notably, both Phenol and
Acetone experienced a significant increase in revenue realisation compared to the previous
quarter.
Furthermore, the phenolics division plans to enhance its downstream
products. With the upcoming implementation of projects like MIBC and MIBK, which are
solvents, the utilisation of acetone is expected to increase further. Overall, the Company
remains optimistic about the future prospects of its phenolics business.
KEY DEVELOPMENTS & GROWTH INITIATIVES
FY 2022-23 has proven to be a transformative year for us, as we have
witnessed the realisation of several growth initiatives.
A significant milestone for Deepak Phenolics has been the successful
implementation of debottlenecking measures, a crucial development that will bolster our
production capabilities. This enhancement is set to commence within the current quarter,
ensuring a swift and efficient integration. Furthermore, we have greenlit an advanced
process control project, which is expected to go live in the subsequent quarter. We have
taken several steps to improve our sustainable profitability by adding new products and
debottlenecked existing plants. This initiative holds the potential to amplify operational
efficiency and elevate product quality, further solidifying our market position and
bolstering our competitive edge.
In addition to these accomplishments, we are actively pursuing various
other ventures to expand our business horizons. Our SAC unit, a recent installation aimed
at enhancing sustainability in Nandesari, has been successfully commissioned, marking a
significant step forward. Looking ahead, we are planning to implement the
photochlorination and chlorination project in the third quarter, followed by the acid
project in the fourth quarter.
These endeavours will effectively cater to our present and future
requirements. By the first quarter of FY 2024-25, we anticipate the commissioning of our
MIBK and MIBC plants, which, as previously mentioned, are derived from acetone. Moreover,
the approval for our hydrogenation and multipurpose distillation facility signifies
further progress in our expansion endeavours.
in Additionally, it should be emphasised that DNL's subsidiary,
Deepak Chem Tech Limited ("DCTL"), has been proactively bolstering its workforce
by recruiting essential personnel across departments including project management,
procurement and support functions. DNL has allocated 400 Crores to DCTL to part finance
the ongoing capital projects undertaken by the Group.
During the year, we have taken substantial measures to mitigate
business risks, such as ensuring a consistent supply of critical raw materials and
actively reducing debt to fortify our financial position. With the Nandesari plant
operating at full capacity and other facilities operating at high utilisation rates, our
momentum remains strong. As we gear up to commission multiple plants in the forthcoming
quarters, we are poised to deliver growth and generate value for our esteemed
shareholders. Acknowledging this, the Board of Directors has announced a final dividend of
7.50 per equity share, representing a remarkable 375% return on the face value of 2.00
each for the fiscal year 2022-23, in recognition of the Company's steady performance.
SUSTAINABILITY AT THE FOREFRONT FOR DNL
Our Company is committed to a sustainable future and we have
implemented various measures to reduce our carbon and water footprints. Additionally, we
have found innovative ways to transform by-products into valuable compounds. These
initiatives have been recognised by prestigious awards, such as being named "The Best
Compliant Company for the Codes Under Responsible Care" by the Indian Chemical
Council and receiving the Divya Bhaskar Pride of Gujarat award for "The Most
Responsible Company." As proud signatories of Responsible Care, Together for
Sustainability (TfS)) and Nicer Globe, we prioritise environmental, health and safety
guidelines. Deepak Nitrite is dedicated to responsible chemistry and the creation of
At Deepak Nitrite, we understand the risks associated with a
constrained production process, including operational errors and warehousing
misjudgements. To address this, we have taken on greater responsibility for developing and
implementing automation and plant safety standards. These measures aim to minimise errors
and ensure a safe working environment. Our commitment to quality, environmental standards,
human resource management and efficiency in hazardous and complex chemical processes has
made us a trusted supplier for major global customers.
We are pleased to share that our Dahej facility achieved a remarkable
score of 100 out of 100 in the Together for
Sustainability Audit, in the first attempt. It's worth noting that
Together for Sustainability (TfS) is the European counterpart to
Responsible Care, an esteemed institution in the United States. TfS is highly regarded by
large European, Japanese and American companies. We are confident that this milestone will
inspire many more companies to follow suit and strive for excellence in sustainability.
FUTURE OUTLOOK
DNL is poised to capitalise on the ‘Make in India for the
World' initiative and the growing trend of the China+1 strategy, as a multitude of
opportunities emerge in the industry. With a lineup of projects worth around 25 billion
spanning its core product lines,
DNL is clearly dedicated to continuous growth and enhancing value. By
utilising its strong manufacturing infrastructure and extensive expertise in chemistry,
DNL has become a vital partner for major Indian and international conglomerates.
Positioned strategically, DNL is well-equipped to achieve incremental
advantages in both its segments by implementing key projects scheduled for the upcoming
year. These projects include expanding the capacity of specific products through
brownfield projects, enhancing backward integration capabilities to boost margins and
ensure a reliable supply, developing valuable downstream derivatives like solvents derived
from Phenol and Acetone, establishing new chemistry platforms for photo chlorination and
fluorination, investing in a asset to cater to the diverse needs of India's 5G,
electronics, EVs and medical devices industries and creating innovative products that
leverage highly efficient chemistries end-user industries.
Our focus is on implementing a pioneering growth strategy centred
around a robust platform. This strategy entails directing investments towards our existing
customers and businesses, utilising our current assets as a foundation for new value-added
products. By incorporating specialised balancing equipments, we aim to achieve high return
on capital employed (ROCE) targets.
Additionally, we are excited to announce the forthcoming establishment
of a world-class research and technology centre. This state-of-the-art facility will house
versatile pilot plants, compact plants, an environmental laboratory and scalable
technology platforms. We are proud to uphold the trust and expectations of all our
stakeholders and with enthusiasm and humility, we are dedicated to fostering inclusive,
top-quality growth in the short and long term.
Furthermore, I want to take this opportunity to thank all our investors
and stakeholders for their continuous commitment and confidence.
Best Regards,
Maulik D. Mehta
Executive Director and CEO
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Deepak Nitrite Ltd
Company History
Deepak Nitrite Limited (DNL) is a prominent chemical manufacturing company. The Company manufactures Advanced Intermediates. It has a diversified portfolio of chemical intermediates that cater to various end-user industries and falls under Strategic Business Units (SBUs) of Basic Chemicals (BC), Fine and Speciality Chemicals (FSC) and Performance Products (PP). Its manufacturing facilities are located at Nandesari and Dahej in Gujarat, Roha and Taloja in Maharashtra, and Hyderabad in Telengana. Even as the operations are now predominantly domestic, it enjoys significant footprint offshore, especially into Europe, USA, Japan, Latin America, South East, and Far-East Asia - an export network spanning over 45 countries.
Deepak Nitrite Limited was incorporated in the year June 06th, 1970. During the year the 1984-1985, the company started to manufacture 3000 TPA concentrated nitric acid and in the same year the company commissioned its hexamine plant. During the year, the company acquired 31 acres of land in village Kareli in District Bharuch. During the year 1986-1987, the company started the production of new items namely, Guanidine Nitrate and Hydroxylamine Sulphate.
During the year the 1987-89, the company commissioned of the second CAN plant. During the year 1994-1995, the company successfully achieved rated capacity utilization for the whole year the Nitroaromatic plant's capacity being enhanced in a phased manner and in the same year the company developed a new hydrogenation plant being set up at Taloja.
During the year 1995-1996, the company's Sahyadri Dyestuffs & Chemical Division developed new product for exclusive customers in Europe and USA. During the year 1996-1997, the company's Taloja Chemical division established the plant for Hydrogenation of Nitromatics at Taloja and started commercial production of Toluidines.
During the year 1999-2000, the company acquired 68.76 % equity capital of Aryan Pesticides Ltd (APL). In the same year, the company increased installed capacity of Nitro Aromatics from 16,500 MTS to 19,000 MTS. During the year 2000-2001, the company's Taloja Chemical division commissioned the second stream of hydrogenation thereby giving an additional capacity. Also, the company increased the installed capacity of Aromatics Amines from 4500 MTS to 6,600 MTS.
During the year 2003-2004, Aryan Pesticides Ltd amalgamated with Deepak Nitrite Limited with effect from 31 March 2004. During the year 2004-2005, the company increased installed capacity of Inorganic Salts from 36,100 MTS to 36,430 MTS, Nitro Aromatics from 20,000 MTS to 24,000 MTS and Aromatics Amines from 6,600 MTS to 9,600MTS.
During 2006-07, the company acquired the DASDA business of Vasant Chemical Limited, with effect from 1 August 2006 on a going concern basis, for a consideration of Rs. 55 crores.
In 2010, the company launched products in the Fuel Additive Space. The company commenced first stream for commercial production of Optical Brightening Agent (OBA) for the year ended 2013.
During the financial year ended 31 March 2014, Deepak Nitrite registered its highest ever turnover of Rs 1,269.62 crore. During the year, your company decided to realign its operations into Strategic Business Units (SBUs) to intensify focus on individual businesses to drive accelerated growth of top and bottom line. The company's present business segments of Organic Intermediates, Inorganic Intermediates and Fine & Speciality Chemicals will be reorganised into three SBUs, viz. (i) Bulk Commodities & Chemicals, (ii) Fine & Speciality Chemicals and (iii) Fluorescent Whitening Agent (FWA).
The Brownfield expansion at the company's Nandesari facility was commissioned in June 2013 and commenced commercial production during the first half of FY 2013-14. This expansion has enhanced the production capacity for Inorganic Salts in which the company is the market leader in India.
During the year under review, Deepak Nitrite incorporated a wholly owned subsidiary Deepak Nitrite Corporation, LLC in North Carolina, USA to take care of marketing & operations part of customers in Northern and Southern American region.
During the financial year ended 31 March 2015, Deepak Nitrite's Greenfield Plant at Dahej, Dist. Bharuch in the State of Gujarat, for manufacturing Optical Brightening Agents (OBA) was fully commissioned.
With a view to broadbase the investor base by encouraging the participation of the small investors and also to increase the liquidity of Equity Shares of the company, the Board of Directors of Deepak Nitrite at its meeting held on May 2, 2014 have recommended the sub-division of each Equity Share of face value of Rs. 10/- of the company into 5 Equity Shares of face value Rs. 2/- each.
The Board of Directors at their meeting held on May 2, 2014 have recommended the issue of Bonus Shares in the proportion of 1 new Equity Share of Rs. 2/- each fully paid-up for every 1 existing Equity Share of Rs. 2/- each of the company (post-sub-division of the Equity Share Capital of the company) held by the shareholders on the Record Dates to be fixed by the Board / Committee of the Board.
The company's Board of Directors at their meeting held on May 2, 2014 decided to repay all the Fixed Deposits accepted by the company along with the interest thereon and accordingly, all the Fixed Deposits outstanding as on April 1, 2014 along with interest thereon have been repaid by your Company during the Financial Year.
The Board of Directors of Deepak Nitrite's at their meeting held on August 7, 2014 approved to undertake a Greenfield project for manufacturing Phenol and Acetone at Dahej, in the State of Gujarat. The said Project is to be funded with a mix of Debt and Equity of 60:40 and is being implemented through the company's Wholly Owned Subsidiary Company - Deepak Phenolics Limited. The capacity of the Phenol Plant shall be 200,000 TPA and that of co-product Acetone shall be 120,000 TPA. Phenol is widely used in the manufacturing of various commercial products and finds applications in Laminates, Foundry, Automobile lining, etc. while Acetone finds applications in Pharmaceuticals, Paints, and Adhesives & Thinners etc. Currently, a majority of India's Phenol and Acetone requirement is met by imports.
In order to raise the funds for the proposed Phenol and Acetone Project at Dahej, Deepak Nitrite's Board of Directors at their meeting held on January 22, 2015 approved issuance of Equity Shares for an aggregate amount upto Rs 200 crores on private placement basis through Qualified Institutions Placement (QIP).
Deepak Nitrite launched a special grade of Sodium Nitrite for exports market in FY 2015-16.
During the financial year ended 31 March 2016, Deepak Nitrite strengthened its Fine & Speciality Chemicals segment by successfully foraying into high-potential and fast-growing segments of pharma and personal care intermediates. Within pharma and personal care, the company started offering multiple new drug intermediates for which it received favourable response from multinational companies. During the year, deeper customer engagement in Fluorescent Whitening Agent (FWA) segment and finalisation of the plan for Phenol & Acetone project has been other notable achievements.In order to monetise the value of the company's unutilised assets and improve shareholders value by freeing up capital to facilitate growth, the company's Board of Directors had approved the sale of freehold land and surrender / assignment of leasehold rights in respect of lands situated at Sinhagad Road, Pune, Maharashtra. During April 2016, the said transactions were concluded for a total consideration of Rs 79.26 crore.
During FY 2015-16, Deepak Nitrite offered Equity Shares to the Qualified Institutional Buyers (QIBs) on private placement basis through Qualified Institutions Placement (QIP). Accordingly, 11,750,000 Equity Shares of Rs 2/- each were allotted to QIBs on January 6, 2016 at an issue price of Rs 70.90 per Equity Share (including premium of Rs 68.90 per Equity Share). The QIP issue proceeds aggregating to Rs 83.31 crore will be utilized in accordance with the objects stated in the offer document.
During the financial year ended 31 March 2017, Deepak Nitrite encountered multiple headwinds in the form of temporary closure of one of the three units at its Hyderabad facility due to excessive flooding and the resulting issues related to pollution. In October 2016, Deepak Nitrite faced an accidental fire at one of the distillation columns of the manufacturing facility at Roha, which impacted the performance.
During the year under review, the company leveraged its strength to switch to enhance the volumes of value added products to mitigate impact from down-cycle of existing product categories. Towards the end of the year, there was some disruption in demand in end-user industries of certain customers as a result of the demonetisation initiative.
There were several positives as the company witnessed encouraging demand in some of its key products and witnessed favourable trends in newer products launched in the complementary sub-segments. The company was able to incorporate a turnaround in its performance in the fourth quarter driving a rapid recovery from impact of the developments which took place in the third quarter through diversification in products, geographies, customer segments and end-user industries.
As a part of ongoing transformation, the company has during the year renamed its Bulk Chemicals and Commodity segment as Basic Chemicals' and the Fluorescent Whitening Agents segment as Performance Products' segment. With this, the product portfolio now comprises of expanded range of offerings thereby helping the company to further strengthen its position in the market.
During FY 2016-17, Deepak Nitrite offered Equity Shares to the Qualified Institutional Buyers (QIBs) on private placement basis through Qualified Institutions Placement (QIP), in accordance with Chapter VIII of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009. Accordingly, 1,44,23,076 Equity Shares of Rs 2/- each were allotted to QIBs on March 7, 2017 at an issue price of Rs 104 per Equity Share (including premium of Rs 102 per Equity Share). The QIP issue proceeds aggregating to Rs 150 crores will be utilised in accordance with the objects stated in the offer document.
In October 2016, Deepak Nitrite had faced an accidental fire at one of the distillation columns of the manufacturing facility at Roha, which had impacted the performance. During the financial year ended 31 March 2018, all the units at Roha resumed full operations which enabled the company to deliver balanced growth with contribution from all the three Strategic Business Units (SBUs), thereby recovering from the one-off events that occurred last year.
During FY 2017-18, Deepak Nitrite received Rs 7.50 crores as an interim payment against insurance claims due to fire at one of the distillation columns of the manufacturing facility at Roha.
During the year under review, the company undertook several initiatives to fortify its offerings by increasing integration of manufacturing process for select high value products in the Fine & Speciality Chemicals (FSC) segment and has received regulator's clearances for commencing operations, which will enable the company to further enhance profitability.
During FY 2017-18, Deepak Nitrite's wholly owned subsidiary Deepak Phenolics Limited (DPL) started seed marketing of Phenol/Acetone.
During FY 2017-18, Deepak Nitrite offered Equity Shares to the Qualified Institutional Buyers (QIBs) on private placement basis through Qualified Institutions Placement (QIP). Accordingly, 56,81,775 Equity Shares of Rs 2/- each were allotted to QIBs on January 30, 2018 at an issue price of Rs 264/- per Equity Share (including share premium of Rs 262/- per Equity Share). The QIP issue proceeds aggregating to Rs 150 Crores will be utilized in accordance with the objects stated in the offer document.
During FY 2017-18, Deepak Nitrite sold 77,500 shares held in Deepak Gulf LLC (DGL), a limited liability company incorporated in the Sultanate of Oman, being 31% of total share capital of DGL. Post the said transaction; Deepak Nitrite's shareholding in DGL is 45,000 shares, representing 18% total share capital of DGL. Consequently, DGL ceased to be Associate of Deepak Nitrite with effect from March 16, 2018.
During FY 2018-19, Deepak Phenolics Limited (DPL), commenced commercial production at a plant at Dahej to manufacture 200,000 MTPA of Phenol and 120,000 MTPA of its co-product Acetone on November 1, 2018.
During the year 2019, the Company entailed a capital expenditure of around Rs 67 Crore towards Brownfield expansions in Basic Chemicals and Fine & Specialty Chemicals segments, to enhance capacities of major products and also towards increasing operational efficiencies. It achieved a key milestone by replacing the bulk of imports of Phenol and Acetone in the local market having a market share of around 55% in the country. It has been producing and selling pharma grade acetone.
In FY 2019-20, Deepak Phenolics Limited (DPL), a subsidiary, completed its operations of about 90% capacity utilisation, a testament to plant operators and domestic customers' desire to partner with an Indian supplier.
During the Financial Year 2020-21, Company commenced land development at its newly procured site in Dahej, which is approximately 127 acres. In April 2020, Deepak Phenolics Limited (DPL), subsidiary of the Company, commissioned commercial production of IPA plant at Dahej. With effect from October 9, 2020, it had established a wholly-owned subsidiary, Deepak Clean Tech Limited' (DCTL), to produce chemical and pharma intermediate products, interwoven with their existing products and process chemistry knowledge, also towards creating new platforms like fluorination and photochlorination.
In FY'22, Company commenced the production of Isopropyl Alcohol (IPA) at its manufacturing facility in Dahej and doubled production capacity to 60,000 MTPA. It commissioned a brownfield expansion project of IPA at Nandesari, Roha and Taloja plants in Dec' 21.
During 2022-23, the Company commissioned the installation of Sulfuric Acid Concentration (SAC) unit at Nandesari Plant; undertook debottlenecking and commissioning of capacity of Phenol plant.