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Deepak Nitrite held its conference call on 6 Feb 2019 which was addressed by Umesh Asaikar CEO.
Key Highlights
Phenol and Acetone plant started commercial operations from mid Nov 18 onwards.
The company is well in line with the debt and the cost of the project. Some delay of around a month has happened but that is nothing compared to the size of the project.
Consolidated debt stands at around Rs 1400 crore for the company with debt equity ratio of 1.3:1. The company has reduced its foreign borrowings to around Rs 170 crore as on Dec 18.
Despite crude oil and other commodity meltdown, while there has been some volatility in Phenol pricing, but the prices continue to remain firm. The delta remained in favour of the company.
The company generated Ebidta of Rs 38 crore in Dec 18 quarter and PAT of Rs 12 crore at around 80-85% of capacity utilization from the Phenol plant.
There will be an additional depreciation and interest of around Rs 40 crore and Rs 50 crore every year respectively due to commencement of Phenol plant at consolidated level.
The existing standalone business is expected to grow around 15-16% with margin improvement of around 0.5% every year.
The trade war and Chinese issues are working very well for the speciality chemicals and other performance products of the company. This aids in higher realisation. Demand continues to remain strong.
Despite increase in raw material and other costs, margins improved due to better realisation and increase in volumes which was aided by forex gains as well.
Performance product has turned around. The company entered new geographies and widened its reach. The company did Rs 180 crore of sales in FY 18 of Optical Brightening segment (OBS) and expects Rs 240 crore net sales in FY 19 and aiming for Rs 300 crore of net sales in FY 20 from this segment.
The company would incur a normal capex of around Rs 50-60 crore every year.
Globally some capacities have been shut down which will further aid the prices of Phenol and Acetone.
Not importing any raw material from China. So any Chinese related issues which other companies are facing are not applicable to the company from raw material point of view.
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