Deepak Nitrite held its conference call on 15 May 2018 which was addressed by Umesh Asaikar CEO.
Key Highlights
The company was able to restore the entire Roha facility from May 18 onwards.
Brownfield approvals for backward integration got delayed in FY 18 and finally were received only by the end of the year. Expects the backward integration facility to commence from H2 FY 19 which will result in further higher margins in fine and speciality chemical segment.
Performance in terms of margins for FY 18, would have even better had the company received the permission of backward integration at Roha.
The company will incur capex of around Rs 60 crore towards brownfield expansion across all the business segments due to higher demand.
Supply issues in China led to increased offtake from key domestic customers in FY 18 in bulk chemical segment. This is expected to continue. Further rupee depreciation will lead to higher landed imported costs which will further take the customers away from Chinese imports.
Performance product division did not perform as per the initial planning. The company has realigned its strategy in this segment. Earlier the focus was only on paper industry in North America which has now shifted to textiles and detergents. Expects to break even in this segment at Ebidta level in FY 19.
The company has raised total of around Rs 380 crore through QIP issues and this together with proceeds of land sale has resulted in meeting the equity requirement of Phenol project.
Phenol demand is currently very strong and is growing around 10% annually in India. The prices also have increased due to some global capacity issues. Management has indicated that even a small 3-5% increase or decrease in capacities, can spurt or crash the prices of Phenol.
China has forward integrated into downstream project. So phenol produced is consumed there itself. There is a ready market available in India for company's product Phenol. The company is in the process of signing the supply contracts with dealers.
From end of July 18 onwards the Phenol project will commission. Expects around 70% capacity utilization in FY 19 itself.
Not importing any raw material from China.
Overall very bullish for FY 19 both in terms in net sales growth and margins.
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