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Analyst Meet / AGM
07-Feb-20
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Conference Call
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Deepak Nitrite
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IPA facility will come on stream in the first quarter of the next year
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Deepak Nitrite held a conference call to discuss the results for the quarter ended December 2019 and way forward. Mr. Umesh Asaikar - Executive Director & CEO, Mr. Sanjay Upadhyay - Director, Finance & Chief Financial Officer and Mr. Somsekhar Nanda- Sr. GM, Finance of the company addressed the call.
Highlights of the Concall
- Balanced growth across Basic Chemicals, Fine & Speciality Chemicals and the performance products segment resulted in robust topline performance during the quarter. Overall, this was supported by encouraging demand scenario of company's products in the export markets
- Domestic revenues for the quarter were Rs. 331 crore compared to Rs. 293 crore in the same period last year, growing by 13% Y-o-Y. Production efficiencies and recalibration of product mix resulted in volume growth. This was supported by higher realizations for select products
- Revenues from exports were at Rs. 251 crore in Q3 FY20 compared to Rs. 154 crore in Q3 FY19, resulting in robust growth of 63% Y-o-Y. Deepak Nitrite leveraged its deep expertise and high backward integrations in certain products to capitalise on tailwinds in the global supply chain for chemical intermediates.
- The Basic Chemicals segment reported revenues of Rs. 253 crore in Q3 FY20 compared to Rs. 219 crore in the corresponding quarter of last year, growing by 16% Y-o-Y. Volumes in the Basic Chemicals segment improved 23% Y-o-Y given its cost leadership position in the market as well as efforts towards widening customer base.
- Revenues from the Fine & Speciality Chemicals segment were Rs. 173 crore in Q3FY20 compared to Rs. 148 crore in Q3 FY19, growth of 17% Y-o-Y. Solid realisation gains as well as favourable product mix in the export markets boosted the segment performance during the quarter under review.
- The performance products segment delivered healthy growth of 76% to Rs. 176 crore in Q3 FY20. Higher realisations reported were driven by demand-supply mismatch for key products in the performance products segment. Overall, Deepak Nitrite position of being a fully integrated manufacturer of FWA (Fluorescent Whitening Agent) has been yielding encouraging results.
- The company mentioned that DASDA ((Diamino Stilbene Disulfonic Acid ), a performance product) prices cannot remain at very high level. As a result there was a marginal fall in dasda prices and volumes were impacted during the quarter. But that does not mean dasda will go back to earlier low levels. Dasda continues to do well as OBA (Optical Brightening Agent- performance product) is doing well. Q4 will also see good numbers. Deepak Nitrite is the world's only fully-integrated manufacturer of OBA, with vertical integration from Toluene to PNT and further into DASDA and OBA.
- Deepak Phenolics (DPL) performed extremely well on volumes as it reported capacity utilisation of over 100% during the quarter resulting in revenues of Rs. 550 crore and its maiden quarter of PAT
- The prices of both phenol and acetone are cyclical in nature as they are global commodities. Even as the company navigates this phase of the phenol and acetone cycle, it is investing to develop value added derivatives through forward integration. It plans to commercially launch the first such product towards the end of current fiscal year and this represents the first step towards achieving the vision of developing a comprehensive basket of downstream derivatives.
- The company has acquired industrial land admeasuring around 125 acres situated at Dahej, Gujarat for a total consideration of Rs. 99.25 crore. This land will be utilized for future expansion plans of the company.
- Deepak Nitrite is secure on the raw materials front, since it sources most of its raw materials locally and has a well-integrated facility. It has also undertaken positions to ensure that supply of imported raw materials are covered for the current quarter causing no disturbance to operations as a result of the developments in China.
- China, which enjoys a dominant position in the market, has been deemphasizing manufacturing of chemicals and high-complexity products. Further, global customers are also seeking to establish operations in alternate markets other than China for which India is better placed. Uncertainties caused by the corona virus are exacerbating the concerns around China. This is a tailwind for the speciality chemical industry and Deepak Nitrite is well placed and endeavours to continue to build upon its success in recent years
- The company's isopropyl alcohol (IPA) facility at Dahej in Gujarat will come in the first quarter of the next year.
- Net debt at consolidated level is Rs 1100 crore.
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