Commenting on the performance, Mr. Deepak C. Mehta, Chairman & Managing Director, said,

"I am pleased to share that we have begun Financial Year 2019 on an exuberant note with strong double-digit growth in Revenues, EBITDA and Profit after Tax. We have been able to successfully pass on rising input costs to customers and have managed to report higher volumes across export and local markets amidst rising oil prices. The focused initiatives to turnaround the Performance Products segment have also delivered and the effect of full integration of value chain (Toluene>PNT>DASDA>OBA) is now visible.

FY2019 is set to be a breakthrough year for us as we commission our ambitious mega-Greenfield project of Phenol and Acetone in Dahej in the current month. This will enable a quantum leap in revenues and profits for the Company in the initial stage and subsequently open up new verticals of growth towards value-added import substitutes.

At full capacity, we anticipate that our plant will save the nation close to USD$ 400 million in value of imports saved. In addition to this, our growth during the year will be driven by increase in capacities for select products, buildup of newly introduced product lines and recognising pockets of opportunity due to the shifts in the global supply chain.

We are already witnessing escalation in enquiries for existing and new products and are geared up to capitalise on the multiple opportunities ahead."

Other highlights

All of the Strategic Business Units (SBUs) contributed positively to the topline performance. While Basic Chemicals witnessed improving demand and pricing for key products, Fine & Speciality Chemicals saw strong traction especially in export markets.

The Performance products segment has also delivered an encouraging performance on the back of strategic initiatives implemented earlier.Combination of higher contribution from all business segments, benefits of operating leverage and better product acceptance enabled the increase in EBITDA. (Excluding the insurance claim of Rs 18.33 crore net of expenses, received in June 17 quarter). June 17 quarter also had an impact of incident of fire in Roha facility.

Q1FY19 has been an excellent quarter wherein the Company has withstood challenging operating conditions to drive buoyancy in product volumes, witnessed initial success from strategic initiatives implemented and derived benefits from better pricing and cost management all of which have combined to significantly enhance profitability.

Domestic revenues stood at Rs. 265.05 crore in Q1 FY19 from Rs. 214.95 crore in the same period last year, growing by 23% Y-o-Y. Environmental challenges and production disruptions in China led to volume gains for local customers boosting domestic revenues.

Revenues from exports came in at Rs. 153.82 crore in Q1FY19 compared to Rs. 98.36 crore in Q1 FY18, higher by 56%. Export performance was driven by strong demand trends in key markets across all segments, currency tailwind and stabilisation of operations compared to the same quarter in the previous financial year.

Revenues from the BC segment stood at Rs. 222.62crore in Q1 FY19 compared to Rs. 180.44 crore in Q1FY18, growing by 23% Y-o-Y. Improved demand traction from the domestic customer industries resulted in volume growth of 7% in the BC segment.

Revenues from FSC segment were Rs. 122.37crore in Q1 FY19, higher by 49% compared to Rs. 81.94 crore in Q1 FY18. Revenue growth was backed by solid volume growth of 25% in the FSC segment due to a favourable demand environment in domestic as well as export markets as well as benefit from a moderate base.

The PP segment reported revenues of Rs. 80.51 crore in Q1 FY19 compared to Rs. 60.61 crore in Q1 FY18, a growth of 33%y-o-y.

Management strategy to turnaround the PP segment has delivered results and this has helped the PP segment to turn EBIT positive. Customer's acceptance for the PP products is going up and at the same time company's strategy to differentiate product, price and market is yielding positive results.

Update on Phenol and Acetone Project

Introduction:

DNL is implementing a mega project, aligned with Make in India, to manufacture 200,000 MTPA of Phenol and 120,000 MTPA of the co-product Acetone. This will be supported by capacity to manufacture 260,000 MT of Cumene, which is a feedstock for manufacturing Phenol and Acetone.

This project is being implemented in a 100% subsidiary, i.e. Deepak Phenolics Limited (DPL). The proposed Phenol Plant will be located at Dahej in the State of Gujarat, with a capital expenditure of Rs. 1,400 crore being funded by debt and equity in the ratio 60: 40.

DPL will address the opportunity in the domestic market which is currently met by imports. In addition, its plant is being based on cutting-edge technology and will be resource and energy efficient. Local availability of Phenol and Acetone is expected to boost the production of derivatives and downstream intermediates, which will expand the overall market in the country.

Progress:

All pre-commissioning activities have been concluded and the mega-greenfield project is on the verge of commissioning. The Leadership team and functional teams have been appointed and the marketing team has already commenced customer outreach program. The Construction work began in month of May, 2016 and in a record time of approx. 24 months construction work has been completed. Currently we are doing trial runs at the plant and even amidst the transporters' strike, the plant is expected to be commissioned in the month of August, 2018.

On the Market front, when the project was announced, demand for Phenol in India was around 275,000 MT which has seen 8.5% growth and current demand is around 350,000 MT. Demand is expected to grow at around 10-12% p.a.

Owing to the strong latent demand for phenol combined with reliability associated with local production, the Company has received highly encouraging response to its seed marketing programme. Phenol demand is also growing globally, due to which, the demand-supply capacity is moving towards equilibrium, as downstream projects in China which commenced earlier during the current calendar year have led to greater captive consumption of Chinese Phenol capacity. Developments in the Chinese market have been accompanied with shutdown of a large global facility for production of Phenol in the US. These factors have resulted in firming up of overall prices of Phenol globally.

Outlook

The roadmap for FY19 appears encouraging as we expect to deliver sustained growth across all the Strategic Business Units -Basic Chemicals, Fine & Speciality Chemicals and Performance Products. Growth will be led by Basic Chemicals due to focus on further strengthening of product portfolio as well as brownfield capex to enhance capacities of major products. The FSC segment will benefit from full capacity utilisation during the year after receiving the regulatory consent for the backward integration facility at Roha.

As informed earlier, in order to take advantage of growing demand, the company has further invested Rs 60-70 crores for increasing capacity in existing products in BC, FSC segments. These projects shall be commissioned by Q2FY2019. With the additional capacity, the comapny shall see much improved performance in second half of FY2019 and thereafter. PP segment will benefit from the improved demand and pricing trends in the local and export markets combined with better efficiency and utilization of the plant. The company also expect the reorientation of geographic focus of this business segment to enable better results in the coming quarters.

Lastly, the commissioning of the Phenol and Acetone facility will be a significant event for the Company which will drive a quantum leap in its revenues and profitability as well as enhance the growth trajectory for the Company as it will pave the way to enter in various derivatives business.

Performance for the 12 months ended Mar 18

For 12 Months ended Mar 18, net sales was up by 18% to Rs 1454.78 crore. OPM was up by 230 bps to 13.9% resulting in a 41% increase in OP to Rs 202.66 crore. Other income was up by 28% to Rs 11.71 crore.

Interest costs was higher by 31% to Rs 40.34 crore and depreciation was higher by 9% to Rs 51.95 crore. PBT was thus higher by 65% to Rs. 122.08 crore in 12 Months ended Mar 18. There was an EO income of Rs 74.97 crore for 12 Months ended Mar 17 pertaining to transfer of its land leasehold rights. Thus, PBT after EO for 12 Months ended Mar 18 stood at Rs 122.08 crore, down by 18% YoY. Total tax was higher by 1% to Rs 38.63 crore on YoY. Finally, PAT came in at Rs. 83.45 crore in 12 Months ended Mar 18 down by 25% YoY.

For the 12 months, sales from the bulk and chemicals segment (BCC) stood at Rs 746.98 crore and accounted for 49% of sales. PBIT from the same was up by 21% to Rs 106.65 crore and accounted for 50% of total.

For the 12 months, sales from the Fine & Specialty chemicals (FSC) Segment stood at Rs 463.24 crore and accounted for 31% of sales. PBIT from the same was up by 39% to Rs 114.79 crore and accounted for 54% of total.

For the 12 months, sales from the Performance product (PP) segment stood at Rs 299.31 crore and accounted for 20% of sales. Loss at PBIT level stood at Rs 8.08 crore as compared to loss of Rs 13.88 crore for 12 Months ended Mar 17.