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For the year ended March 2006, Deepak Fertilizers and Petrochemicals Corporation (DFPCL) has reported a revenue growth of 18% to Rs 562.86 crore. Due to rise in outsourced products, which were necessitated by lower production and the need to maintain marketshare and consumer loyalty, the net profit of DFPCL did not move in line with sales growth remaining flat at Rs 79.77 crore.
DFPCL is one of the leading producers of industrial chemicals like Ammonia, Methanol, various grades of Nitric Acid and liquid Carbon Dioxide in India. It has a prilled Ammonium Nitrate facility with a capacity of 90,000 tonnes at Taloja, near Mumbai, in Western India. The Company’s 100 % subsidiary, Smartchem Technologies, has two plants with a total capacity of 50,000 tonnes in Andhra Pradesh in Eastern India and in Gujarat in the Western part of the country.
The Government of India is yet to notify final subsidy on fertilizers for the quarter ended September-2005, December-2005 and March-2006 and hence the amount of subsidy is estimated in line with the on going applicable schemes and accepted parameters.
Quarterly Results
For the quarter ended March 2006 sales of DFPCL has increased by 18% to Rs 170.16 crore. Revenue growth of the company was mainly fueled by increase in sales of traded fertilizers and chemicals. However the company was not able to retain its margins. Operating profit margin of the company has fallen by a massive 1538 basis points as compared to the corresponding previous quarter. This was mainly on account of sharp rise in traded goods purchases as a percentage of sale (net of stock adjustment) to 37.98% from 24.39%. On account of fall in margins, operating profit of the company has trembled down by 49% to Rs 20.39 crore.
Other Income has increased by 58% to Rs 10.07 crore. Interest expenses has declined by 44% to Rs 1.38 crore while provision for depreciation has remained the same at Rs 8.02 crore. PBT before EO stood at Rs 21.06 crore as compared to Rs 35.48 crore in corresponding quarter in previous year, down by 41%. Net EO amounted to Rs 13.17 crore. Due to this EO, PBT after EO has declined only by 4% to Rs 34.23 crore. Provision for tax, including deferred tax and newly added Fringe Benefit Tax (FBT), has fallen by 5% to Rs 7.4 crore. Finally, PAT for the quarter stood at Rs 26.83 crore as compared to Rs 27.69 crore in corresponding quarter in previous year, down by 3%. If the net EO of Rs 13.17 crore is excluded, then the PAT would be Rs 13.66 crore, down by 50.67% as compared to the corresponding period of the previous year
Yearly results
For the year ended March 2006, DFPCL has posted 18% growth in revenue to Rs 562.86 crore. Operating profit margin of the company has fallen by 774 basis points to 18.4%. This was largely due to increase in cost of traded good purchased as a percentage of sale to 36.28% from 22.23%. Raw material cost and staff cost as a percentage of sale has declined to 24.01% and 7.31% (Last year: 28.59% and 8.48%). Due to fall in margins operating profit of the company has declined by 17% to Rs 103.55 crore.
Other income included receipt of insurance claim settled in respect of damaged stocks due to unprecedented rains in July, 2005: Rs. 181 lacs, profit on sale of long term investment in shares: Rs. 314 lacs for the year. On account of rise in other income by 43% to Rs 32.63 crore PBIDT of the company has declined by just 8% to Rs 136.18 crore. Fall in interest expenses by 35% to Rs 5.65 crore PBDT declined by 6% to Rs 130.53 crore. Provision for depreciation has inched up by 1% to Rs 31.56 crore. PBT before EO posted a decline of 8% to Rs 98.97 crore. Extraordinary income has increased by 186% to Rs 12.73 crore. Provision for tax, including deferred tax and FBT, has fallen by 2% to Rs 31.93 crore. PAT for the period has remained flat at Rs 79.77 crore.
Segment Results
Quarterly Results
For the quarter ended March 2006 the Net Sales/ Income from operations from three segments have increased by 18% to Rs 170.16 crore.
a) Chemicals
The Chemicals segment of the Company's business includes Methanol, Nitric Acid, Ammonium Nitrate, and Liquid CO2 etc. During the quarter ended March 2006, the chemical segment of the company reported 10% decline in revenue to Rs 107.96 crore. Sales of manufactured chemicals, declined by 11% to Rs 88.46 crore and revenue from traded chemicals has posted a decline of 7% to Rs 19.50 crore . The chemical segment as whole contributed 61% of total in sales of which manufacture chemicals contribution 50% while traded chemical contributes 11%.
PBITA margins for the segment have fallen from 40.33% to 33.95%. As a result PBITA of the segment has decline by 25% to Rs 36.65 crore. 47% of the total capital is employed in the chemical business. The capital employed under this segment was higher by 41% to Rs 376.82 crore.
b) Fertilizers
In fertilizers segment sales of manufacturing fertilizers reported a growth of 39% to Rs 21.12 crore while revenue from traded fertilizers has increased by 196% to Rs 48.66 crore. Over all, this segment recorded 120% growth in revenue to Rs 69.78 crore. The fertilizers segment as whole contributed 39% of total in sales of which manufacture fertilizers contribution 12% while traded fertilizers contributes 27%.
PBITA margins for the segment has improved from –24.77% to –10.60%. Segment posted a loss of Rs 7.40 crore, a reduction in loss by 6%. 12% of the total capital is employed in the fertilizer business. The capital employed under this segment was higher by 13% to Rs 91.70 crore.
c) Others
The others segment reported a 72% increase in loss to Rs 0.31 crore. The capital employed under this segment was higher by 64% to Rs 65.95 crore. 8% of the total capital is employed in others segment.
Yearly results
For the year ended March 2006 the Net Sales/ Income from operations from three segments have increased by 18% to Rs 562.86 crore.
a) Chemicals
For the year ended March 2006 the chemical business showed a growth in revenue of 7% to Rs 395.90 crore as compared to previous year. Revenue from manufacturing reported a decline of 2% to Rs 313.50 crore and trading activity has reported a growth of 62% to Rs 82.40.
PBITA margins for the segment have fallen from 41.79% to 35.95%. As a result loss of the segment has increased by 8% to Rs 142.31 crore. 47% of the total capital is employed in chemical business. The capital employed under this segment was higher by 41% to Rs 376.82 crore.
b) Fertilizers
Revenue from manufacturing fertilizers has decline by 19% to Rs 54.90 crore while revenue from traded fertilizers has increased by 114% to Rs 133.29 crore. Over all, this segment recorded 45% growth in revenue to Rs 188.19 crore. The fertilizers segment as whole contributed 29% of total in sales of which manufacture fertilizers contribution 8% while traded fertilizers contributes 21%.
PBITA margins for the segment has improved from –20.76% to –13.24%. As a result loss of the segment has fallen by 8% to Rs 24.91 crore. 12% of the total capital is employed in chemical business. The capital employed under this segment was higher by 13% to Rs 91.70 crore.
c) Others
Loss of the other segment for the year ended March 2006 stood at Rs 1.51 crore which was 80% higher as compared to the corresponding previous year. The capital employed under this segment was higher by 64% to Rs 65.95 crore. 8% of the total capital is employed in others segment.
Consolidated Results for the year ended March 2006
Sales grew by 16% to Rs. 608.61 crore. The operating margins were down by 757 basis points to 17.8%, which led to decrease in operating profits by 19% to Rs. 108.41 crore.
The other income moved up 27% to Rs. 7.38 crore, interest costs reduced by 35% to Rs 5.91 crore and the PBT went down by 23%. A 186% rise in EO and a 5% reduction in provision for tax helped the PAT to show a decline of just 3% to Rs. 76.90 crore.
Recent Developments
DFPCL has made a strong foray into agri-services, offering integrated or total nutrients management to the farmer. The Company has set up two centres in Maharashtra that offer more than just fertilizers. The centres have been branded "Mahadhan Saarrthie". Each "Mahadhan Saarthie" centre aims to provide total agri-services and solutions through soil, water, plant testing facilities and crop nutritional management, utilising DFPCL’s range of plant nutrient products and, ultimately, providing the farmer marketing linkage for his farm produce with product buy back and retailing. The crops selected for this purpose are potato, tomato and grapes. Two pilot projects have been undertaken so far and over 1,000 farmers in Maharashtra and 3,000 acres of land brought under the "Mahadhan Saarrthie" umbrella. This represents a major strategic thrust for DFPCL.
The Company’s Mahadhan and Bhoodhan brands are amongst the leaders in terms of brand recognition within their geographical and customer markets. With this base, DFPCL is now leveraging its strengths in marketing, and brand extensions with enhanced potash, sulphur, and phosphorous have been introduced in the last few years with good success. The Company’s Iso-Propyl Alcohol project is slated to go online in the first quarter of 2006-07 and current IPA prices show a firm trend. Ishanya, India’s first Design Centre and Mall, had leased out over 60 percent of its 5,50,000 sq. feet leasable area as of date.
DFPCL’s 300,000 MT Ammonium Nitrate project at Paradip in Orissa is going ahead as planned. The Nitric Acid plant for the project has arrived at the plant site and is ready for erection. The detailed engineering design contract and key technology supply contracts have been signed.
On 18th May 2006 results were announced after market hours and the scrip closed at Rs 92.95 on BSE.
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