For the quarter, sales from the bulk and chemicals segment (BCC) stood at Rs 166.33 crore and accounted for 46% of sales. PBIT from the same was up by 24% to Rs 26.21 crore and accounted for 50% of total.

For the quarter, sales from the Fine & Specialty chemicals (FSC) Segment stood at Rs 112.86 crore and accounted for 31% of sales. PBIT from the same was higher by 18% to Rs 26.21 crore and accounted for 50% of total.

For the quarter, sales from the Performance product (PP) segment stood at Rs 84.21 crore and accounted for 23% of sales. PBIT from the same stood at Rs 5 lakh as compared to loss of Rs 4.38 crore for Sep 16 quarter.

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

"We are pleased to report strong growth in Q2 with a sharp improvement in profitability. This has been enabled by healthy demand especially in export markets in the Fine & Specialty Chemicals segment, improved realisations in the Basic Chemicals Segment and the initial results of steps implemented in the performance products segment. The resumption of all units at Roha enabled us to deliver balanced growth with contribution from all our segments. We have comprehensively recovered from the one-off events that occurred last year.

There has been significant volatility in global prices of major chemicals during the quarter. While the prices of inputs have also increased, we have been able to successfully transmit the same. For a number of products, it has become more difficult to source from China opening up opportunities for our customer base in India which depend upon us to supply basic building blocks. The performance of the Basic Chemicals segment reflects these trends.

Coming to our Phenol project, I am happy to share that we have achieved significant progress and remain well on track to commission this mega-greenfield facility towards last quarter of the current financial year. Once commissioned, this project will allow us to scale up operations while opening up new avenues for growth and diversification."

Performance for the 6 months ended Sep 17

For H1 ended Sep 17, net sales post the adjustment of insurance claim received by the company, were up by 8% on YoY basis and stood at Rs 674.02 crore.

The OPM up by around 40 bps compared to 12.6% in H1 ended Sep 16. Thus, OP was higher by 11% to Rs 84.63 crore. Other income was lower by 11% to Rs 3.29 crore in H1 ended Sep 17. Interest costs was higher by 52% to Rs 20.19 crore and depreciation was higher by 7% to Rs 25.60 crore. PBT was thus lower by 1% to Rs. 42.13 crore in H1 ended Sep 17. There was an EO income of Rs 18.33 crore for H1 ended Sep 17 pertaining to Insurance claim on loss of profits for Roha plant as compared to an EO income of Rs 70.77 crore for H1 ended Sep 16 pertaining to transfer of its leasehold rights. Thus, PBT after EO for H1 ended Sep 17 stood at Rs 60.46 crore, down by 47% YoY. Total tax was lower by 43% to Rs 17.67 crore on YoY. Finally, PAT came in at Rs. 42.79 crore in H1 ended Sep 17 down by 48% YoY.

For the six months, sales from the bulk and chemicals segment (BCC) stood at Rs 360.28 crore and accounted for 49% of sales. PBIT from the same was up by 30% to Rs 49.81 crore and accounted for 48% of total.

For the six months, sales from the Fine & Specialty chemicals (FSC) Segment stood at Rs 219.67 crore and accounted for 30% of sales. PBIT from the same was up by 17% to Rs 57.64 crore and accounted for 17% of total.

For the six months, sales from the Performance product (PP) segment stood at Rs 149.98 crore and accounted for 21% of sales. Loss at PBIT level stood at Rs 3.96 crore as compared to loss of Rs 7.19 crore for H1 ended Sep 16.

Other highlights

Domestic revenues stood at Rs. 208.84 crore in Q2 FY18 from Rs. 191.36 crore in the same period last year, representing growth of 9% Y-o-Y. Higher realisation in products in the Basic Chemicals segment combined with increase in volumes for products catering to agrochemicals and colourants end user industries contributed to top line growth in the domestic market.

Revenues from exports came in at Rs. 141.6 crore in Q2 FY18 compared to Rs. 111.07 crore in· Q2 FY17 higher by 27%. This was driven by improved demand trends in export markets in FSC Segment and higher product realisation and improved performance of PP segment.

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. 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 highly 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.

The Phenol mega-project is progressing on schedule and remains on track to be commissioned in the last quarter of the current financial year. The commissioning and operational teams have been recruited as preparations are underway for the operational phase.

Till date, the Company has invested an amount of Rs. 865 crore. Overall, more than Rs. 1,075 crore has been committed for implementation of this project.

Seed marketing initiatives have resulted in initial volumes being supplied to various customers across the country. Key objectives of the seed marketing initiative such as developing working relationships with major customers, understanding of demand patterns and the overall logistics, have been met and is being strengthened further.

Outlook

The increased volatility in global prices of major chemicals is expected to sustain in the near future. Due to difficulties in sourcing from China, suppliers in competing markets like India are witnessing improved demand traction, which is in turn resulting into stronger demand for basic building blocks. Should the constraints to sourcing from China sustain it will have long term benefits. These trends are reflecting in the Basic Chemicals segment and is expected to also positively impact the Fine & Speciality Chemicals segment in the coming years as international customers would be seeking stable and reliable suppliers.

The measures undertaken in the Performance products segment have delivered initial results and the Company will strive to elevate the performance further. DNL will also continue to implement its strategy of rebalancing product mix in favour of products which enjoy favourable demand and pricing trends.

Financial Year 2018 will also be a defining year for the company as it expects to commission India's largest Phenol and Acetone facility at Dahej in Gujarat in quarter IV. This global standard plant will reduce India's dependence on phenol imports, enable the company to save foreign exchange while providing Deepak Nitrite a market leadership position and new avenues of growth and forward integration.