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Deepak Nitrite
BSE: 506401|NSE: DEEPAKNTR|ISIN: INE288B01011|SECTOR: Chemicals
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Mar 12
Chairman's Speech (Deepak Nitrite) Year : Mar '13
Dear Shareholders,
 
 I am delighted to share a few critical insights after yet another
 successful year during which your Company reported aspirational growth
 despite the globally challenging environment; thus emerging as a
 powerful organization. We have made positive advancements in all
 business segments. With several strategic initiatives in place, we are
 poised for a strong growth trajectory, keeping in mind Deepak Nitrite''s
 core value that has always been and continues to be: making safe and
 innovative products through Responsible Care. I would like to commend
 the dedication and hard work put in by every member of our team. This
 is one of the crucial driving forces behind your Company''s consistent
 performance.
 
 Global scenario
 
 This year, the global economy is still recovering from the financial
 shocks of 2008 albeit, at a slow pace. Some economies are doing better
 than others, but the Eurozone Debt crisis has left European economies
 burdened with situations which are graver than envisaged. We expect
 ongoing measures to revive these economies, but these are not likely to
 have any immediate impact on your Company. A key positive is that the
 US economy is showing signs of growth but an overall return to normalcy
 is awaited. Analysts see mixed signals, but it is encouraging that
 manufacturing is returning to the US and this is a key enabler for a
 solid and sustained recovery.
 
 Inspite of this global environment that has challenged businesses the
 world over, your Company is well- positioned to take on new challenges
 as it is comfortably placed because of its strong presence in exports
 markets.  The adverse circumstances which we have endured along with
 our customers have served to strengthen the customer relationships. The
 global showdown has affected the Indian economy during this fiscal
 year, but there are signs that the problems will bottom out. With
 inflation issues being addressed, RBI is taking steps to reduce
 rates-with a third rate cut in March - to increase liquidity in the
 financial system and bolster growth.
 
 Growth despite challenges
 
 At your Company, we are not deterred by these challenging environments
 - globally or in India. We believe that for a company which has a
 strong innovation quotient and distinctive competencies with
 broad-based management, there are abundant opportunities ahead. It is
 our unwavering commitment to process excellence and our adherence to
 stringent environmental norms that have ensured stability despite the
 headwinds of uncertainty. We have taken a successful leap by retracting
 a step and then making a bigger impact. In this context, we are happy
 to report record turnover of Rs. 1004.09 crores and profits at an
 all-time high of Rs. 81.22 crores this fiscal. Most products have shown
 outstanding growth with revenue primarily driven by the organic
 segment.  This growth is not just a result of high volumes, but also of
 progressively higher realizations. We are confident that the value we
 deliver is in tandem with the quality that our customers demand at
 competitive costs. This is reflected in our performance as exports to
 Europe have grown by 21% and the US by 10% this year. The US market has
 proved to be very rewarding for us and it has a strong potential for
 future growth of all our businesses. On the other hand, China is one of
 the most difficult markets to penetrate. However, with continuous
 efforts, increasing acceptance of our products in Chinese markets and
 our focus on quality that is unmatched by local competitors, operations
 even in Chinese markets have generated a sizeable revenue contribution.
 
 Exploring new skies
 
 You will notice that Fuel additives have now become an integral part of
 our business. Revenues from this segment alone have touched Rs. 196
 crores this year - reaching a new high. This business is an eloquent
 testimony to our in-house capabilities for a global standard of
 Research & Development driven by our state-of-the-art research
 facilities and our dedicated research teams. These fuel additives not
 only increase efficiencies of diesel, petrol and aviation fuels
 butalsohelp in improving theirquality; in turn reducing emissions and
 helping us contribute to a sustainable environment.
 
 With expansion plans close to completion, your Company has gained
 positive momentum to soar higher. The investment in the OBA business
 will be a game changer for Deepak Nitrite. While with its current
 products, your Company serves major B2B customers in Agrochemicals,
 Colors and Speciality business, the OBA business would take your
 Company many stages forward into offering performance solutions for
 major customers in countries such as US, Canada, South America, Europe
 and South- East Asia. Deepak Nitrite would be offering OBA at the
 door-step not only from the world''s largest Brightener plant but it
 would also be offering equally matching logistic solutions and
 after-sale technical services. As the OBA plant comes into production,
 the capital investments in the project would be completed. Investments
 in marketing and logistics and various operational trials at customers''
 end would lay the foundation for major long- term supply agreements
 with downstream industries including paper, detergents and textiles.
 With the facility having a commercial outlook, we are also working
 towards making it one of the most environmental friendly facilities in
 the world.
 
 Your Company is also at an advanced stage of commissioning a brownfield
 expansion at Nandesari which will manufacture advanced quality of
 Inorganic Salts. Trial runs have already commenced. Going forward, this
 will prove to be a sizeable new contributor to your Company''s turnover
 as well as a thrust in international markets. To mitigate the
 short-term risk of dependence on the Solar Energy sector, we have
 initiated Research & Development to develop salts for other
 applications.
 
 It is anticipated that post such business tie-ups, business would be
 significantly more resilient compared to any of our current businesses
 besides bringing a quantum jump of almost 50% on our current turnover
 when the business reaches full capacity
 
 Lastly, I must say that we have taken on the challenge of setting
 significantly higher targets for the year ahead. Our de-bottlenecking
 efforts have been making processes more efficient and our prudent
 foreign exchange policies have helped us to hedge our risk against an
 unpredictable and volatile global market. But these accomplishments
 would have been unattainable without the loyal support of all our
 stakeholders. I would also like to thank our employees for their
 passion and dedication and for helping us to achieve newer milestones
 every year. With the commencement of another year, we will capture
 newer opportunities and tame every challenge by working harmoniously
 and cohesively. We hope to positively exceed the expectations of our
 stakeholders.
 
                                                      D. C. MEHTA
  
                                VICE CHAIRMAN & MANAGING DIRECTOR
Source : Dion Global Solutions Limited
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