I am delighted to address you on yet another successful year for Deepak
Nitrite. Our strategy in FY 2010-11 was aimed at entering new business
segments and strengthening our presence in existing markets. I am
happy to report that your Company achieved success in these efforts and
delivered robust performance in all business segments. This has given
us impetus to dream bigger and aim higher. Considering the overall
performance, the Board of Directors has recommended a dividend of Rs. 6
per equity share of face value of Rs. 10 each.
The global economy posed major challenges in FY 2010-11. Developed
countries reported improvement in economic indicators, largely on
account of government stimulus packages. However, there was also an
upsurge in commodity prices, especially in emerging market economies.
There were concerns regarding the sovereign debt of some European
countries. Political unrest in the Middle East, catastrophes in Japan
and fast changing weather patterns added to the complications and made
the overall business environment more unpredictable than ever.
Your Company successfully met these challenges. We have a broad-based
product mix catering to varied applications and industries and hence we
can address uncertain and volatile market conditions with some ease.
Leveraging our competencies, our strategy in FY 2010-11 was to achieve
growth in the fuel additives market, continue with our expansion plans
at Dahej, and penetrate difficult markets like USA and China. In terms
of segmental growth, we wanted to better our performance compared to
previous years. I am proud to state that your Company not only met but
exceeded its targets with respect to these strategies.
New Product Horizons
We are one of the few players in India to capitalise on the demand for
fuel additives and this market has become an important business segment
for us. All our products for this market, encompassing petrol, diesel
and aviation turbine fuel blending applications are doing well. Apart
from fuel additives, which were introduced in FY 2009-10, we have
launched some other products that, we are confident, will be equally
successful. You will be pleased to note that over 50% of your Company''s
incremental revenues in FY 2010-11 came from sale of products
introduced in the last two years.
New Market Horizons
Another significant aspect of our performance in FY 2010-11 was the
progress made in widening and strengthening our diversified
geographical reach. While Europe has historically been a good market
for us, we have recently taken steps to increase our presence in USA
and China. Our success was due to acceptance of our products by our
esteemed customers. Our products enjoy competitive advantage due to
superior quality backed by sustainable after-sales support. China is
renowned for its low cost manufacturing capabilities. Our ability to
derive revenues from this market speaks volumes about our global cost
competitiveness and value proposition. Another feather in our cap was
registration of our products under the European Union''s REACH
(Registration, Evaluation, Authorization and Restriction of Chemicals)
regulation. This will strengthen our long-term relationships with
In the Indian market, our products flourished and our businesses
reported growth of 34% in FY 2010-11. While our export revenues
increased in absolute terms by 14%, the share of revenues from the
domestic market increased from 53% in FY 2009-10 to 57% in FY 2010-11
due to strong performance in all segments. We foresee good growth in
both the markets. We derive much strength from the fact that the Indian
economy continues to grow rapidly, and is expected to register around
9% annual growth in the coming years. This will help further
development of your Company''s domestic business.
New Financial Horizons
Your Company has greatly improved its financial strength. On the
operating side, we have been able to significantly reduce our interest
cost despite steadily increasing interest rates. Our net debt to equity
ratio stands at 0.25 as on March 31, 2011. We have also steadily
increased net worth, thereby sharing our progress with all our
stakeholders. Our stronger financial position backed by low leverage
will enable us to finance our expansion plan, cost-effectively.
New Manufacturing Horizons
Let me share some exciting information about our expansion plans, which
will open up new horizons for us. In our Greenfield expansion at Dahej,
we are setting up facilities for manufacture of a performance chemical,
which will be a forward integration of one of our existing fine and
speciality chemicals. The project has a capital outlay of around Rs. 150
crore. We are well on course to complete this project on schedule.
We are also excited about our Brownfield expansion at Nandesari in
Gujarat which will be completed in the first half of FY 2012-13. This
investment is aimed at expanding our inorganic-intermediates business.
I can proudly say that your Company is on course to exceed revenue
earnings of Rs. 1,000 crore within next three years.
To conclude, I would like to reiterate that we ended FY 2010-11 on an
extremely positive note. Our strategies for opening new horizons were
successful and all our businesses performed well. Our commitment to
work ethics, research & development, environmental standards, safety
norms and community services remained unstinted.
I appreciate the hard work put in by our employees and the support of
all our stakeholders, which has greatly contributed to our success and
am confident that it shall be always available in our endeavour to
place ourselves on a path of rapid growth.
D. C. Mehta
Vice Chairman & Managing Director