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Deepak Nitrite Ltd.

BSE: 506401 | NSE: DEEPAKNTR |

Represents Equity.Intra - day transactions are permissible and normal trading is done in this category
Series: EQ | ISIN: INE288B01029 | SECTOR: Chemicals

BSE Live

Aug 02, 16:00
2061.40 22.65 (1.11%)
Volume
AVERAGE VOLUME
5-Day
129,046
10-Day
90,159
30-Day
84,497
85,241
  • Prev. Close

    2038.75

  • Open Price

    2069.80

  • Bid Price (Qty.)

    2055.00 (314)

  • Offer Price (Qty.)

    2060.75 (11)

NSE Live

Aug 02, 15:59
2061.30 22.10 (1.08%)
Volume
AVERAGE VOLUME
5-Day
2,134,987
10-Day
1,416,053
30-Day
1,312,374
1,692,703
  • Prev. Close

    2039.20

  • Open Price

    2060.00

  • Bid Price (Qty.)

    0.00 (0)

  • Offer Price (Qty.)

    2061.30 (357)

Annual Report

For Year :
2019 2018 2017 2016 2015 2014 2013 2012 2011

Chairman's Speech

Dear Shareholders, It is with immense pleasure that I share your Company''s exemplary performance in the tough and challenging environment that prevailed through the financial year 2011-12. It was a year in which circumstances tested the mettle of businesses around the world. However, despite the turbulence in the operating environment, we are glad to report growth and also delighted to have made significant progress on key strategic initiatives. The fiscal under review threw up many challenges, some of which carried forward from the previous year while others arose from recent developments. The continued sluggishness in the developed economies kept global businesses on their toes. To further aggravate the situation was the intensification of the Eurozone debt crisis, the after-effects of the tsunami in Japan and political events in the Middle East. These developments combined to result in softening of demand for end-user industries, coupled with continued pressure on commodity prices, notably crude and heightened volatility in foreign exchange rates. In India, we kicked off FY12 on an optimistic note, but were forced to soon downgrade our outlook as persistent inflation, policy inaction and shocks from the macro environment resulted in moderation of the growth rate. Stubborn inflation and firmer input prices impacted corporate profitability as well as household budgets. All this led to lower than expected GDP growth. Worse still, the fiscal deficit exceeded targets in FY11, annual budget, resulting in sustained pressure on liquidity and interest rates. However, with the FY12 budget seeking to address some of these challenges, the scenario, going forward, is once again beginning to look positive. While, admittedly, it is easy to focus on circumstances and succumb to the prevailing pressures, let us not forget that when the playing field is level for all companies, the strength of an organisation lies in making the most of the operating environment. I am pleased to state that your Company, on the back of its experience and expertise, succeeded in capitalising on the opportunities that prevailed even in the negative environment to report steady growth in turnover of 18%, from Rs 661.08 crores last year to Rs 776.91 crores in the current fiscal. What makes this achievement truly remarkable is that it encompassed all our business segments, with each of them performing strongly. Revenue growth was driven by higher volumes with some improvements in realisations. Inorganic intermediates, Organic intermediates, as well as Fine & Speciality chemicals, all lived up to our expectations and we are glad to have performed well across each segment of our business. One of our key strengths is our diversified customer base, to which we are continually adding. The end-user industries that we supply to, are diversified across dyes, pigments, agro-chemicals, pharmaceuticals, paper, explosives, textiles, rubber chemical intermediates, chemicals for refineries and cosmetics, to name a few. This provides us with a natural hedge as a slowdown in any one of these industries is compensated by improved demand in another. Exports also proved a great driver for growth during the year and revenues from exports stood at approximately 44% of total revenues, registering growth of 24% from Rs 282 crores last year to Rs 350 crores in the current fiscal. The positive performance on the exports front came amidst concerns of a slowdown in exports, given that a large proportion of exports are to European countries. However, since a significant part of our exports are to countries such as Germany and Switzerland, which were not so severely impacted by the economic turmoil in Europe, we were able to keep our performance on this count well on track. Further, our customers are large multinational companies with a global presence and well established businesses. The growth in exports was also attributable to our prudent foreign exchange hedging policies, wherein we were able to take advantage of the depreciating rupee, which aided better realisations. Apart from Europe, we supply products to markets in China & U.S. Exports to China this year stood at Rs 35 crores, while to the U.S. it scaled to Rs 63 crores. We have recently entered both these markets and operations are currently at a nascent stage. There is scope to increase revenues from both these markets and our strategy is to establish a significant presence in these new major two export markets. In operational terms, a key highlight of our performance during the year was the development in our fuel additives business, where we could successfully achieve a turnover closer to the Rs 100 crore mark. With oil prices increasing at a rapid rate, demand for Fuel Additives is also increasing. Fuel Additives help Refineries maximize fuel efficiency and reduce emissions, and improves the overall quality of different types of fuels like gasoline, diesel, Aviation Turbine Fuel and lubricants and are thus in high demand. One of such Fuel Additive is Cetane Booster, which is used for Diesel is also witnessing strong demand. Other Fuel Additives such as Anti-Oxidants are being introduced by the Company in the near future. I believe this to be truly a landmark for your Company as it is a testament to our strong in-house R&D capabilities. Going forward, we are focussed on more such initiatives and I must stress that your Company believes in innovation as a key component of its business strategy and spends almost 1% of its revenue on R&D each year. Unfortunately, even though our performance on revenue growth and business expansion has been noteworthy, there has been a moderation in margins. This is attributed to the increase in input prices across various categories. Due to higher prices of crude oil and natural gas, inputs derived from these commodities also firmed up. The earthquake and tsunami in Japan resulted in a disruption in the supply of caustic lye, which also put pressure on input prices. However, the good news is that the prices of inputs have peaked out and the time lag in passing on higher costs to customers is behind us; so we definitely expect an improved performance going forward. Another notable event that I would like to touch upon is the progress made on our expansion plans. Apart from the debottlenecking activities undertaken earlier, which resulted in higher volumes on the existing manufacturing base, we are focussed on expanding our capacities. Our greenfield expansion in Dahej and brownfield expansion at Nandesari are progressing as planned. Our greenfield expansion in Dahej is a forward integration to manufacture OBA. With the completion of this greenfield project at Dahej, we will complete the vertical integration from Toluene to Optical Brightening Agent - OBA (Toluene ->PNT -> DASDA -> OBA). This feat places us amongst the very few fully integrated player in the world with such a capability. Optical Brightening Agents (OBA) enjoys good demand across industries like Paper, Detergents, Textiles, Coating applications in Printing and Photographic Paper. Through this expansion, we are poised to move to the next league - from mere chemical manufacturing to enter the other high-end customised chemical solutions business. We are the dominant manufacturer of Sodium Nitrite. Since last two years, our plants are operating at almost 100% capacity. Through the brownfield expansion, we will enhance our production capacity by at least 50%. The new production will cater mainly to high price export market. Your Company is also embarking on a new business segment that is of heat storage related Solar Salts. Through this, we will manufacture sodium and potassium nitrate of advanced quality, matching the needs of the Solar Industry. The demands for such solar salts would be project-based particularly where solar companies are targeting peak power supply. With the increasing oil prices, support to solar-based power may not come only from the green angle or wild solar energy, but will continue to be supported as a best non-conventional energy source. The increasing oil prices make such solar-based projects more economically viable and seek less government support. These factors make us confident of a bright future for Deepak''s Salts for solar energy. Your Company has always adhered to the most stringent of environmental standards and believes in contributing to the community as well. It is our small initiatives of reaching out to the community that make such a big difference to our approach, which is focussed not only on financial gains but also on social enhancement and growth. Clearly, your Company is on an excellent growth trajectory and I must thank our employees for the hard work put in by them, as well as our stakeholders for their extended support that made it possible. Best wishes, D.C. Mehta Vice Chairman & Managing Director