During the company‘s earnings declaration, Deepak Nitrite announced that its board had approved raising of Rs 200 crore through a qualified institutional placement (QIP) issue.
During the company’s earnings declaration, Deepak Nitrite announced that its board had approved raising of Rs 200 crore through a qualified institutional placement (QIP) issue.
Speaking with CNBC-TV18’s Sumaira Abidi and Reema Tendulkar, CFO Sanjay Upadhyay said the company would utilize to capital to fund the company’s growth plans and added that the company may need to raise further funds for its Rs 1,200-crore phenol project that it has announced.
The firm posted net profit of Rs 12.7 crore (higher 12 percent year-on-year) on sales of Rs 302 crore (down 9.5 percent), filing to the exchanges showed. The revenue decline was led by the decline in crude prices.
But Upadhyay said he did not expect revenue de-growth to take place in the fourth quarter. “The fall in crude oil has compelled customers to cut down on inventory as a knee-jerk reaction. We believe things will normalize by February.”
Below is the transcript of Sanjay Upadhyay’s interview with Sumaira Abidi and Reema Tendulkar on CNBC-TV18.
Sumaira: I want to talk to you about your QIP a little bit, can you tell us what these funds will be utilised for?
A: Considering our growth plan, the additional fund to be raised through QIP will be invested in growth opportunities for the expansion plan of the company and other approved general corporate purpose from time to time.
Reema: When are you likely to close this fund raising?
A: It will take sometime because we are across the market and we are preparing ourselves for the launch.
Sumaira: Would this Rs 200 crore suffice your expansion plans for this year or would you need to raise some further funds going ahead in 2015 itself?
A: We need to raise because we have announced a project, a phenol project of Rs 1200 crore. So, for that we are in the market.
Sumaira: Would any part of this Rs 200 crore go towards that or would that Rs 1200 crore be raised separately?
A: Part of this will go for phenol funding also.
Reema: Your topline looks a bit disappointing, it is down 10 percent on a year-on-year (YoY) basis and you did indicate it is because of crude prices therefore the clients are hurt by the inventory, etc. Do you expect a revenue de-growth to take place even in this January to March quarter?
A: We don’t expect that. We believe that the things will normalise because what is happened actually is this continuous falling down of price of crude oil and petroleum products and intermediate we just compelled every customer in the value chain to cut inventory as a knee-jerk reaction. Consequently some of the chemical in the bulk commodity segment witnessed the compression in demand and causing drop in sale. However, we believe things will normalise by February and demand will come back to normal in almost all products.
Sumaira: Can you tell us what are the volumes that you have recorded in Dahej and also what are your utilisation levels?
A: Dahej we have commissioned in last May so currently our utilisation is low as compared to our plan. However, it is picking up. Currently we are at around 20-22 percent of our utilisation.
Reema: How much would it go up to in the next 12 months?
A: We expect that to touch around 50 percent.
Reema: The company is also focusing on higher value products which is why your margins have improved. Will that continue and therefore can we expect your margins to improve further in the next 12 months and if yes by how much?
A: In the current year also if you see our results, on YoY basis the EBITDA margins have gone up by around 200 basis points. We believe this is a sustainable margin and we aspire to do better in coming quarters.