Deepak Nitrite Limited CORPORATE PRESENTATIONdeepaknitrite.com/pdf/investor/DNL_Nov_14.pdf ·...

CORPORATE PRESENTATION

Enhancing a Sustainable Future

www.deepaknitrite.com November, 2014

Deepak Nitrite Limited

www.deepaknitrite.com

Safe Harbour

Certain statements in this presentation concerning our future growth prospects are forward looking statements,

which involve a number of risks and uncertainties that could cause actual results to differ materially from those in

such forward-looking statements. The risks and uncertainties relating to these statements include, but are not limited

to, fluctuations in earnings, our ability to manage growth, competitive intensity in our industry of operations

including those factors which may affect our cost advantage, wage increases, our ability to attract and retain highly

skilled professionals, cost overruns on contracts, client concentration, our ability to manage our international

operations, our ability to successfully complete and integrate potential acquisitions, liability for damages on our

contracts, the success of the companies in which Deepak Nitrite has made strategic investments, withdrawal of

governmental fiscal incentives, political instability, legal restrictions on raising capital or acquiring companies

outside India, and unauthorized use of our intellectual property and general economic conditions affecting our

industry. Deepak Nitrite Ltd. may, from time to time, make additional written and oral forward-looking statements,

including our reports to shareholders. The company does not undertake to update any forward-looking statement

that may be made from time to time by or on behalf of the company.

2


Contents

3

About Deepak Nitrate LimitedAbout Deepak Nitrate Limited 55

Value PropositionValue Proposition 1313

FinancialsFinancials 2222

Phenol ProjectPhenol Project 2626

www.deepaknitrite.com4

About Deepak Nitrite Ltd.


Company Overview

� Established in 1970s by Mr. C.K. Mehta (Founder & Chairman), Deepak Nitrite Limited(“DNL”) is a leading Indian specialty chemical manufacturer

� Product Portfolio: Bulk Chemicals | Fine & Specialty Chemicals | Fluorescent WhiteningAgents (FWA)

� Amongst the leading players across its entire product segments

� Leading global supplier for several niche chemical products like Xylidines, Cumidines,Oximes & Colour Intermediates

� Caters to several industries - Colourants, Petrochemicals, Agrochemicals, Rubber,Pharmaceuticals, Paper, Textile, Detergents, Fine & Specialty Chemicals, etc. & counts ahost of Fortune 500 companies amongst its key clientele

� ISO certified manufacturing facilities located at Nandesari, Dahej (Gujarat), Roha, Taloja(Maharashtra) & Hyderabad (Telangana) & an R & D facility at Vadodara

� Strong R&D focus has led to in-house development of new product applications

� Strong distribution network across the globe with footprints in over 30 countries

� Accredited with ‘Responsible Care’ certification - towards global environment, safety andhealth management

� Consistent track record of dividend payment & shareholder wealth creation

� DNL is setting up one of the largest phenol-acetone plant in India at Dahej to fuel its nextphase of expansion

6

Shareholding Pattern – September, 2014Shareholding Pattern – September, 2014

57%

6%

37%

Promoter & Promoter Group

Institutions

Non Institutions

Particulars FY13 FY14 H1FY15

Revenues 10,194 12,696 6,884

EBITDA* 722 1,140 658

margin (%) 7.1% 9.0% 9.6%

PAT 378 383 255

margin (%) 3.7% 3.0% 3.7%

Net worth 2,806 3,075 3,315

Debt 3,101 4,620 5,589

Net Block 4,430 5,324 5,513

Key Financials (`̀̀̀ mn)Key Financials (`̀̀̀ mn)

FY13 Profit nos includes exceptional item of Rs.8.58

cr


Milestones

7

New Manufacturing Facility/ Diversification

Others

Corporate Events

M & A

� 1972 – Sodium Nitrite Plant commissioned at Nandesari

�1971 – Listed on BSE

�1970 – Incorporation of DNL as a private company

1970 -1980

� 1984 - Acquisition of Sahyadri Dyestuffs & Chemicals unit from Mafatlal Industries

� 1982 - Promoted Deepak Fertilisers & Petrochemicals

1981 -1990

� 2000 – Acquisition of management and control of Aryan Pesticides Limited

� 1995 - Commissioning of full fledged Hydrogenation Plant at Taloja

�1992 - Commissioned Nitro Aromatic Plant at Nandesari

1991 -2000

� 2010 - Entry into Fuel Additives business

� 2009 - Turnover crosses ` 500 Cr

� 2007 - Acquisition of business of DASDA Division from Vasant Chemicals at Telangana

� 2006 - Rights Issue of Equity Shares

2001-2010

2011-Present

�2014 – Chairman has received Lifetime Achievement Award from Indian Chemical Council

� 2014 - Issue of Bonus Equity Shares at the ratio of 1:1 & and stock split to Face value ` 2

� 2014 - Dahej facility for OBA fully commissioned

� 2013 - Brownfield expansion for manufacturing inorganic salts at Nandesari

� 2013 - Turnover crosses ` 1,000 Crores

� 2012 – Awarded by FICCI with “Businessworld FICCI CSR Award ((Large Enterprises)”

� 2012 – Accredited with “Responsible Care”

� 2011 - Listing on NSE


Business Segments

8

Bulk SpecialtyChemicals

� High volume segment consisting of commodity chemicals that are made to standard specifications thus is

characterized by moderate margins

� Manufacturing of both organic & inorganic chemicals

� This SBU can be further classified under Nitro Toluene, Sodium Salt & Fuel Additives

� DNL plans to leverage on Company’s cost leadership to enhance volumes & drive profits

� Includes niche products that require greater value addition and qualityfocus

� It is segregated into Specialty Chemicals, Xylidines, Oximes, Cumidines

� These products typically enjoy some degree of customisation and differfrom standardised products

FY14 Revenue

58%

FY14 Revenue

28%FY14 Revenue

14%

� FWA is an application chemical and is commonly known asOptical Brightening Agent (OBA)

� DNL has the fully integrated manufacturer of FWA having verticalintegration from Toluene to OBA (Toluene – PNT – DASDA –FWA)

� OBA has wide applications in varied industries - Paper,Detergents, Textiles, Coating Applications in Printing &Photographic Paper


Manufacturing Facilities

9

� Bulk and commodity product manufacturing with on site Nitration &Specialty Agrochemicals

� Contributed 66% of revenues in FY14

NANDESARI, Gujarat1

� Full spectrum stilbenic Optical Brightening Agents production� Contributed 4% of revenues in FY14 (Plant fully commissioned in FY15)

DAHEJ, Gujarat2

� Hydrogenation & noble metal catalysis specialty� Contributed 12% of revenues in FY14

TALOJA, Maharashtra3

� Multispecialty site specialising in pilot plants and scaling up activitiesNitration & Specialty Agrochemicals

� Contributed 11% of revenues in FY14

ROHA, Maharashtra4

� Plant acquired from Vasant Chemicals� Manufactures DASDA (toulene derivative) for captive use in OBA business

& commercial sales� Contributed 8% of revenues in FY14

HYDERABAD, Telangana5


Technical Capabilities

10

Nitration

Alkylation

Nox Production / Absorption

Hydrogenation / Reduction

Sulfonation

Condensation

Diazotisation

Oxidation

Expertise in multiple chemical processes while maintaining the best safety standards


Global Reach

11

Brazil

Australia

Bahrain

Bangladesh

Argentina

Canada

ChinaSpain

Italy

Israel

India

New Zealand

JapanKorea

Mexico Hong Kong

JordanKuwait

Saudi ArabiaOman

Germany

Philippines

Sri Lanka

Thailand

UAE

UK

South Africa

US Turkey

Switzerland

Sweden

Taiwan

A trusted supplier in over 30 countries across 6 continents


Business Segments

12

Specialty DASDA / FWA

Paper

Textiles

Detergents

Colourants

Specialty Chemicals

Rubber Chemicals

Pharmaceuticals

Explosives

Dyes

DASDA

Agrochemicals Dyes / Pigments

Pharma Interm.

Food colours

Electroplating

Specialty Chemicals

Colourants

Colourants RefineryAgrochemicalsPigment

Agrochemicals

Pharma Interm.

Bulk Specialty ChemicalsBulk Specialty ChemicalsFluorescent Whitening

Agents

Fluorescent Whitening

Agents Fine Chemicals Fine Chemicals

Fuel Additives Sodium NitriteXylidines Oximes Cumidines Nitro Tolunes

Agrochemicals

Value Proposition


Value Proposition

14

DNLDNLDNLDNL

Consistent wealth creation for Investors

Product profile having varied applications

No significant domestic competition

Diverse sales mix -Product & Geography

wise

Consistent Diversification into new products

1

2

3

45

6

7

8

Customised product offerings for global giants!

Marquee customer relationships

Highly respected Board of Directors with a strong

management team


Product Profile having varied applications

15


New Products have fuelled robust growth in past 5 years

16

CAGR: 38%

CAGR: 9%CommencementCommencement

2010

Revenue Growth (`̀̀̀ mn) (FY10 – FY14)Revenue Growth (`̀̀̀ mn) (FY10 – FY14)New ProductsNew Products

CAGR: 106%

2010Fuel Additives

Specialty Agrochemicals

961

1,229 1,208 1,214 1,173

CAGR: 5%

2007DASDA

431 391 594

1,322 1,577

FY10 FY11 FY12 FY13 FY14

1,299 1,257 1,371

1,659

1,838

Nitro Toluene & Derivatives

CAGR: 9%

Pre 2000

163 605

971

1,952

2,949


Diverse sales mix - Product & geography wise

17

Revenue Segmentation on End Use Industry (FY14)Revenue Segmentation on End Use Industry (FY14) Key Export Markets (FY14)Key Export Markets (FY14)

Export v/s Domestic Sales (FY14)Export v/s Domestic Sales (FY14)

58%28%

14%

Bulk SpecialtyChemicals

Fine SpecialtyChemicals

FluorescentWhitening Agents

65%12%

9%

3%

4% 8%Europe

USA

China

Korea

Japan

Others

51%

21%

23%

1%4% Colour

Agro

Fuel Additives

Pharma

Others

60%

40%Domestic Sales

Exports

Product –wise segmentation (FY14)Product –wise segmentation (FY14)


Marquee Customer Relationships

18


Professional Board of Directors…

19

DescriptionName Designation

Mr. C.K. Mehta

Mr. Ajay C. Mehta

Independent Director

Chairman

Vice Chairman & Managing Director

Managing Director

Executive Director & CEO






Mr. Deepak C. Mehta

Mr. Umesh Asaikar

Mr. Nimesh Kampani

Mr. Sudhin Choksey

Dr. Richard H. Rupp

Mr. Sudhir Mankad

Mr. S.K. Anand

Dr. SwaminathanSivaram

• Founder and promoter of DNL• Well-known industrialist having more than 5 decades of versatile experience in chemical trade & industry

• Has been at the helm of affairs at DNL for the last 31 years as a Managing Director• A science graduate from University of Bombay• Erstwhile Chairman of National Chemicals Committee on Chemicals, Petrochemicals & Fertilizers of CII

• A science graduate with Honors and M.Sc. (Chemical Engg.) from University of Texas, USA• Has been actively associated with the Company since 1984

• Bachelor's degree in Mechanical Engineering from IIT Mumbai, an MS degree from JBIMS, Mumbai & is a memberof ICMAI & has been the CEO of DNL since Sept, 2008

• Has34+ years of experience in sales, commercial purchase & business management

• A Commerce graduate from Sydenham College and qualified Chartered Accountant• Founder and Chairman of JM Financial Group• Has served on various committees constituted by BSE, NSE, SEBI and ICAI

• A fellow member of ICAI & Managing Director of GRUH Finance Ltd. and on the Board of HunnarShalaFoundation for Building Technology and Innovations

• Holds Ph.D. in Chemistry from Univ. of Karlsruhe, Germany &has completed a program for ExecutiveDevelopment, IMD at Lausanne, Switzerland

• Has held various top level positions in the fields of fine chemicals & pharmaceuticals at MNCs like Hoechst AG(Germany), Lonza (Switzerland) & Allessachemie (Germany)

• A retired IAS officer and has completed his Masters in History from University of Delhi• Served as Chairman on the Board of several cement, power, fertilizer and finance companies and is now Chairman

of Bhavnagar Energy Co. Ltd., Gujarat International Finance Tec-City Ltd. ,etc.

• B.tech in Chemicals from Delhi University & has completed a course on management at IIM-A• Over 40 years of experience in the fields of project management, operations, corporate planning, quality

management, energy management etc.

• An alumnus of IIT, Kanpur, Dr. Sivaram received his Ph.D in Chemistry from Purdue University and has over 50US patents to his credit

• Has over 40 years of experience in basic research, process/product R&D and S&T management

Independent DirectorMrs. Indira Parikh• Founder President of FLAME & was the Dean of IIM-Ahmedabad from 2002 to 2005• Holds Ph.D from Gujarat University, Ahmedabad and MA Edu from University of Rochester• Has been a consultant to various national & international organizations both in private & public sector


… And backed by Strong Team

20

DescriptionName Designation

Mr.Sanjay Upadhyay

Dr. Pramod Garg

Vice President, Marketing

Chief Financial Officer

President , FWA

Vice President, Operations

Vice President, Technology

Vice President, HR & Admin

Vice President, Commercial

Mr. Ajay P. Patwardhan

Mr.Pramod Talegaon

Mr.Vijay Tikekar

Mr. R R Prasad

Mr. Krishnamurthy Shankar

• Qualification: A Master’s degree in Commerce, an Associate Member of the ICWAI, Company Secretary &has completed Advanced Business Management from Wharton Business School

• Experience: 26 years in the field of Accounts, Finance, Treasury, Secretarial & Taxation• Responsibility: Finance and accounts and Strategic Management, Business process development

• Qualification: Bachelor’s degree in Civil Engineering & MBA in Marketing from Nagpur University• Experience: 23 years of expertise in managing business globally for Chemicals & Polymers• Responsibility: Strategic Business Unit of Fluorescent Whitening Agent.

• Qualification: Ph.D in Agriculture Chemistry from Indian Agriculture & Research Institute and M.Sc in SoilScience along-with B. Sc in Chemistry

• Experience: 31 years of experience in chemical industry. In the past has worked with Rallis India, UnionCarbide, Rajendra Agricultural University, Cheminova and Sajjan India Ltd.

• Responsibility: Production Planning & Control, Process Management & Optimisation, EHS, Quality Controland Factory Management

• Qualification: Master’s & Bachelor’s degree in Chemical from UDCT, Mumbai• Experience: An aggregate of 30 years of experience in handling chemical technology and processes• Responsibility: Handling Project Implementation & technical services, stabilization of process and plant

upgradation for sustenance of process, Quality Management & Safety, Pilot and scale up activities of variousprocesses

• Qualification: A Bachelor’s degree in Science from Mumbai University• Experience: Has around 40 years of experience in Marketing• Responsibility: Global Marketing and Supply Chain

• Qualification: Bachelor’s degree in Commerce from Kolkata University & Master’s degree in PersonnelManagement and Industrial Relations from XLRI

• Experience: 28 years of experience in human resource management and has previously worked withCoromandal Fertilizers, ITW Signode, ICT Agrotech, British Gas & Tvarita Consulting Firm

• Responsibility: Designing and restructuring organization, development and deployment of PerformanceManagement System and leading change management initiatives. Also responsible for HR andAdministration activities

• Qualification: Master’s degree in Chemical Science & M. Tech. in Material Science & Engineering from IITMumbai & a Post Graduate in Marketing Management from JBIMS

• Experience: Possesses over 32 years of experience and has previously worked with Fibreglass, Pilkingto,Greaves Ltd., EIDupont India, Reliance Industries, SI Group and Nova Chemicals

• Responsibility: Managing supply chain and commercial activities


0

20

40

60

80

100

120

Ap

r-04

Oct

-04

Ap

r-05

Oct

-05

Ap

r-06

Oct

-06

Ap

r-07

Oct

-07

Ap

r-08

Oct

-08

Ap

r-09

Oct

-09

Ap

r-10

Oct

-10

Ap

r-11

Oct

-11

Ap

r-12

Oct

-12

Ap

r-13

Oct

-13

Ap

r-14

Oct

-14

Returns

• 10 year : 12.7x• 5 year : 6.2x• 2 year : 3.7x• 1 year : 2.8x

Wealth Creator for Investors

21

Rights Issue

Split to FV ` 2Bonus Issue 1:1

Ad

just

ed S

ha

re P

rice

(`

)(F

ace

Va

lue

–`

2)

24% 25%

10%

51%

16%26% 24% 27%

22%27%

0%

20%

40%

60%

80%

100%

FY

200

5

FY

200

6

FY

200

7

FY

200

8

FY

200

9

FY

201

0

FY

201

1

FY

201

2

FY

201

3

FY

201

4Dividend Payout Ratio (% of PAT)Dividend Payout Ratio (% of PAT) Declared Dividend (% of FV)Declared Dividend (% of FV)

40% 40% 40% 40%50% 50%

60% 60%

80%

100%

0%

20%

40%

60%

80%

100%

FY

200

5

FY

200

6

FY

200

7

FY

200

8

FY

200

9

FY

201

0

FY

201

1

FY

201

2

FY

201

3

FY

201

4

DNL Share Price Performance - AdjustedDNL Share Price Performance - Adjusted

Summary of Returns on 1 DNL Share

Price of 1 Share in Apr 2004 60

Further Inv in Rights Issue (2006) 75

Total Investment 135

Dividend Recd from 2004-14 82

Current Value of the Holding 1,140

Total Value Derived from Investment 1,222

Financials


Financials

23

Balance Sheet (`̀̀̀ mn) FY13 FY14 H1FY15

Share Capital 104.5 104.5 209.1

Reserves & Surplus 2,701.4 2,970.7 3,105.5

Networth 2,806.0 3,075.2 3,314.5

Debt

Long Term Borrowings 2,393.4 2,712.5 3,230.2

Short Term Borrowings 707.4 1,907.2 2,359.0

Other Non Current Liabilities 291.5 414.0 473.8

Current Liabilities & Provisions 2,688.6 2,453.5 2,043.9

TOTAL LIABILITIES 8,886.8 10,562.4 11,421.5

Net Block (Incl. CWIP) 4,429.7 5,323.8 5,513.0

Other Non Current Assets 233.9 282.5 396.6

Current Assets 4,223.2 4,956.2 5,511.8

TOTAL ASSETS 8,886.8 10,562.4 11,421.5

Income Statement (`̀̀̀ mn) 2013 2014 H1FY15

Revenue from Operations 10,194.0 12,696.3 6,883.7

RM Consumed 7,146.2 8,317.5 4,502.1

as a % of sales 70.1% 65.5% 65.4%

Employee benefit expenses 625.6 883.5 504.0

as a % of sales 6.1% 7.0% 7.3%

Other Expenses 1,700.5 2,355.3 1,220.0

as a % of sales 16.7% 18.6% 17.7%

EBITDA 721.8 1,140.0 657.5

Margin 7.1% 9.0% 9.6%

Finance costs 113.6 279.7 172.3

Depreciation 189.4 296.4 175.9

PAT 378.4 383.3 254.8

Margin 3.7% 3.0% 3.7%


Financial Highlights

24

24%Revenue CAGR

FY11 - FY14

25%Revenue Growth

FY14 v/s FY13

40%Growth in EBITDA

FY14 v/s FY13

FY14

11%Growth in PBTFY14 v/s FY13

1%Growth in PATFY14 v/s FY13

Revenue Growth H1FY15 v/s H1FY1420%

25%Growth in EBITDAH1FY15 v/s H1FY14

H1FY15

101%Growth in PBT

H1FY15 v/s H1FY14

129%Growth in PAT

H1FY15 v/s H1FY14


11%

9%

13%

12%15%

8%

10% 11%

6%

7%

8%

9%

10%

11%

12%

13%

14%

15%

16%

2011 2012 2013 2014

ROE ROCE

Capex for OBA business resulted in lower returns

2,379 2,528 2,806 3,075

615

2,609 3,412

5,084

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

2011 2012 2013 2014

Equity Debt

6,7227,899

10,194

12,696

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

2011 2012 2013 2014

Revenue Segmentation

25

EBITDA v/s PAT (`̀̀̀ mn)EBITDA v/s PAT (`̀̀̀ mn)

Revenue (` ` ` ` mn)Revenue (` ` ` ` mn) Debt – EquityDebt – Equity

ROE v/s ROCEROE v/s ROCE

586 577

722

1,140

258 231

378 383

0

200

400

600

800

1,000

1,200

2011 2012 2013 2014

EBITDA PAT

Phenol Project (Proposed)


Phenol Facility at Dahej - Snapshot

27

Fund Requirements

`̀̀̀ 12,000 mn

`̀̀̀ 7,200 mn

Total capital outlay for the project

Manufacturing Capacity

200,000 MT

120,000 MT

Total manufacturing capacity for Phenol

Total manufacturing capacity for Acetone

Raw Material (Cumene) Sourcing

263,000 MT

135,000 MT

Total cumene requirement p.a.

Total cumene quantity that can be sourced fromprospective plant at Kochi

Technology Tie-up

Technology tie-up with KBR (USA)� KBR is the leading licensor of phenol capacity in

the world

� Has over 50 years of experience in cumene-to-phenol process design & innovation

Source: www.kbr.com


Acetone & Phenol Value Chain in India

28

Benzene

Propylene

CumeneCumene Hydro Peroxide

Phenol

Acetone

Alkyl phenol

Drugs & Dyes

Phenolic resin

Agro-chemicals

Foundry/Mould

Laminates

Automobile lining

Paints & Varnishes

Rubber adhesives

Others

Surfactants & Rubber

Rubber & Sulpha drugs

Pesticides

Direct use

Aldol Chemicals*

MMA

0.87 unit

0.47 unit

1.31 unit

1.0 unit

0.612 unit

Pharmaceuticals

Paints, Adhesives & Thinners

Others

Paints, printing ink etc.

Acrylic sheets

Source: CRISIL


Market Opportunity

29

HOC11,600

SI Group39,600

Imports202,450

HOC24,000

SI Group24,000

Imports32,000 Dahej

Facility120,000

HOC7,105

SI Group24,255

Imports126,165

HOC40,000

SI Group40,000

Imports40,000

Dahej Facility200,000

The plant at Dahej will help substitute the imports and give

DNL a market leadership position for phenol & acetone

in India

The plant at Dahej will help substitute the imports and give

DNL a market leadership position for phenol & acetone

in India

DNL’s facility (120,000MT) will start operations in 2017 -18

Phenol Demand - 2014

250,100 MT Estimated Demand for Phenol in 2017-18

320,000 MT

Acetone Demand - 2014

156,734 MT Estimated Demand for Acetone in 2017-18

200,000 MT

DNL’s facility (200,000MT) will start operations in 2017 -18

Phenol Demand Supply in India Phenol Demand Supply in India

Acetone Demand Supply in IndiaAcetone Demand Supply in India

Source: CRISIL

Thank You

Deepak Nitrite Limited CORPORATE PRESENTATIONdeepaknitrite.com/pdf/investor/DNL_Nov_14.pdf ·...

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