1% - Deepak Nitrite Limited

Enhancing a Sustainable Future
Deepak Nitrite Limited
CORPORATE PRESENTATION
www.deepaknitrite.com
February , 2015
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.
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Contents
About Deepak Nitrite Limited
5
Value Proposition
13
Financials
23
Phenol Project
27
Annexures
31
3
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4
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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
Shareholding Pattern – December, 2014
 Product Portfolio: Bulk Chemicals | Fine & Specialty Chemicals | Fluorescent
Whitening Agents (FWA)
37%
 Amongst the leading players across its entire product segments
57%
6%
 Leading global supplier for several niche chemical products like Xylidines,
Cumidines, Oximes & Colour Intermediates
Promoter & Promoter Group
 Caters to several industries - Colourants, Petrochemicals, Agrochemicals, Rubber,
Pharmaceuticals, Paper, Textile, Detergents, Fine & Specialty Chemicals, etc. &
counts a host of Fortune 500 companies amongst its key clientele
Institutions
Non Institutions
Key Financials (` mn)
 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 and health management
 Consistent track record of dividend payment & shareholder wealth creation
 DNL envisages to setup one of the largest phenol-acetone plant in India at Dahej to
fuel its next phase of expansion
6
Particulars
Revenues
EBITDA
margin (%)
PAT
margin (%)
Particulars
FY13
FY14
10,194
12,696
9,947
722
1,140
1,008
7.1%
9.0%
10.1%
378
383
382.1
3.7%
3.0%
3.8%
FY13
FY14
9MFY15
H1FY15
Networth
2,806
3,075
3,315
Debt
3,101
4,620
5,589
Net Block
4,430
5,324
5,513
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Milestones
2011-Present
2014 – Chairman has received Lifetime Achievement Award from Indian Chemical Council
Corporate Events
 2014 - Stock split to Face value ` 2 and Issue of Bonus Equity Shares at the ratio of 1:1
 2014 - Dahej facility for OBA fully commissioned
M&A
 2013 - Brownfield expansion for manufacturing inorganic salts at Nandesari
New Manufacturing Facility/ Diversification
 2013 - Turnover crosses ` 1,000 Crores
 2012 – Awarded by FICCI with “Businessworld FICCI CSR Award ((Large Enterprises)”
 2012 – Accredited with “Responsible Care”
Others
 2011 - Listing on NSE
2001-2010
 2010 - Entry into Fuel Additives business
 2009 - Turnover crosses ` 5,000 mn
 2007 - Acquisition of business of DASDA Division from Vasant Chemicals at Telangana
 2006 - Rights Issue of Equity Shares
1991 -2000
 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
1981 -1990
 1984 - Acquisition of Sahyadri Dyestuffs & Chemicals unit from Mafatlal Industries
 1982 - Promoted Deepak Fertilisers & Petrochemicals
1970 -1980
 1972 – Sodium Nitrite Plant commissioned at Nandesari
1971 – Listed on BSE
1970 – Incorporation of DNL as a private company
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Business Segments
 High volume segment consisting of commodity chemicals that are made to standard specifications
FY14 Revenue
58%
 Manufacturing of both organic & inorganic chemicals
 This segment faces low entry barriers and thus is characterised by moderate margins
 This SBU can be further classified under Nitro Tolunes, Sodium Nitrates & Fuel Additives
 DNL plans to leverage on Company’s cost leadership to enhance volumes & drive profits
Bulk Specialty
Chemicals
FY14 Revenue
FY14 Revenue
28%
14%
 Includes niche products that require greater value addition and
quality focus
 It is segregated into Specialty Chemicals, Xylidines, Oximes,
Cumidines
 These products typically enjoy some degree of customisation and
differ from standardised products
8
 FWA is an application chemical and is commonly known as
Optical Brightening Agent (OBA)
 DNL has the world’s first fully integrated manufacturer of
FWA having vertical integration from Toluene to OBA
(Toluene – PNT – DASDA – FWA)
 OBA has wide applications in varied industries - Paper,
Detergents, Textiles, Coating Applications in Printing &
Photographic Paper
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Manufacturing Facilities
1
NANDESARI, Gujarat
 Bulk and commodity product manufacturing with on site Nitration &
Specialty Agrochemicals
 Contributed 66% of revenues in FY14
2
DAHEJ, Gujarat
 Full spectrum stilbenic Optical Brightening Agents production
 Contributed 4% of revenues in FY14 (Plant fully commissioned in
FY15)
3
TALOJA, Maharashtra
 Hydrogenation & noble metal catalysis specialty
 Contributed 12% of revenues in FY14
4
ROHA, Maharashtra
 Multispecialty site specialising in pilot plants and scaling up activities
Nitration & Specialty Agrochemicals
 Contributed 11% of revenues in FY14
5
HYDERABAD, Telangana
 Plant acquired from Vasant Chemicals
 Manufactures DASDA (toulene derivative) for captive use in OBA
business & commercial sales
 Contributed 8% of revenues in FY14
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Technical Capabilities
Expertise in multiple chemical processes while maintaining the best safety standards
Nitration
Oxidation
Alkylation
Nox Production
/ Absorption
Diazotisation
Hydrogenation /
Reduction
Condensation
Sulfonation
10
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Global Reach
A trusted supplier in over 30 countries across 6 continents
Sweden
Canada
Germany
Switzerland
UK
Italy
US
Spain
Turkey
Israel
Jordan
China
Kuwait
Bahrain
Mexico
Saudi Arabia
UAE India
Oman
Bangladesh
Thailand
Korea
Japan
Taiwan
Hong Kong
Philippines
Sri Lanka
Brazil
Australia
South Africa
Argentina
New Zealand
11
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Business Segments
Fine Chemicals
Fluorescent
Whitening
Agents
Bulk Specialty Chemicals
Specialty
Xylidines
Oximes
Cumidines
Nitro Tolunes
Colourants
Pigment
Agrochemicals
Agrochemicals
Colourants
Fuel
Additives
Refinery
Sodium
Nitrite
DASDA /
FWA
Dyes / Pigments
Paper
Pharma Interm.
Specialty Chemicals
Pharma Interm.
Textiles
Agrochemicals
Rubber Chemicals
Food colours
Detergents
Pharmaceuticals
Electroplating
DASDA
Explosives
Specialty Chemicals
Dyes
Colourants
Agrochemicals
12
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Value Proposition
Value Proposition
8
1
Product profile having
varied applications
Consistent wealth creation
for Investors
2
7
Highly respected Board of
Directors with a strong
management team
No significant
domestic competition
DNL
Consistent
Diversification into new
products
Marquee customer
relationships
6
Diverse sales mix Product & Geography
wise
Customised product
offerings for global giants!
3
4
5
14
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Product Profile having varied applications
15
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Competitive Landscape
A leading player across all its product segments
Products
Domestic Competitor
Global Competitor
NT and NT Derivatives
Aarti Group, Panoli Intermediates
Lanxess Germany, Chinese Producers
DASDA / FWA / OBA
JB chemical, Pranav Chemical
Hebei , Dong Yang, Hongda
Fuel Additives (EHN)
Kutch Chemicals
Cetpro, Eurenco
Inorganic Chemicals
Kribhko/RCF
(by product manufacturers)
BASF
 DNL is a leading player across all its product segments in India
 No significant competition from domestic players in any of its product segments
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New Products have fuelled robust growth in past 5 years
New Products
Commencement
Revenue Growth (` mn) (FY10 – FY14)
1,659
Nitro Toluene Derivatives
Pre 2000
1,299
1,257
1,229
DASDA
2007
1,208
1,214
961
2010
123
Specialty Agrochemicals
2010
489
431
391
FY10
FY11
17
1,838
CAGR: 9%
1,371
1,796
Fuel Additives
CAGR: 9%
1,173
CAGR: 5%
2,841
CAGR: 119%
885
1,322
1,577
CAGR: 38%
FY13
FY14
594
FY12
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Diverse sales mix - Product & geography wise
Product –wise segmentation (FY14)
Export v/s Domestic Sales (FY14)
Bulk Specialty
Chemicals
14%
28%
Fine Specialty
Chemicals
Domestic Sales
40%
58%
60%
Exports
Fluorescent
Whitening
Agents
Revenue Segmentation on End Use Industry (FY14)
1%
4%
23%
51%
21%
Key Export Markets (FY14)
Colour
4% 8%
Agro
3%
9%
Fuel Additives
12%
Pharma
Others
Europe
USA
China
65%
Korea
Japan
Others
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Marquee Customer Relationships
19
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Professional Board of Directors…
Name
Designation
Mr. C.K. Mehta
Chairman
Mr. Deepak C. Mehta
Vice Chairman &
Managing Director
• Has been at the helm of affairs at DNL for the last 31 years
• A science graduate from University of Bombay
• Erstwhile Chairman of National Chemicals Committee on Chemicals, Petrochemicals & Fertilizers of CII
Mr. Ajay C. Mehta
Managing Director
• A science graduate with Honors and M.Sc. (Chemical Engg.) from University of Texas, USA
• Has been actively associated with the Company since 1984
Mr. Umesh Asaikar
Executive Director & CEO
Mr. Nimesh Kampani
Independent Director
Mr. Sudhin Choksey
Independent Director
Dr. Richard H. Rupp
Independent Director
Mr. Sudhir Mankad
Independent Director
Mr. S.K. Anand
Independent Director
Dr. Swaminathan
Sivaram
Independent Director
Mrs. Indira Parikh
Additional Director
Description
• Founder and promoter of DNL
• Well-known industrialist having more than 5 decades of versatile experience in chemical trade & industry
• Bachelor's degree in Mechanical Engineering from IIT Mumbai, an MS degree from JBIMS, Mumbai & is
a member of ICMAI & has been the CEO of DNL since Sept, 2008
• Has 34+ 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 HunnarShala
Foundation for Building Technology and Innovations
• Holds Ph.D. in Chemistry from Univ. of Karlsruhe, Germany &has completed a program for Executive
Development, 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 50 US patents to his credit
• Has over 40 years of experience in basic research, process/product R&D and S&T management
• Founder President of FLAME & was the Dean of IIM-Ahmedabad from 2002 to 2005
• Holds Ph.D from Gujarat University, Ahmedabad and MA in Edu from University of Rochester
• Has been a consultant to various national & international organizations both in private & public sector
20
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… And backed by Strong Team
Name
Mr.Sanjay Upadhyay
Description
Designation
Chief Financial Officer
• 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
Vice President,
Operations
• Qualification: Ph.D in Agriculture Chemistry from Indian Agriculture & Research Institute and M.Sc
in Soil Science along-with B. Sc in Chemistry
• Experience: 31 years of experience in chemical industry. In the past has worked with Rallis India,
Union Carbide, Rajendra Agricultural University, Cheminova and Sajjan India Ltd.
• Responsibility: Production Planning & Control, Process Management & Optimisation, EHS, Quality
Control and Factory Management
Mr.Pramod Talegaon
Vice President,
Technology
• 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 various processes
Mr.Vijay Tikekar
Vice President,
Marketing
• 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
Dr. Pramod Garg
Mr. Krishnamurthy
Shankar
Vice President,
Commercial
• Qualification: Master’s degree in Chemical Science & M. Tech. in Material Science & Engineering
from IIT Mumbai & 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
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Wealth Creator for Investors
DNL Share Price Performance - Adjusted
Summary of Returns on 1 DNL Share
120
100
Adjusted Share Price (`)
(Face Value – ` 2)
Split to FV ` 2
Bonus Issue 1:1
Returns
80
•
•
•
•
Rights Issue
10 year
5 year
2 year
1 year
: 12.7x
: 6.2x
: 3.7x
: 2.8x
Price of 1 Share in Apr 2004
60
Further Inv in Rights Issue (2006)
75
Total Investment
135
60
Dividend Recd from 2004-14
40
20
82
Current Value of the Holding
1,140
Total Value Derived from Investment
1,222
Oct-14
Apr-14
Oct-13
Apr-13
Oct-12
Apr-12
Oct-11
Oct-10
Apr-11
Apr-10
Oct-09
Apr-09
Oct-08
Apr-08
Oct-07
Apr-07
Oct-06
Apr-06
Oct-05
Apr-05
Oct-04
Apr-04
0
Dividend Payout Ratio (% of PAT)
Declared Dividend (% of FV)
100%
80%
80%
80%
51%
60%
24%
25%
20%
60%
16%
10%
26%
24%
27%
22%
27%
40%
40% 40% 40% 40%
50% 50%
60% 60%
20%
0%
22
FY2014
FY2013
FY2012
FY2011
FY2010
FY2009
FY2008
FY2007
FY2005
FY2014
FY2013
FY2012
FY2011
FY2010
FY2009
FY2008
FY2007
FY2006
FY2005
0%
FY2006
40%
100%
100%
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Financials
Financials
Balance Sheet (` mn)
Income Statement (` mn)
2013
2014
Revenue from Operations
10,194.0
12,696.3
9,947.1
Share Capital
7,146.2
8,317.5
6427.0
as a % of sales
70.1%
65.5%
64.6%
Employee benefit expenses
625.6
883.5
757.9
as a % of sales
6.1%
7.0%
7.6%
1,700.5
2,355.3
1754.5
16.7%
18.6%
17.6%
721.8
1,140.0
1,007.7
7.1%
9.0%
9.6%
Finance costs
113.6
279.7
283.2
Net Block (Incl. CWIP)
Depreciation
189.4
296.4
268.1
Other Non Current Assets
PAT
378.4
383.3
382.1
Current Assets
3.7%
3.0%
3.8%
RM Consumed
Other Expenses
as a % of sales
EBITDA
Margin
Margin
BCC
Turnover
EBIT
Margin
740
92
12.50%
9MFY15
FY 13-14
FNS
FWA
361
176
63
(27)
-15.42%
17.42%
FY13
FY14
H1FY15
104.5
104.5
209.1
Reserves & Surplus
2,701.4
2,970.7
3,105.5
Net worth
2,806.0
3,075.2
3,314.5
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
2,688.6
2,453.5
8,886.8
10,562.4
11,421.5
4,429.7
5,323.8
5,513.0
233.9
282.5
396.6
4,223.2
4,956.2
5,511.8
8,886.8
10,562.4
11,421.5
Debt
Current Liabilities &
Provisions
TOTAL LIABILITIES
TOTAL ASSETS
Total
FY 14-15 YTD
FNS
FWA
BCC
2,043.9
Total
1,277
577
227
202
1,007
128
55
41
3
99
9.61%
17.99%
1.45%
9.86%
10.04%
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Financial Highlights
24%
Revenue CAGR
FY11 - FY14
H1FY15
FY14
25%
Revenue Growth
FY14 v/s FY13
20%
Revenue Growth
H1FY15 v/s H1FY14
40%
Growth in EBITDA
FY14 v/s FY13
25%
Growth in EBITDA
H1FY15 v/s H1FY14
11%
Growth in PBT
FY14 v/s FY13
101%
Growth in PBT
H1FY15 v/s H1FY14
1%
Growth in PAT
FY14 v/s FY13
129%
Growth in PAT
H1FY15 v/s H1FY14
25
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Revenue Segmentation
EBITDA v/s PAT (` mn)
ROE v/s ROCE
1,140
1,200
16%
15%
14%
13%
12%
11%
10%
9%
8%
7%
6%
1,000
722
800
586
600
577
400
200
258
231
2011
2012
378
383
2013
2014
0
EBITDA
Capex for OBA business
resulted in lower returns
15%
9%
8,000
2011
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
-
7,899
6,000
4,000
2,000
0
2012
11%
2013
2014
ROCE
Debt – Equity
10,194
2011
2012
ROE
12,696
6,722
10%
8%
PAT
14,000
10,000
12%
11%
Revenue (` mn)
12,000
13%
2013
2014
26
5,084
2,609
3,412
615
2,379
2,528
2,806
3,075
2011
2012
2013
2014
Equity
Debt
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Phenol Project (Proposed)
Phenol Facility at Dahej - Snapshot
Manufacturing Capacity
Raw Material (Cumene) Sourcing
200,000 MT
263,000 MT
Total manufacturing capacity for Phenol
Total cumene requirement p.a.
135,000 MT
120,000 MT
Total cumene quantity that can be sourced
from prospective plant at Kochi
Total manufacturing capacity for Acetone
Fund Requirements
Technology Tie-up
` 12,000 mn
Total capital outlay for the project
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-tophenol process design & innovation
Source: www.kbr.com
` 7,200 mn
Total Debt raised by DNL for the project
Financial closure achieved
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Acetone & Phenol Value Chain in India
Laminates
Foundry/Mould
Phenolic resin
Automobile lining
Paints & Varnishes
0.87 unit
Cumene
Rubber adhesives
Phenol
Benzene
1.0 unit
Others
Cumene Hydro
Peroxide
1.31 unit
Alkyl phenol
Surfactants & Rubber
Drugs & Dyes
Rubber & Sulpha
drugs
Agro-chemicals
Pesticides
Pharmaceuticals
Propylene
0.47 unit
Direct use
Paints, Adhesives &
Thinners
Others
0.612 unit
Acetone
Aldol Chemicals*
Paints, printing ink
etc.
MMA
Acrylic sheets
Source: CRISIL
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Market Opportunity
Phenol Demand Supply in India
Phenol Demand - 2014
Estimated Demand for Phenol in 2017-18
250,100 MT
320,000 MT
SI Group
39,600
Imports
202,450
HOC
11,600
Imports
40,000
DNL’s facility
(200,000MT) will
start operations in
2017 -18
SI Group
40,000
Dahej
Facility
200,000
HOC
40,000
Acetone Demand Supply in India
Acetone Demand - 2014
Estimated Demand for Acetone in 2017-18
156,734 MT
SI Group
24,255
Imports
126,165
HOC
7,105
The plant at Dahej will help
substitute the imports and
give DNL a market
leadership position for
phenol & acetone in India
200,000 MT
Imports
32,000
DNL’s facility
(120,000MT) will
start operations in
2017 -18
SI Group
24,000
Dahej
Facility
120,000
HOC
24,000
Source: CRISIL
30
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Thank You