Innoventive Industries ltd

Deepak Nitrite Limited
CORPORATE PRESENTATION
www.deepaknitrite.com
July, 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 Limited (“The Company”) 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. The Company may, from time to time, make additional written and oral forwardlooking statements, including our reports to shareholders. The Company does not undertake to update any forwardlooking statement that may be made from time to time by or on behalf of the Company.
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Contents
About Deepak Nitrate Limited
5
Value Proposition
13
Financials
20
Phenol Project
24
3
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Deepak Nitrite at a glance
A producer
A market leader
of organic, inorganic and fine
chemicals with specialization in
Hydrogenation, Nitration, customized
products as per client specifications
and Toluene derivatives amongst
others
for Inorganic intermediates and Nitro
Toluenes in India
4
Among top global
players
for products like Xylidines, Color
intermediates, Cumidines and Oximes
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About Deepak Nitrite Ltd
Company Overview
Shareholding Pattern – June 30, 2015
 Established in 1970s by Mr. C.K. Mehta (Founder & Chairman), Deepak Nitrite Limited
(“DNL”) is an Indian chemical manufacturing company
 Product Portfolio: Bulk Chemicals & Commodities| Fine & Specialty Chemicals |
Fluorescent Whitening Agents (FWA)
37%
 Enjoys a leading market position in most of its products in the domestic as well as global
markets
6%
 Leading global player for several niche chemical products like Xylidines, Cumidines,
Oximes & Colour Intermediates
Promoter & Promoter Group
Institutions
Non Institutions
 Caters to several industries - Colorants, Petrochemicals, Agrochemicals, Rubber,
Pharmaceuticals, Paper, Textile, Detergents, Fine & Specialty Chemicals, etc. & caters
some Fortune 500 companies amongst its clientele
 ISO certified manufacturing facilities located at Nandesari, Dahej (Gujarat), Roha, Taloja
(Maharashtra) & Hyderabad (Telangana) & an R & D facility at Vadodara
Key Financials (` mn)
Particulars
Revenues
829
1,158
1,418
8.1%
9.1%
10.7%
378
383
534
3.7%
3.0%
4.0%
Net worth
2,806
3,075
3,468
Debt*
3,101
4,620
5,445
Net Block
4,430
5,324
5,867
PAT
6
FY15
13,272
 Accredited with “Responsible Care” certification – towards global environment, safety
and health management
 DNL is undertaking a greenfield expansion plan at Dahej, Gujarat for manufacturing
phenol and acetone
FY14
12,696
EBITDA
 Consistent track record of dividend payment & shareholder wealth creation
FY13
10,194
 Strong R&D focus has led to in-house development of new product applications and
understanding customer preferences
 Strong distribution network across the globe with footprints in over 30 countries
57%
margin (%)
margin (%)
FY13 Profit nos includes exceptional item of ` 85.8 mn
* Debt = Long term + Short term borrowings + Current maturities
of long term borrowings
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Milestones
2011-Present
2014 – Chairman has received Lifetime Achievement Award from Indian Chemical Council
Corporate Events
 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
M&A
 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)”
New Manufacturing Facility/ Diversification
 2012 – Accredited with “Responsible Care”
Others
 2011 - Listing on NSE
2001-2010
 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
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
FY15 Revenue
56%
 High volume segment consisting of Bulk Chemicals & Commodities 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, Ortho Toluene and Inorganic Chemicals such as
Sodium Nitrites & Sodium Nitrates
 DNL plans to leverage on Company’s cost leadership to enhance volumes & drive profits
Bulk Chemicals
& Commodities
FY15 Revenue
FY15 Revenue
24%
20%
 Includes niche products that require greater value addition
 It is segregated into Specialty Chemicals, Xylidines, Oximes,
Cumidines, Nitro Oxylene amongst others
 These products are customised as per customer specifications
 These products find application in the manufacture of
agrochemicals, pharmaceuticals, pigments, paper, hair colour, etc
 FWA is an application chemical and is commonly known as
Optical Brightening Agent (OBA)
 DNL is a fully integrated manufacturer of FWA
 OBA has wide applications in varied industries - Paper,
Detergents, Textiles, Coating Applications in Printing &
Photographic Paper
 The products in this segment can be customised into liquid or
powdered form, as per the customer’s requirements.
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Manufacturing Facilities
1
NANDESARI, Gujarat
 Bulk and commodity product manufacturing with on site Nitration &
Specialty Agrochemicals
2
DAHEJ, Gujarat
 Full spectrum stilbenic Optical Brightening Agents production
3
TALOJA, Maharashtra
 Hydrogenation & noble metal catalysis specialty
4
ROHA, Maharashtra
 Multispecialty site specialising in pilot plants and scaling up activities
Nitration & Specialty Agrochemicals
 Contributed 9% of revenues in FY15
5
HYDERABAD, Telangana
 Plant acquired from Vasant Chemicals Limited
 Manufactures DASDA for captive use in commercial sales
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Technical Capabilities
Expertise in multiple chemical processes
Nitration
Oxidation
Alkylation
Diazotisation
Nox Absorption
Hydrogenation /
Reduction
Condensation
Sulphonation
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Global Reach
Exporting products to over 30 countries across 6 continents
Sweden
Canada
UK
Germany
Belgium
Switzerland
France
Italy
US
Spain
Israel
Jordan
Turkey
China
Korea
Kuwait
Bahrain
Mexico
Saudi Arabia
UAE India
Oman
Bangladesh
Japan
Taiwan
Hong Kong
Vietnam
Philippines
Thailand
Sri Lanka
Indonesia
Brazil
Australia
South Africa
Argentina
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Business Segments
Fine & Specialty Chemicals
Fluorescent
Whitening
Agents
Bulk Chemicals & Commodities
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
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Value Proposition
Value Proposition
8
1
Product profile having
varied applications
Consistent wealth creation for
Investors
2
7
Leading market
position in most of its
products
Experienced Promoters and
qualified & experienced
management team
DNL
Long term customer
relationships
Consistent additions in
new product lines
6
3
Customised product
offerings for multinational
companies
Diverse sales mix - Product
& Geography wise
4
5
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Product Profile having varied applications
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Diverse sales mix - Product & geography wise
Product –wise segmentation (FY15)
Bulk Chemicals &
Commodities
20%
24%
Export v/s Domestic Sales (FY15)
56%
Fine Specialty
Chemicals
Domestic Sales
39%
Exports
61%
Fluorescent
Whitening Agents
Revenue Segmentation on End Use Industry (FY15)
Key Export Markets (FY15)
1% 2%
Asia
Colour
25%
Agro
21%
20%
Europe
Fuel Additives
17%
59%
Others
4%
Pharma
Others
51%
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USA
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Marquee Customer Relationships
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Professional Board of Directors backed by Strong Team
Name of Director
Mr. C.K. Mehta
Mr. Deepak C. Mehta
Designation
Chairman
Vice Chairman &
Managing Director
Mr. Ajay C. Mehta
Managing Director
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
Independent Director
Name of Key Managerial Personnel
Mr.Sanjay Upadhyay
Chief Financial Officer
Dr. Pramod Garg
President, BCC
Mr. Suresh Manerikar
President, F & S
Mr. Girish Satarkar
President, FWA
Mr.Pramod Talegaon
Vice President,
Technology
Mr. Nilesh Dave
18
Designation
Vice President, HR
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Wealth Creator for Investors
DNL Share Price Performance - Adjusted
120
Split to FV ` 2
Bonus Issue 1:1
Summary of Returns on 1 DNL Share
80
Rights Issue
60
Price of 1 Share in Apr, 2005
88
Further Inv in Rights Issue (2006)
75
Total Investment
40
20
Dividend Recd from 2005-14*
78
Current Value of the Holding
1,123
Total Value Derived from Investment
1,201
* Dividend for FY15 declared but not yet received by shareholders
Jul-15
Jan-15
Jul-14
Jan-14
Jul-13
Jan-13
Jul-12
Jan-12
Jul-11
Jan-11
Jul-10
Jan-10
Jul-09
Jan-09
Jul-08
Dividend Payout Ratio (% of PAT)
120%
40.0%
80%
26%
25%
16%
10%
22%
27%
60%
20%
40%
40%
40%
60%
60%
50%
19
FY2015
FY2014
0%
FY2015
FY2014
FY2013
FY2012
FY2011
FY2010
FY2009
FY2008
FY2007
FY2006
40%
50%
20%
0.0%
FY2005
40%
50%
FY2013
10.0%
27%
FY2012
20.0%
24%
80%
FY2011
24%
100%
FY2008
100%
FY2007
50.0%
FY2006
51%
FY2005
60.0%
Declared Dividend (% of FV)
FY2010
Jan-08
Jul-07
Jan-07
Jul-06
Jan-06
Jul-05
-
30.0%
163
FY2009
Adjusted Share Price (`)
(Face Value – ` 2)
100
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Financials
Financial Highlights
15%
Revenue CAGR
FY11 - FY15
FY15
FY14
25%
Revenue Growth
FY14 v/s FY13
40%
Q1 FY16
5%
Revenue Growth
FY15 v/s FY14
4%
Revenue Growth
Q1FY16 v/s Q1FY15
Growth in EBITDA
FY14 v/s FY13
22%
Growth in EBITDA
FY15 v/s FY14
35%
Growth in EBITDA
Q1FY16 v/s Q1FY15
11%
Growth in PBT
FY14 v/s FY13
17%
Growth in PBT
FY15 v/s FY14
50%
Growth in PBT
Q1FY16 v/s Q1FY15
1%
Growth in PAT
FY14 v/s FY13
39%
Growth in PAT
FY15 v/s FY14
38%
Growth in PAT
Q1FY16 v/s Q1FY15
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Financials
Income Statement (` mn)
FY13
FY14
FY15
Revenue from Operations
10,194.0
12,696.3
13,271.6
3,383.2
Share Capital
7,146.2
8,317.5
8,570.5
2,060.5
as a % of sales
70.1%
65.5%
64.6%
60.9%
Employee benefit Expense
625.6
883.5
1,001.0
278.1
Debt
as a % of sales
6.1%
7.0%
7.5%
8.2%
1,700.5
2,355.3
2,319.0
664.9
16.7%
18.6%
17.5%
19.7%
828.8
1,157.7
1,417.6
381.8
8.1%
9.1%
10.7%
11.3%
Finance costs
113.6
279.7
364.1
100.2
Depreciation
189.4
296.4
360.2
94.9
PAT
378.4
383.3
534.4
133.6
3.7%
3.0%
4.0%
3.9%
RM Consumed
Other Expenses
as a % of sales
EBITDA
Margin
margin
Q1FY16
Balance Sheet (` mn)
FY14
FY15
104.5
104.5
209.1
Reserves & Surplus
2,701.4
2,970.7
3,253.1
Networth
2,806.0
3,075.2
3,462.2
Long Term Borrowings
2,393.4
2,712.5
2,386.0
Short Term Borrowings
707.4
1,907.2
2,310.1
Other Non Current Liabilities
291.5
414.0
542.5
Current Liabilities & Provisions
2,688.6
2,453.5
2,530.4
TOTAL LIABILITIES
8,886.8
10,562.4
11,231.3
4,429.7
5,323.8
5,998.9
233.9
282.5
500.0
4,223.2
4,956.2
4,732.4
8,886.8
10,562.4
11,231.3
Net Block (Incl. CWIP)
Other Non Current Assets
Current Assets
TOTAL ASSETS
22
FY13
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Revenue Segmentation
Revenue from Operations (` mn)
14,000
12,696
12,000
13,272
6,722
7,899
6,000
4,000
2,000
0
FY11
FY12
FY13
FY14
15%
16%
15%
14%
13%
12%
11%
10%
9%
8%
7%
6%
10,194
10,000
8,000
ROE v/s ROCE
13%
12%
12%
FY15
10%
11%
FY13
FY14
Revenue from Operations (INR mn)
ROE
EBITDA v/s PAT (` mn)
1,402
1,158
1,200
829
1,000
800
638
605
600
400
200
0
534
258
231
FY11
FY12
378
383
FY13
FY14
EBITDA
PAT
ROCE
Debt – Equity
1,600
1,400
FY15
FY15
23
10,000
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
-
1.7
1.6
5,084
0.3
1.6
1.4
1.2
1.0
2,609
1.8
5,445
3,412
1.2
1.0
0.8
0.6
615
2,379
2,528
2,806
FY11
FY12
FY13
3,075
3,468
FY14
FY15
0.4
0.2
0.0
Equity
Debt
Debt - Equity
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Phenol Project (Proposed)
Phenol & Acetone Facility at Dahej - Snapshot
Manufacturing Capacity
Fund Requirements
200,000 MT
` 12,000 mn
Total manufacturing capacity for Phenol
Total capital outlay for the project
120,000 MT
` 7,200 mn
Total manufacturing capacity for Acetone
Total Debt raised by DNL for the project
Financial closure achieved
Technology Tie-up
Technology tie-up with KBR (USA)
 KBR is a licensor of phenol capacity
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Acetone & Phenol Value Chain in India
Laminates
Foundry/Mould
Phenolic resin
Automobile lining
Paints & Varnishes
0.87 unit
Benzene
Cumene
Rubber adhesives
Phenol
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
Imports
40,000
DNL’s facility
(200,000MT) will start
operations in 2017 -18
SI Group
40,000
HOC
11,600
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
200,000 MT
SI Group
24,255
Imports
126,165
HOC
7,105
Imports
32,000
DNL’s facility
(120,000MT) will start
operations in 2017 -18
SI Group
24,000
The plant at Dahej will help
substitute the imports and
give DNL a market
leadership position for
phenol & acetone in India
Dahej
Facility
120,000
HOC
24,000
Source: CRISIL
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Thank You