Deepak Nitrite Ltddeepaknitrite.com/pdf/investor/corporate presentation - sent to... · contracts, client concentration, ... margin (%) 3.7% 3.0% 3.8% Particulars FY13 FY14 H1FY15

CORPORATE PRESENTATION

Enhancing a Sustainable Future

www.deepaknitrite.com February , 2015

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 Nitrite Limited 5

Value Proposition 13

Financials 23

Phenol Project 27

Annexures 31

www.deepaknitrite.com 4

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 Whitening Agents (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 a host 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 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

Shareholding Pattern – December, 2014

57%

6%

37%

Promoter & Promoter Group

Institutions

Non Institutions

Particulars FY13 FY14 9MFY15

Revenues 10,194 12,696 9,947

EBITDA 722 1,140 1,008

margin (%) 7.1% 9.0% 10.1%

PAT 378 383 382.1

margin (%) 3.7% 3.0% 3.8%

Particulars FY13 FY14 H1FY15

Networth 2,806 3,075 3,315

Debt 3,101 4,620 5,589

Net Block 4,430 5,324 5,513

Key Financials (` mn)


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 ` 5,000 mn

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 - 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

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 Specialty Chemicals

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

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

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

FY14 Revenue

58%

FY14 Revenue

28% FY14 Revenue

14%

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


Manufacturing Facilities

9

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

Contributed 66% of revenues in FY14

NANDESARI, Gujarat 1

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

FY15)

DAHEJ, Gujarat 2

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

TALOJA, Maharashtra 3

Multispecialty site specialising in pilot plants and scaling up activities Nitration & Specialty Agrochemicals

Contributed 11% of revenues in FY14

ROHA, Maharashtra 4

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

business & commercial sales Contributed 8% of revenues in FY14

HYDERABAD, Telangana 5


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

China Spain

Italy

Israel

India

New Zealand

Japan Korea

Mexico Hong Kong

Jordan Kuwait

Saudi Arabia

Oman

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 Refinery Agrochemicals Pigment

Agrochemicals

Pharma Interm.

Bulk Specialty Chemicals Fluorescent Whitening

Agents Fine Chemicals

Fuel Additives

Sodium Nitrite

Xylidines Oximes Cumidines Nitro Tolunes

Agrochemicals

Value Proposition


Value Proposition

14

DNL

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

4 5

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


Competitive Landscape

16

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

A leading player across all its product segments

DNL is a leading player across all its product segments in India

No significant competition from domestic players in any of its product segments


New Products have fuelled robust growth in past 5 years

17

CAGR: 38%

CAGR: 9% Commencement

2010

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

123 489

885

1,796

2,841 CAGR: 119%

2010 Fuel Additives

Specialty Agrochemicals

961

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

CAGR: 5%

2007 DASDA

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


Diverse sales mix - Product & geography wise

18

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

Export v/s Domestic Sales (FY14)

58% 28%

14%

Bulk SpecialtyChemicals

Fine SpecialtyChemicals

FluorescentWhiteningAgents

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)


Marquee Customer Relationships

19

http://www.clariant.com/

http://www.bayercropscience.com/

http://www.lonza.com/group/en.html

http://www.sfchem.ch/index.htm

http://www.dottikon.com/index.php?article_id=104


Professional Board of Directors…

20

Description Name 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. Swaminathan Sivaram

• 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 • 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 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

Additional Director Mrs. 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 in Edu from University of Rochester • Has been a consultant to various national & international organizations both in private & public sector


… And backed by Strong Team

21

Description Name Designation

Mr.Sanjay Upadhyay

Dr. Pramod Garg

Vice President, Marketing

Chief Financial Officer

Vice President, Operations

Vice President, Technology

Vice President, Commercial

Mr.Pramod Talegaon

Mr.Vijay Tikekar

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

• 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

• 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

• 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: 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


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

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Ap

r-10

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-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

22

Rights Issue

Split to FV ` 2 Bonus Issue 1:1

Ad

just

ed S

har

e P

rice

(`)

(F

ace

Val

ue

– `

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) 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

2011

FY

201

2

FY

201

3

FY

201

4

DNL 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

24

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

Net worth 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 9MFY15

Revenue from Operations 10,194.0 12,696.3 9,947.1

RM Consumed 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%

Other Expenses 1,700.5 2,355.3 1754.5

as a % of sales 16.7% 18.6% 17.6%

EBITDA 721.8 1,140.0 1,007.7

Margin 7.1% 9.0% 9.6%

Finance costs 113.6 279.7 283.2

Depreciation 189.4 296.4 268.1

PAT 378.4 383.3 382.1

Margin 3.7% 3.0% 3.8%

FY 13-14 FY 14-15 YTD

BCC FNS FWA Total BCC FNS FWA Total

Turnover 740

361

176 1,277 577 227 202 1,007

EBIT 92

63

(27) 128 55 41 3 99

Margin 12.50% 17.42% -15.42% 10.04% 9.61% 17.99% 1.45% 9.86%


Financial Highlights

25

24% Revenue CAGR

FY11 - FY14

25% Revenue Growth

FY14 v/s FY13

40% Growth in EBITDA

FY14 v/s FY13

FY14

11% Growth in PBT FY14 v/s FY13

1% Growth in PAT FY14 v/s FY13

Revenue Growth H1FY15 v/s H1FY14 20%

25% Growth in EBITDA H1FY15 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

6,722 7,899

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

26

EBITDA v/s PAT (` mn)

Revenue (` mn) Debt – Equity

ROE 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

28

Fund Requirements

` 12,000 mn

` 7,200 mn

Total capital outlay for the project

Total Debt raised by DNL for the project Financial closure achieved

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 from prospective 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

29

Benzene

Propylene

Cumene Cumene 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

30

HOC 11,600

SI Group 39,600 Imports

202,450

HOC 24,000

SI Group 24,000

Imports 32,000 Dahej

Facility 120,000

HOC 7,105

SI Group 24,255

Imports 126,165

HOC 40,000

SI Group 40,000

Imports 40,000

Dahej Facility 200,000

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

Acetone Demand Supply in India

Source: CRISIL

Thank You

Deepak Nitrite Ltddeepaknitrite.com/pdf/investor/corporate presentation - sent to... · contracts, client concentration, ... margin (%) 3.7% 3.0% 3.8% Particulars FY13 FY14 H1FY15

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