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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
www.deepaknitrite.com
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.
www.deepaknitrite.com
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)
www.deepaknitrite.com
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
www.deepaknitrite.com
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
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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
www.deepaknitrite.com
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
www.deepaknitrite.com
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
www.deepaknitrite.com
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
www.deepaknitrite.com
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
www.deepaknitrite.com
Product Profile having varied applications
15
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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
www.deepaknitrite.com
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
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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)
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Marquee Customer Relationships
19
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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
Independent Director
Independent Director
Independent Director
Independent Director
Independent Director
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
www.deepaknitrite.com
… 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
www.deepaknitrite.com
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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
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FY
200
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FY
200
9
FY
201
0
FY
201
1
FY
201
2
FY
201
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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
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FY
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FY
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FY
200
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FY
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9
FY
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FY
2011
FY
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FY
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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
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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%
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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
www.deepaknitrite.com
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)
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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
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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
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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
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