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Deepak Nitrite Ltd.

BSE: 506401 Sector: Industrials
NSE: DEEPAKNTR ISIN Code: INE288B01029
BSE 00:00 | 16 Aug 271.00 2.85
(1.06%)
OPEN

263.00

HIGH

274.00

LOW

263.00

NSE 00:00 | 16 Aug 271.15 2.75
(1.02%)
OPEN

267.95

HIGH

274.00

LOW

265.10

OPEN 263.00
PREVIOUS CLOSE 268.15
VOLUME 21895
52-Week high 337.55
52-Week low 204.60
P/E 16.53
Mkt Cap.(Rs cr) 3,696
Buy Price 271.60
Buy Qty 45.00
Sell Price 273.50
Sell Qty 95.00
OPEN 263.00
CLOSE 268.15
VOLUME 21895
52-Week high 337.55
52-Week low 204.60
P/E 16.53
Mkt Cap.(Rs cr) 3,696
Buy Price 271.60
Buy Qty 45.00
Sell Price 273.50
Sell Qty 95.00

Deepak Nitrite Ltd. (DEEPAKNTR) - Chairman Speech

Company chairman speech

Dear Stakeholders

We are pleased to present to you our Annual Report for FY 2018-19. This year marks asignificant landmark for our stakeholders who have shared this journey with us andcontributed to our success. Recalling our journey since the beginning I remember everysingle year to be fulfilling in each respect. The year has been a remarkable one for usnot just financially but for some of the significant milestones we achieved.

WORLD ECONOMY

FY 2018-19 was a turbulent year for the global economy characterised by geopoliticaluncertainties and trade wars. Softening of commodity prices demand deflation and theeffect of escalating trade tensions moderately impacted the pace of global growth. Whilethe US witnessed a moderate increase in GDP growth this was more than offset by otherlarge economies such as China Euro area economies and some of the Latin American nations.This had a spiralling impact on interconnected economies and in turn on global growth.

Amidst all these India continues to be one of the fastest-growing major economies inthe world backed by healthy domestic consumption. Successful implementation of theGovernment's structural initiatives towards improving the ease of doing business such asenhancing transparency speeding up approvals resolving policy issues and fostering moresignificant levels of value addition also played a crucial role in sustaining performance.

INDIA 'S CHEMICAL INDUSTRY – RISING OPPORTUNITIES

The global chemical industry has been a healthy contributor to the world GDP. Itcontributed USD 5.7 trillion or 7% to the world's GDP. Due to uncertainty on interestrates trade tensions and slowing economic growth global M&As in the chemicalindustry slowed down. However transactions undertaken are being consolidated andabsorbed and these are likely to pursue vast opportunities in the global chemicalsmarket.

Within this backdrop we believe the opportunities for the Indian chemical industry areimmense. Moreover we remain confident that efficient producers that prioritise R&Dand innovation with a focus on scaling via sustainable operations will succeed in the longrun. An essential reminder to this approach served as the recent crackdown on pollutingindustries in China which resulted in supply disruption of necessary chemicalsmanufactured and exported from there. Due to this unforeseen development most largecustomers are on the path to de-risk their China exposure and have been increasinglyseeking alternative channels including India. It has provided a tailwind to growth andenhanced opportunities to chemical producers in India.

WE MADE PROMISES. WE DELIVERED THEM.

We are on a journey of planned transformation. Our transformational expansion in termsof product portfolio and geographical presence is already taking shape and showing earlysigns of bearing fruit. Today we are a robust and diversified institution with a strongposition in India's chemical industry.

In an uncertain business environment your Company delivered a resilient performance inFY 2018-19. We delivered on our promises made on the existing lines of business as well asthe recently commissioned Phenol and Acetone project. On the back of a robust businessmodel diverse product portfolio and geographies and a competitive operating profile wecreated a superior position in the global chemicals market. Our strategic and focusinitiatives - such as reorienting of geographical focus strengthening product portfolioand brownfield expansion - positively impacted our verticals and enabled us to deliverimproved performance.

Our consistent performance focus on profitable growth and a calibrated strategytowards expansion serves in the best long-term interest of our shareholders as it leads tobetter valuation. Our relentless focus on faster execution and operational excellence hasbeen one of the Company's key strengths. It helps improve margins as well as sustain andgain free cash flows to create new investments.

OUR LEGACY GIVES US PRIDE

Today Deepak Nitrite Limited is proud to state that it has been carrying the legacy ofresponsible chemistry for about 50 years. We have built our corporate strength byunshackling opportunities with enormous patience determination and perseverance.

Despite having started as a bulk commodity manufacturer your Company has transformedits operations over the years. It has expanded its offerings to include high-value fineand speciality chemicals based on our core expertise and the lateral and verticalintegration of the existing products. Our robust R&D capabilities have been stepped upacross the value chain in-line with the expansion in product categories. Additionallyour healthy client relationships have enabled us to create deeper inroads into theexisting markets widen our product portfolio and enter newer markets. At the foundationof our transformational journey is our firm commitment to being completely and squarelyaligned with reinforcing India's positioning as a superpower and doing good for society.

OUR TRIPLE BOTTOMLINE APPROACH: PEOPLE

Our employees have been our most significant assets. We believe that none of ourachievements would have been possible without the passion and commitment of our employees.Today a dedicated team of professionals nurtured over the years have been driving thegrowth of your Company. Among the several steps we are taking to grow sustainably we arerecruiting and nurturing quality talent and create a work culture that ensures a highlevel of performance and a conducive work environment. During the year under review theGlobal Employer Branding Institute and World HRD Congress conferred Deepak Nitrite Limitedwith the "National Best Employer Brands 2018".

Our people-aligned business strategy has catapulted in organisation-wide success. Wewill continue to create platforms to hire and nurture our talent pool with atransformational vision for our employees. There is also a deep focus on giving back tosociety and to the communities in which we operate. Through Deepak Foundation the Companyis executing various healthcare skill development and education related CSR programmesfor the families of workers and local communities residing around our manufacturingfacilities and other remote areas including tribal areas. Over the years the Foundationhas progressed into a leading non-profit civil society in Gujarat and has been executingseveral such initiatives to enhance lives of the people.

PLANET

As a responsible corporate citizen your Company strongly believes in sustainablepractices. Your Company is already a member of the coveted accredited bodies such as‘Responsible Care' ‘Nicer Globe' and ‘Together for Sustainability' whichmakes it a "Preferred Supplier" for several chemical multinationals.Additionally your Company has steadily worked towards a reduced carbon footprint. It hasa key focus on reduction in resource intensity in energy and water and greater emphasis onproducts that are a part of the sustainable supply chains. Your Company's Phenol plant hasbeen set up with the latest technologies. It is also one of the most efficient unitsglobally at this scale in terms of water and energy efficiency further underscoring ourcommitment to the planet.

PROFIT & PERFORMANCE

Your Company ended FY 2018-19 on an exuberant note with double-digit growth inRevenues EBITDA and Profit Before Tax. It also managed to report higher volumes andrealisations across critical products amidst rising prices of crude oil and relatedpetrochemical intermediates. On consolidated basis total revenues for the year stood at `2715 crore while EBITDA came in at ` 429 crore. Both PBT and PAT recorded acceleratedgrowth during the year at ` 268 crore and

` 174 crore respectively. During the year we continued our "bottom lineaccretive" investments in solidifying our capital structure and fortifying theproduct portfolio. We are focussed on strengthening our infrastructure systems andprocesses to drive greater efficiencies.

WE ARE "FUTURE-READY"

To sustain a growing business in size and complexity we are strategically transformingour organisation and becoming "future-ready." We are making continuousinvestments in our productive assets and our expansion strategies are also devisedkeeping in mind our in-depth risk-mitigated approach towards incurring capital expansion.

We take immense pride in stating that during the year we over-delivered on our promisesof creating a global-scale manufacturing plant within the envisaged cost and scheduledtime. This was made possible through our qualities of meticulous planning and preciseexecution. These attributes gave us the confidence to leverage our key strengths andcapabilities and create massive value for all our stakeholders. We also believe that ourinvestments in cutting-edge research & development is not only altering ourcompetitive capabilities but also sustaining and bettering our performance in the futureyears.

In light of a spirited performance reported by your Company the Board of Directorshave recommended a dividend of ` 2 per equity share (100%) on a face value of ` 2 each onan expanded capital base. This is compared to a dividend of

` 1.30 per equity share (65%) declared in the previous financial year.

MAKING INDIA SELF-RELIANT IN CHEMICAL IMPORTS

FY 2018-19 has been a milestone year for the Company as we commissioned our megaGreenfield project for manufacturing of Phenol and Acetone at Dahej in Gujarat in November2018. More importantly we successfully ramped up its capacity utilisation above 80%within first few months of commissioning which in itself is a positive achievement. Icongratulate the entire team at Deepak Phenolics Limited for their tireless efforts inachieving the above. I am also happy to highlight that our dedicated logistics team hasbeen successful in despatching approximately 75% of the average capacity utilisation inthe first quarter of commissioning.

We delivered on our promise of executing the plant and getting it commissioned inrecord time – and with no cost or time over-runs. This not only demonstrates ourpreparedness it also indicates our elevated manufacturing and marketing capabilities. Ourrobust execution has been a result of the seed marketing efforts undertaken during thepre-commissioning phase. With this we have enabled the country to become self-reliant inthe production of Phenol and Acetone and resulting in import savings. The plant is wellcapacitated to address India's demand for Phenol and Acetone and reduce its importdependence on these chemical intermediates based on its cutting-edge technology as wellas resource and energy efficiency. Our philosophy of import substitution has beenconverted into further action as we succeeded in replacing the bulk of imports of Phenoland Acetone in the domestic market.

This project has undoubtedly added another feather in our cap. We are of the firmbelief that this will enable a quantum leap in your Company's revenues and profits andsubsequently open new avenues of growth from forward-integration into value-addedderivatives.

MOVING AHEAD

Your Company's strategic focus on the performance of People Planet and Profit havebuilt a formidable foundation that will serve multiple growth levers in the years ahead.We are traversing the journey forward with an unwavering faith in our conviction as wecontinue to innovate with vigour and passion for taking your Company to a higher horizonof excellence. We remain focussed on executing our clear-cut strategies on costoptimisation adding new products tapping new markets and expanding our capacities.

Today we are in a position to take advantage of market dynamics through ourdiversified portfolio and credibility among the customers and confident of continuing ourgrowth momentum. Being on a steep growth path we are confident about our growth prospectsand building market share gains. We are ready for a promising future with the multiplebusiness drivers that will enable us to achieve our goals. We also believe our growth willbe sustainable as it is predicated on the strengths of our organisation. Some of these are– an able and competent leadership deep customer relationships ability to innovateand develop new products expertise in complex chemistry ability to cope up with changeglobally competitive manufacturing capabilities and an efficient supply chain anddistribution infrastructure.

VOTE OF THANKS

On behalf of the Board I thank the entire team at Deepak Nitrite Limited and DeepakPhenolics Limited and our valued shareholders for their continued support andencouragement. We thank you for having your continued faith in our strength andcapabilities and our employees for their tireless efforts towards achieving our goals.

We are on an exciting journey towards becoming a diversified chemical powerhouse. Weare proud to have been associated with you as we continue on our voyage of responsiblegrowth and value creation.

Best Regards

DEEPAK C. MEHTA

Chairman and Managing Director