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Deepak Nitrite Ltd.

BSE: 506401 Sector: Industrials
NSE: DEEPAKNTR ISIN Code: INE288B01029
BSE 00:00 | 29 Nov 2087.50 -18.30
(-0.87%)
OPEN

2001.00

HIGH

2103.95

LOW

2001.00

NSE 00:00 | 29 Nov 2086.45 -19.15
(-0.91%)
OPEN

2063.00

HIGH

2105.00

LOW

2005.00

OPEN 2001.00
PREVIOUS CLOSE 2105.80
VOLUME 163005
52-Week high 3020.00
52-Week low 785.85
P/E 66.14
Mkt Cap.(Rs cr) 28,474
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 2001.00
CLOSE 2105.80
VOLUME 163005
52-Week high 3020.00
52-Week low 785.85
P/E 66.14
Mkt Cap.(Rs cr) 28,474
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Deepak Nitrite Ltd. (DEEPAKNTR) - Chairman Speech

Company chairman speech

Dear Stakeholders

We are pleased to share our Fiftieth Annual Report for Fiscal Year (FY) 2020-21. On theback of marked success and excellence we have achieved a milestone of 50 years supportingthe Indian chemical industry. Our journey has been transformational from a small companyin Vadodara with a handful of products and employees into an emerging conglomerate withover 4700 employees and a comprehensive product portfolio catering to multiple industriesglobally. Having said that our focus on import substitution throughout this periodremains unaltered and we are proud to serve the nation. This in true sense is thefulfilment of ‘Atmanirbhar Bharat'.

I am glad we are on the right course with the support and guidance of all ourstakeholders investors and employees. This Golden Jubilee Year provided us a platform todemonstrate our capabilities and buoyancy amidst unprecedented challenges. We lived to ourreputation and converted it into a landmark year delivering strong operating efficiencywhich resulted in increased productivity and profitability. Alongside we undertookcalibrated expansion initiatives to set the foundation for future growth.

OUTLOOK ON THE WORLDWIDE ECONOMY

FY 2020-21 was largely dominated by the pandemic that hit economies globally. Howeverthe vaccine rollout along with a reduced case load has spurred optimism of the pandemic'send and a rebound in global economy. Accommodative policies by major economies furtherimprove the outlook.

The International Monetary Fund (IMF) forecasts the global economy to expand at 5.5% inCY 2021 and 4.2% in CY 2022 despite the high level of uncertainty.

Among the advanced economies the US and Japan are expected to restore to end-CY 2019activity levels by the second half of CY 2021 while Eurozone and the UK are expected tostay below end-CY 2019 levels into CY 2022. Among the Emerging economies China hasindicated a rapid rebound towards pre-pandemic levels of growth and economic activity. Itsoutput is expected to grow 8.1% supported by effective containment policies with vigorouspublic investment response and liquidity measures from the central bank.

Several countries particularly low-income developed economies entered the crisis withhigh debt levels that are projected to accelerate even further during the pandemic. Theinternational community will need to keep working together to ensure that these countrieshave enough access to international liquidity.

For the Indian Economy the growth projections for FY 2021-22 have been revisedupwards to 11.5% representing a 2.7 percentage point increase from the previousestimates indicating a carryover from a stronger-than-expected rebound in FY 2020-21. Asa result India is the only major economy predicted to grow in double digits amidst theCOVID-19 pandemic.

While the overall outlook remains positive one cannot rule out recurrence of thepandemic through mutated variants as we witnessed in India in April and May. This causesus to be cautiously optimistic on the prospects for a sharp rebound in economic growth andactivity.

INDIA – A LUCRATIVE MARKET FOR THE CHEMICAL INDUSTRY

Despite the challenges India is poised to become a hub for global chemical industry.Contributing 3% to global chemical industry the country ranks 6th globally interms of chemical sales 14th in exports and 8th in imports. Andthis is excluding pharmaceutical products. Over 2 million people are employed in theIndian chemical industry and that serves as a key enabler to achieve the estimated marketsize of USD 300 billion in Chemicals & Petrochemicals in India by 2025.

The industry valued at USD 178 billion in 2019 is projected to grow at a compounded9.3% to USD 304 billion by 2025. Factors like growing disposable income urbanisation andrural consumer penetration and demand are likely to drive this growth. Higher demand forChemicals and Petrochemicals is mainly driven by shift in global supply chains towardsAsia as well as increased domestic demand. It is estimated that chemical products worthUSD 111 billion could be produced by 2023 for domestic requirements.

For India a thriving R&D ecosystem advantage of being a one-stop investment andan alternative chemical destination production-linked incentive (PLI) scheme and focuson sustainable chemistry and circular economy remain the key pillars of its chemicalindustry roadmap. The Government is also keen on enhancing the industry's competitivenessand its share in manufacturing. Its 2034 vision for the chemicals and petrochemicalssector focusses on exploring ways to increase domestic production reduce imports andattract investments. It has also revamped the Petroleum Chemicals and PetrochemicalsInvestment Region (PCPIR) policy to attract investments of Rs 20 trillion by 2035.

EMBRACING LEGACY OF 50 YEARS – EXCELLENCE EXPERTISE AND VALUE CREATION

Deepak is a well-known Indian player in the chemical industry due to its technicalexpertise understanding of complex chemistries efficient handling of technicalprocesses and a long-term commitment of building deep relationships with stakeholders. Wehave been one of the first adopters of the ‘Make in India' ideology. Over the yearswe have significantly diversified our portfolio while enhancing processes strengtheningrelationships and introducing sustainability strategies to create shared value for allstakeholders.

We have prudently invested funds to improve growth prospects and steadily strengthenfinancial position while remaining committed to the core value and objectives of peopleplanet and profit. With our robust manufacturing platform and capabilities we look aheadwith excitement towards the numerous opportunities that have emerged because of increasedglobal attention on India's potential.

Furthermore through planned introductions of newer products and ventures we arelaying the foundations for future development. We continue to experience uptick in demandfrom a myriad of end-user industries and this trend is expected to continue goingforward.

TACKLING CHALLENGES

Years of experience and tactical acumen have equipped our teams to tackle challengeseffectively. Despite the magnitude of second wave we continued to maintain highefficiency levels across all manufacturing facilities while adhering to regulatorydirectives.

We prioritised man and material safety. Special financial incentives expanded medicalcoverage to include COVID-19 care free health check-ups and supply of multivitaminsunder proper medical advice were some steps undertaken for welfare of employees and theirfamilies. We have already taken on the responsibility of vaccinating all employees andtheir spouses and continue to look for solutions to support the families that depend onus.

DNL FOR ‘ATMANIRBHAR BHARAT' – LIMITING CHEMICAL IMPORTS

In the international arena Government of India's effective vaccine diplomacy hasenhanced the status and capability of Indian manufacturing sector. Its immediate effecthas been an acceleration in chemical manufacturing shift from China to India. Emergence ofthe domestic market is the next-order impact. The Government is capitalising on this shiftby incentivising India's manufacturing sector with the clarion call of Aatmanirbhar Bharatand the PLI scheme the impact of which is evident in the rising manufacturing volumesacross sectors. This coupled with global majors' emphasis on India as an alternativesupplier for their requirements would enhance performance traction for India's leadingchemical companies.

Deepak is a key domestic chemical manufacturer given our deep chemistry knowledgediversified product mix manufacturing experience scale backward integration and R&Dcapabilities. Over the past five decades we have successfully implemented an importsubstitution strategy for a wide range of products such as sodium nitrite nitrotoluenesfuel additives DASDA OBA and phenol. Our recent venture into the Isopropyl Alcoholdownstream of Acetone manufacturing with commissioning of 30000 MT plant is another stepforward. With this product we have met the needs of domestic industries who otherwiseimported it as well as served the country when most needed as it is a key raw materialused in sanitisers. It has also strengthened our margins and minimised commodity pricevolatility exposure while setting a foundation for expanding into downstream products.Doubling of the IPA plant to further reduce the country's dependence on imports has beentaken up on a fast-track basis and should be ready in couple of months.

OUR TRIPLE BOTTOMLINE STRATEGY PEOPLE

People are our most valuable asset. We recognise their contribution towards ourtransformation preparedness for future growth and every aspect of corporate management. A‘People First' approach has enabled us to operate all plants at high efficiency whileadhering to all Government mandates and regulations.

As a result we maintain high priority on educating and training our employees as wellas improving their skills and encouraging employee engagement. Our best-in-class humanresource strategies ensures their development safety and welfare. Goals and outcomes areidentified to not only foster healthy individual competitiveness but also serve as ateam-building initiative to drive productivity and efficiency. This makes us an employerof choice.

PLANET

We strongly believe in sustainable practices and has been honoured as a ResponsibleCorporate Citizen on a global scale. We are amongst the first Indian chemical companies tobe awarded the ‘Responsible Care' certification for our efforts to make the world asafer place. We are also a founding member of the Indian Chemical Council's ‘NicerGlobe' and a key representative of ‘Together for Sustainability'.

At Deepak sustainability is one of the main factors contributing to our quality andenvironmentally friendly solutions. We are dedicated to ecologically sustainablechemistry ensuring the safety of our employees and customers as well as the well-beingof the society. We are consistently innovating to meet the strategic demands of businessindustry community and our planet.

PROFIT

India is on the path of steadily gaining market share in the global chemical industrybased on its manufacturing capabilities and track record. In FY 2020-21 Deepak delivereda profitable growth with gains across key product categories. Our consolidated revenue forthe year was Rs 4382 Crores with EBITDA of Rs 1269 Crores. PBT and PAT increased at afaster rate to Rs 1042 Crores and Rs 776 Crores respectively.

We continued to operate at high utilisation levels at all facilities especially thephenol plant which operated at around 115% capacity. India is indeed a lucrative marketfor the chemical industry and Deepak is an ideal candidate to capitalise on this trendthanks to its diverse product offerings and decades of manufacturing experience.

VISION FOR A SUCCESSFUL FUTURE

Consistency is an invaluable resource in unpredictable economic environment. Ourability to foresee shifts and respond to them with agility ensures our consistency anddistinguishes us as a great organisation.

Amidst the ongoing pandemic we responded effectively to the new normal workenvironment and implemented all recommended health and safety protocols. We progressedtowards becoming future-ready by investing in productive assets and adopting developmentstrategies established keeping in mind an in-depth and risk-averse approach to capitalgrowth.

Our responsiveness is complemented by our integrated business model serving variedend-user industries and robust research and development capabilities. Together thesestrengthen our competitiveness and remain relevant to future needs which is critical toour long-term success.

DIVIDEND

Premised on Deepak's stellar performance during the fiscal the Board of Directorsrecommended a final dividend of Rs 4.50 per equity share being 225% of the face value.Over and above the normal dividend the Board has also recommended a special dividend ofRs 1 per equity share being 50% to commemorate Golden Jubilee year of Deepak. Thereforethe total dividend recommended is Rs 5.50 per equity share being 275% of the face valuefor the year ended March 31 2021 on 136393041 equity shares of face value of Rs 2/-each.

VOTE OF ThANkS

On behalf of the Board I am pleased to state that Deepak has consistently deliveredvalue to customers around the world attributable to our productive and efficientworkforce together with the continuous encouragement and unwavering support of ourdedicated shareholders. We value your continued trust in Deepak's resilience capabilities.We would also like to express our gratitude to all our employees for their diligentefforts in accomplishing our objectives and achieving our vision.

To conclude I would like to take this opportunity to thank all stakeholders for beinga part of our prosperous journey. Going forward we are optimistic that we will soonbecome a diversified chemical conglomerate. We are also honoured to be associated with youas we embark on a path of long-term growth and value creation. While I am sure you all aretaking requisite precaution I take this opportunity to plead once again that youexercise maximum precaution to remain in order to combat the pandemic together.

Best Regards

Deepak C. Mehta

Chairman and Managing Director

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