Corporate Presentation – August 2012
Enhancing a Sustainable Future!
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, risks and
uncertainties regarding fluctuations in earnings, our ability to manage growth, intense
competition 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.
CONTENTS
1 About DNL
4
3
2 Market Environment
Differentiators & Drivers
Financials
5 Growth Plans
Deepak Nitrite Limited - A Leading Chemical Company
Deepak Nitrite : Snapshot
Deepak Nitrite : About Us
• Established in 1970s by Mr. C.K. Mehta
• Market leader in India for Sodium Nitrite / Nitrate & Nitro Toluenes.
• DNL is a top 3 global supplier for products like Cumidines and Oximes
• On par with global players in colour intermediates business
• In-house availability of requisite building blocks
• Track record of successful acquisitions.
Milestones
1972
1972
1979
1984
1992
1994
1999
2005
2006
2011
2011
Manufacturing of Sodium Nitrite and Sodium Nitrate at Vadodara, Gujarat.
Prestigious “P. C. Ray” Award for innovation Listing on Public Markets
Co-promoted Deepak Fertilizers and Petrochemicals Ltd.
Acquisition of Sayadri Dyestuffs & Chemicals from Mafatlal group.
Multipurpose Nitro-Aromatics plant.
Hydrogenation facility near Mumbai.
Acquisition of Aryan Pesticides Limited
Relocation of Sayadri Facilities to Vadodara and Roha.
Acquisition of colour intermediate business from Vasant Chemicals Ltd
Greenfield expansion at Dahej for OBA
Brownfield expansion at Nandesari for Inorganic Intermediate - Salts
Facilities
1 Corporate Office Vadodara, Gujarat
2 Manufacturing Facility Roha, Maharashtra
3 Manufacturing Facility Taloja, Maharashtra
4 Manufacturing Facility Nandesari, Gujarat
5 Manufacturing Facility Hyderabad, AP
6 R&D Facility Pune, Maharashtra
7 Facility under implementation Dahej, Gujarat
( ( ( (
Products & Application
Specialty
Colourants
Fuel Additives
Petrol Blending
Diesel Blending
Aviation Turbine fuel
Nitro Chloro Benzene
Pharmaceuticals
Dyes
Rubber Chem.
Agrochemicals
Pigments
Xylidines
Pigment
Fuel Additive
Agro Chemicals
Pharma Interm.
Oximes
Agrochemicals
Sodium Nitrite
Dyes / Pigments
Pharma Interm.
Food colours
Electroplating
Speciality Chemicals
Colourants
Cumidines
Agrochemicals
Nitro Tolunes
Colourants
Speciality Chem
Rubber Chemicals
Pharmaceuticals
Explosives
Dyes
Specialty Chem.
DASDA
Agrochemicals
DASDA
Paper
Textiles
Detergents
Technical Capabilities – Expertise in processes
Hydrogenation / Reduction
Nitration
Sulfonation
Alkylation
Condensation Oxidation
Nox Production / Absorption
Diazotisation
Technical Capabilities
Able to handle complex and hazardous chemical processes with a high success ratio
Able to optimize processes while meeting standards on product specifications, product quality and environmental norms
Multi purpose manufacturing facilities provide flexibility to change
product mix
Focus on Technical capabilities to provide a competitive edge - R&D
efforts also directed towards improvement of existing processes to enhance competence
Environmental Care
•We are committed to best practices and technologies for a cleaner, sustainable world
•We adhere to all statutory and recommended environmental norms • R&D initiatives are supervised by Environmental scientists to ensure that all
processes optimize resources and minimize impact on environment •We have established effluent treatment plants at all of our facilities • Compliance with environmental standards and green, sustainable business models are important parameters when serving global customers
DNL – Key Strengths
• Strong Track Record in hazardous processes
• Expertise in multiple chemical processes
• Flexible manufacturing facilities
• Customer list includes marquee names
• Long-term Customer
relationships
• Exports represented 44% of FY12 sales
• Govt recognized R&D facility in Pune
• Dedicated R&D spend at approx. 1% of annual revenues
• New products of last 4 years contributing 2% of sales
• Adhering to best practices & technologies
• Compliance with environmental norms
• R&D also focusing in this area
Technical Capabilities Customer Relationships R&D Environmental Care
Provides competitive edge over Peers
• DNL has identified R&D as a key differentiator and significant value creator • Spends almost 1% of annual revenues on R&D
• Dedicated R&D facility in Pune which is Recognized by Dept. of Science and
Technology, Government of India
• R&D Headcount of over 35 personnel – Experienced & highly skilled technical manpower including 3 Ph. D’s
• State of the Art Pilot Facility as a catalyst between R&D trials and commercial production
Research & Development
Business Segments & Application
Agro-chemicals,
Pigments, Dyestuffs ,Fuel Pharmaceuticals
Segments Organic
Intermediates Inorganic
Intermediates Fine & Specialty
Chemicals
Pigments, Dyes,, Rubber Chemicals, Explosives,
Food Colour, Electro PlattingGlass
Paper, Detergent, Textiles, Agro- Chemicals, Fuel Additives, Pharmaceuticals,
Applications
% of FY2012 Revenues
57% 16% 27%
Product Categories
Nitro Tolunes, Fuel Additives, Xylidine, NCB
Cumidines,
Sodium Nitrite, Sodium Nitrate
DASDA, Oximes,
Fuel Additives, Specialty Chemicals
Supply Chain
Raw Material Vendors Market
Environment
Benzene, Toluene, Xylene, Cumene
Nitric Acid, Hydrogen
Ammonia Procured Locally
Procured locally
Multiple Local suppliers /
Direct Imports
Procured Locally at Import Parity Price Or
Imported
Available from group company
Available from local manufacturers in
Gujarat
Caustic / Chlorine Multiple local
suppliers in Gujarat
Oversupply / Availability of
substitutes
Market Environment
•Global production shifting from developed countries to developing economies •Demand for end products growing well in regional economies
• India established as favorable and reliable supplier in view of heightened
focus on environmental awareness. •High barriers to entry are favoring established players
•DNL position strong due to
• Established long-term contracts with global MNCs • Supplying large proportion of requirement in key products • Supplies are split between different customers, markets and currencies thereby mitigating risk arising in any individual market
Customer Relationships
• Deepak Nitrite has a diversified customer base consisting of some of the largest chemical companies in the world, including Sygenta Global, Bayer Crop Science, BASF, Kemira, Lanxess, Clariant, Isochem, Lonza, IOC, Reliance, Essar and Sudarshan Chemicals.
• 44% of the company’s FY12 turnover was through exports
• Long standing relationships - have been supplying products for periods ranging from 5 to 10 years with several customers
• DNL has gone beyond the customer-vendor relationship and has entered into long-term partnership arrangements with many of its customers
• Diversified customer base exposes company to different industries, economic cycles and currencies thereby providing a natural hedge
Key Customers
Inroads to USA
•DNL has been able to make inroads into the US market
• Pursuing additional business wins as the US market is large and lucrative – offering significant growth opportunities
•DNL is already catering to India & Europe – by establishing itself in China & USA, DNL will be catering to the largest markets across the globe
• Exports to USA were Rs. 63 crore in FY12, registering a growth of 31 % over previous year.
Key Differentiators
GLOBAL
Supplier of choice for
leading global
companies
EXPERTISE
Capability in Handling
complex & hazardous
chemical processes like
Nitration,
Hydrogenation &
Catalytic Reactions.
SAFETY
Emphasis on adherence
to Environmental
Norms
INNOVATION
Focused on R&D
leading to new
product/process
development
FLEXIBLE
Ability to change
product mix as per
market requirement
INTEGRATION
Only company to
forward integrate from
Toluene to OBA
through Greenfield
expansion at Dahej
MARKET LEADER
Among top 3 in
almost all the
products / markets
we operate
GREEN ENERGY
Working towards
manufacturing of solar
salt for entering into
renewable energy
through Brownfield
expansion in Nandesari
DIVERSITY
Presence in multiple
applications and
product streams along
with presence in
different geographies
insulates DNL from
various market risks
Developing “New Product and New Application” for established markets
Business Drivers
Reduction in Carbon emission norms
Growth in Environmental Challenging areas
Cost competitiveness causing consolidation of weaker players
in developed economies
Growth Markets shifting to Asia
Growth Drivers
Organic
Expansion
Greenfield
project in Dahej
Deepening of
Global
relationships
Value added
products &
partnership
arrangements
Development of
innovative
technologies as a
means to
enter mature
markets
Expanding
product basket
Based on
current/new
technologies
Intensifying
geographical
reach
New market
in-roads,
competitive
position in
China,
USA
Inorganic
opportunities
Adding business
value with
attractive
return on
Invested capital
Solar Salt
Augmentation
of new business in
renewable energy
Have introduced the following products in recent years:
• Fuel Additives : • Antioxidants & cetane improver for improving quality of fuels to meet norms.
• DNL offers petrol additives, diesel additives and aviation fuel additives
• Strong demand and lucrative and growing market
• FY12 revenue of Rs. 98 crore, recording an increase of 56 % over previous year
Xylidines: • Agro intermediate - down stream product of existing products.
• Demand for end product driving market for this product
• FY12 revenue of Rs.115 crore, , recording an increase of 6 % over previous year
NSA: • Down stream value added product of Inorganic Intermediate.
New Product Development
6774
7927
0.0
1,500.0
3,000.0
4,500.0
6,000.0
7,500.0
9,000.0
FY11 FY12
Re
ven
ue
s (R
s m
n)
Revenues
Financials – FY12 vs. FY11
621581
0.0
100.0
200.0
300.0
400.0
500.0
600.0
700.0
FY11 FY12
EBIT
DA
(R
s m
n)
EBITDA
370316
0.0
100.0
200.0
300.0
400.0
500.0
FY11 FY12
PB
T (R
s m
n)
PBT
258 231
0.0
50.0
100.0
150.0
200.0
250.0
300.0
350.0
FY11 FY12
PA
T (R
s m
n)
PAT
Deepak Nitrite : Revenue Profile
• New Product introduction and
enhancement of offerings leading to
higher demand
• Shift of global production to domestic
manufacturers also driving traction
• Incremental revenue is coming
from Agro and fuel additives
business and its share in overall
sales basket is going up.
Deepak Nitrite : Exports
Financials – Key highlights FY12
•Increased volumes by 5% in FY12 compared to FY11
•Fuel additives gain traction. Contribute to Rs. 98 crore of revenue in FY12,
higher by 56% over last year
•Net Debt to Equity ratio is 0.68
•Augmentation of existing manufacturing facilities on track; significant progress
in FY2012
Financials – Shareholder Value Perspective
FY12 FY11 FY10 FY09 FY08
EPS (Rs.) 22.06 24.65 21.82 31.55 7.84
DPS (Rs.) 6.00 6.00 5.00 5.00 4.00
NETWORTH (Rs. Cr.) 253 238 219 191 168
BVPS (Rs.) 242 228 210 213 187
MARKET CAP (Rs. Cr.) 150 185 143 73 103
NET DEBT (Rs. Cr.) 171 58 67 90 135
Deepak Nitrite : Financial Stability
• Consistent track record of paying dividends
• Strong Revenue growth – improving operating cash flows
• Steady growth in Networth
• Low gearing: Net D/E of 0.68 (March 31, 2012)
• BVPS of Rs. 242
Growth Drivers
PRODUCT: PERFORMANCE CHEMICAL – OPTICAL BRIGHTENING AGENT
SEGMENT: FINE & SPECIALTY CHEMICALS
CAPITAL OUTLAY: Rs 200 CRORE (EST)
PROJECTED REVENUES: Rs 400 – 450 CRORE AT PEAK UTILISATION
FULL CAPACITY UTILISATION: 3 YEARS AFTER COMMISSIONING
TIME FRAME FOR COMPLETION: DECEMBER 2012 (TENTATIVE)
DAHEJ - GREENFIELD EXPANSION 1
Growth Drivers
PRODUCT: INORGANIC INTERMEDIATE – SALTS
SEGMENT: INORGANIC CHEMICALS
CAPITAL OUTLAY: Rs 40 CRORE (EST)
PROJECTED REVENUES: Rs 120 – 140 CRORE AT PEAK UTILISATION
FULL CAPACITY UTILISATION: 3 YEARS AFTER COMMISSIONING
TIME FRAME FOR COMPLETION: SEPTEMBER 2012 (TENTATIVE)
NANDESARI - BROWNFIELD EXPANSION 2
Key Takeaways
• Well entrenched multi segment chemical company with leading world
players as its customers
• One of the top 3 producers of fine intermediates
• New products / markets opportunities driving growth
• Post implementation at Dahej, DNL would be only fully integrated company globally, producing end products from building blocks.
• Strong Financials – Low gearing & track record of dividends
Thank you
More information available online: • Annual Reports
• Quarterly Financial Results
• 5 Years Financial Data & more
http://www.deepaknitrite.com/