deepak nitrite limited corporate presentationdeepaknitrite.com/pdf/investor/dnl_nov_14.pdf ·...
TRANSCRIPT
CORPORATE PRESENTATION
Enhancing a Sustainable Future
www.deepaknitrite.com November, 2014
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 Nitrate LimitedAbout Deepak Nitrate Limited 55
Value PropositionValue Proposition 1313
FinancialsFinancials 2222
Phenol ProjectPhenol Project 2626
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 WhiteningAgents (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 ahost 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 andhealth management
� Consistent track record of dividend payment & shareholder wealth creation
� DNL is setting up one of the largest phenol-acetone plant in India at Dahej to fuel its nextphase of expansion
6
Shareholding Pattern – September, 2014Shareholding Pattern – September, 2014
57%
6%
37%
Promoter & Promoter Group
Institutions
Non Institutions
Particulars FY13 FY14 H1FY15
Revenues 10,194 12,696 6,884
EBITDA* 722 1,140 658
margin (%) 7.1% 9.0% 9.6%
PAT 378 383 255
margin (%) 3.7% 3.0% 3.7%
Net worth 2,806 3,075 3,315
Debt 3,101 4,620 5,589
Net Block 4,430 5,324 5,513
Key Financials (`̀̀̀ mn)Key Financials (`̀̀̀ mn)
FY13 Profit nos includes exceptional item of Rs.8.58
cr
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 ` 500 Cr
� 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 - Issue of Bonus Equity Shares at the ratio of 1:1 & and stock split to Face value ` 2
� 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 SpecialtyChemicals
� High volume segment consisting of commodity chemicals that are made to standard specifications thus is
characterized by moderate margins
� Manufacturing of both organic & inorganic chemicals
� This SBU can be further classified under Nitro Toluene, Sodium Salt & 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 qualityfocus
� It is segregated into Specialty Chemicals, Xylidines, Oximes, Cumidines
� These products typically enjoy some degree of customisation and differfrom standardised products
FY14 Revenue
58%
FY14 Revenue
28%FY14 Revenue
14%
� FWA is an application chemical and is commonly known asOptical Brightening Agent (OBA)
� DNL has the fully integrated manufacturer of FWA having verticalintegration from Toluene to OBA (Toluene – PNT – DASDA –FWA)
� OBA has wide applications in varied industries - Paper,Detergents, Textiles, Coating Applications in Printing &Photographic Paper
www.deepaknitrite.com
Manufacturing Facilities
9
� Bulk and commodity product manufacturing with on site Nitration &Specialty Agrochemicals
� Contributed 66% of revenues in FY14
NANDESARI, Gujarat1
� Full spectrum stilbenic Optical Brightening Agents production� Contributed 4% of revenues in FY14 (Plant fully commissioned in FY15)
DAHEJ, Gujarat2
� Hydrogenation & noble metal catalysis specialty� Contributed 12% of revenues in FY14
TALOJA, Maharashtra3
� Multispecialty site specialising in pilot plants and scaling up activitiesNitration & Specialty Agrochemicals
� Contributed 11% of revenues in FY14
ROHA, Maharashtra4
� Plant acquired from Vasant Chemicals� Manufactures DASDA (toulene derivative) for captive use in OBA business
& commercial sales� Contributed 8% of revenues in FY14
HYDERABAD, Telangana5
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
ChinaSpain
Italy
Israel
India
New Zealand
JapanKorea
Mexico Hong Kong
JordanKuwait
Saudi ArabiaOman
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 RefineryAgrochemicalsPigment
Agrochemicals
Pharma Interm.
Bulk Specialty ChemicalsBulk Specialty ChemicalsFluorescent Whitening
Agents
Fluorescent Whitening
Agents Fine Chemicals Fine Chemicals
Fuel Additives Sodium NitriteXylidines Oximes Cumidines Nitro Tolunes
Agrochemicals
www.deepaknitrite.com
Value Proposition
14
DNLDNLDNLDNL
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
45
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
New Products have fuelled robust growth in past 5 years
16
CAGR: 38%
CAGR: 9%CommencementCommencement
2010
Revenue Growth (`̀̀̀ mn) (FY10 – FY14)Revenue Growth (`̀̀̀ mn) (FY10 – FY14)New ProductsNew Products
CAGR: 106%
2010Fuel Additives
Specialty Agrochemicals
961
1,229 1,208 1,214 1,173
CAGR: 5%
2007DASDA
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
163 605
971
1,952
2,949
www.deepaknitrite.com
Diverse sales mix - Product & geography wise
17
Revenue Segmentation on End Use Industry (FY14)Revenue Segmentation on End Use Industry (FY14) Key Export Markets (FY14)Key Export Markets (FY14)
Export v/s Domestic Sales (FY14)Export v/s Domestic Sales (FY14)
58%28%
14%
Bulk SpecialtyChemicals
Fine SpecialtyChemicals
FluorescentWhitening Agents
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)Product –wise segmentation (FY14)
www.deepaknitrite.com
Professional Board of Directors…
19
DescriptionName 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. SwaminathanSivaram
• 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 as a Managing Director• 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 memberof ICMAI & has been the CEO of DNL since Sept, 2008
• Has34+ 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 HunnarShalaFoundation for Building Technology and Innovations
• Holds Ph.D. in Chemistry from Univ. of Karlsruhe, Germany &has completed a program for ExecutiveDevelopment, 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 50US patents to his credit
• Has over 40 years of experience in basic research, process/product R&D and S&T management
Independent DirectorMrs. 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 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
20
DescriptionName Designation
Mr.Sanjay Upadhyay
Dr. Pramod Garg
Vice President, Marketing
Chief Financial Officer
President , FWA
Vice President, Operations
Vice President, Technology
Vice President, HR & Admin
Vice President, Commercial
Mr. Ajay P. Patwardhan
Mr.Pramod Talegaon
Mr.Vijay Tikekar
Mr. R R Prasad
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, Business process development
• Qualification: Bachelor’s degree in Civil Engineering & MBA in Marketing from Nagpur University• Experience: 23 years of expertise in managing business globally for Chemicals & Polymers• Responsibility: Strategic Business Unit of Fluorescent Whitening Agent.
• Qualification: Ph.D in Agriculture Chemistry from Indian Agriculture & Research Institute and M.Sc in SoilScience along-with B. Sc in Chemistry
• Experience: 31 years of experience in chemical industry. In the past has worked with Rallis India, UnionCarbide, Rajendra Agricultural University, Cheminova and Sajjan India Ltd.
• Responsibility: Production Planning & Control, Process Management & Optimisation, EHS, Quality Controland 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 variousprocesses
• 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: Bachelor’s degree in Commerce from Kolkata University & Master’s degree in PersonnelManagement and Industrial Relations from XLRI
• Experience: 28 years of experience in human resource management and has previously worked withCoromandal Fertilizers, ITW Signode, ICT Agrotech, British Gas & Tvarita Consulting Firm
• Responsibility: Designing and restructuring organization, development and deployment of PerformanceManagement System and leading change management initiatives. Also responsible for HR andAdministration activities
• Qualification: Master’s degree in Chemical Science & M. Tech. in Material Science & Engineering from IITMumbai & 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
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
-09
Ap
r-10
Oct
-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
21
Rights Issue
Split to FV ` 2Bonus Issue 1:1
Ad
just
ed S
ha
re P
rice
(`
)(F
ace
Va
lue
–`
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)Dividend Payout Ratio (% of PAT) Declared Dividend (% of FV)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
201
1
FY
201
2
FY
201
3
FY
201
4
DNL Share Price Performance - AdjustedDNL 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
www.deepaknitrite.com
Financials
23
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
Networth 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 H1FY15
Revenue from Operations 10,194.0 12,696.3 6,883.7
RM Consumed 7,146.2 8,317.5 4,502.1
as a % of sales 70.1% 65.5% 65.4%
Employee benefit expenses 625.6 883.5 504.0
as a % of sales 6.1% 7.0% 7.3%
Other Expenses 1,700.5 2,355.3 1,220.0
as a % of sales 16.7% 18.6% 17.7%
EBITDA 721.8 1,140.0 657.5
Margin 7.1% 9.0% 9.6%
Finance costs 113.6 279.7 172.3
Depreciation 189.4 296.4 175.9
PAT 378.4 383.3 254.8
Margin 3.7% 3.0% 3.7%
www.deepaknitrite.com
Financial Highlights
24
24%Revenue CAGR
FY11 - FY14
25%Revenue Growth
FY14 v/s FY13
40%Growth in EBITDA
FY14 v/s FY13
FY14
11%Growth in PBTFY14 v/s FY13
1%Growth in PATFY14 v/s FY13
Revenue Growth H1FY15 v/s H1FY1420%
25%Growth in EBITDAH1FY15 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
6,7227,899
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
25
EBITDA v/s PAT (`̀̀̀ mn)EBITDA v/s PAT (`̀̀̀ mn)
Revenue (` ` ` ` mn)Revenue (` ` ` ` mn) Debt – EquityDebt – Equity
ROE v/s ROCEROE 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
www.deepaknitrite.com
Phenol Facility at Dahej - Snapshot
27
Fund Requirements
`̀̀̀ 12,000 mn
`̀̀̀ 7,200 mn
Total capital outlay for the project
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 fromprospective 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
www.deepaknitrite.com
Acetone & Phenol Value Chain in India
28
Benzene
Propylene
CumeneCumene 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
www.deepaknitrite.com
Market Opportunity
29
HOC11,600
SI Group39,600
Imports202,450
HOC24,000
SI Group24,000
Imports32,000 Dahej
Facility120,000
HOC7,105
SI Group24,255
Imports126,165
HOC40,000
SI Group40,000
Imports40,000
Dahej Facility200,000
The plant at Dahej will help substitute the imports and give
DNL a market leadership position for phenol & acetone
in India
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 Phenol Demand Supply in India
Acetone Demand Supply in IndiaAcetone Demand Supply in India
Source: CRISIL