deepak nitrite limited corporate...

CORPORATE PRESENTATION

Enhancing a Sustainable Future

www.deepaknitrite.com January, 2015

Deepak Nitrite Limited

www.deepaknitrite.com

SafeHarbour

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


Contents

3

About Deepak Nitrite LimitedAbout Deepak Nitrite Limited 55

Value PropositionValue Proposition 1313

FinancialsFinancials 2323

Phenol ProjectPhenol Project 2727

AnnexuresAnnexures 3131

www.deepaknitrite.com4

About Deepak Nitrite Ltd.


Company Overview

� Established in 1970s by Mr. C.K. Mehta (Founder & Chairman), Deepak NitriteLimited (“DNL”) is a leading Indian specialty chemical manufacturer

� Product Portfolio: Bulk Chemicals | Fine & Specialty Chemicals | FluorescentWhitening 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 tofuel its next phase of expansion

6

Shareholding Pattern – December, 2014Shareholding 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)Key Financials (`̀̀̀mn)


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 fromMafatlal 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 DASDADivision 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 & and

� 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 – Accreditedwith “Responsible Care”

� 2011 - Listing on NSE


Business Segments

8

Bulk SpecialtyChemicals

� 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 andquality focus

� It is segregated into Specialty Chemicals, Xylidines, Oximes,Cumidines

� These products typically enjoy some degree of customisation anddiffer from 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 world’s first fully integrated manufacturer ofFWA 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


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 BrighteningAgents production� Contributed 4% of revenues in FY14 (Plant fully commissioned inFY15)

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


ROHA, Maharashtra4

� Plant acquired from Vasant Chemicals� Manufactures DASDA (toulene derivative) for captive use in OBAbusiness & commercial sales


HYDERABAD, Telangana5


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


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


Business Segments

12

SpecialtyDASDA / 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 Nitrite

Xylidines Oximes Cumidines Nitro Tolunes

Agrochemicals

Value Proposition


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


Product Profile having varied applications

15


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 ChemicalsKribhko/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


New Products have fuelled robust growth in past 5 years

17

CAGR: 38%

CAGR: 9%CommencementCommencement

2010

Revenue Growth (`̀̀̀mn) (FY10 – FY14)Revenue Growth (`̀̀̀mn) (FY10 – FY14)New ProductsNew Products

123 489

885

1,796

2,841 CAGR: 119%

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


Diverse sales mix - Product & geography wise

18

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

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)Product –wise segmentation (FY14)


Marquee Customer Relationships

19


Professional Board of Directors…

20

DescriptionName Designation

Mr. C.K. Mehta

Mr. Ajay C. Mehta

Independent Director

Chairman

Vice Chairman & Managing Director

Managing Director

Executive Director & CEO






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• 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 associatedwith the Company since 1984

• Bachelor's degree in Mechanical Engineering from IIT Mumbai, an MS degree from JBIMS, Mumbai & isa 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 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 likeHoechst 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 nowChairman 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, qualitymanagement, energy management etc.

• An alumnus of IIT, Kanpur, Dr. Sivaram received his Ph.D in Chemistry from Purdue University and hasover 50 US patents to his credit

• Has over 40 years of experience in basic research, process/product R&D and S&Tmanagement

Additional 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 in Edu from University of Rochester• Has been a consultant to various national & international organizations both in private & public sector


… And backed by Strong Team

21

DescriptionName Designation

Mr.Sanjay Upadhyay

Dr. Pramod Garg

Vice President, Marketing

Chief Financial Officer

President , FWA

Vice President, Operations

Vice President, Technology

Vice President, Commercial

Mr. Ajay P. Patwardhan

Mr.Pramod Talegaon

Mr.Vijay Tikekar

Mr. Krishnamurthy Shankar

• Qualification: A Master’s degree in Commerce, an Associate Member of the ICWAI, CompanySecretary& has completed Advanced Business Management fromWharton Business School

• Experience: 26 years in the field of Accounts, Finance, Treasury, Secretarial & Taxation• Responsibility: Finance and accounts and StrategicManagement

• 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 FluorescentWhitening Agent.

• Qualification: Ph.D in Agriculture Chemistry from Indian Agriculture & Research Institute and M.Scin 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, QualityControl and FactoryManagement

• 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 andplant upgradation for sustenance of process, Quality Management & Safety, Pilot and scale upactivities of various processes

• Qualification: A Bachelor’s degree in Science fromMumbai 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 & Engineeringfrom IIT Mumbai & a Post Graduate in MarketingManagement 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


0

20

40

60

80

100

120

Apr-04

Oct-04

Apr-05

Oct-05

Apr-06

Oct-06

Apr-07

Oct-07

Apr-08

Oct-08

Apr-09

Oct-09

Apr-10

Oct-10

Apr-11

Oct-11

Apr-12

Oct-12

Apr-13

Oct-13

Apr-14

Oct-14

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 ` 2Bonus Issue 1:1

Adjusted

Share Price (`)

(Face Value –`2)

24% 25%

10%

51%

16%26% 24% 27%

22%27%

0%

20%

40%

60%

80%

100%

FY2005

FY2006

FY2007

FY2008

FY2009

FY2010

FY2011

FY2012

FY2013

FY2014

Dividend 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%

FY2005

FY2006

FY2007

FY2008

FY2009

FY2010

FY2011

FY2012

FY2013

FY2014

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

Financials


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

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 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% 10.1%

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%


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 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


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

26

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

Phenol Project (Proposed)


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 projectFinancial 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 sourcedfrom prospective plant at Kochi

Technology Tie-up

Technology tie-up with KBR (USA)� KBR is the leading licensor of phenol capacityin the world

� Has over 50 years of experience in cumene-to-phenol process design & innovation

Source: www.kbr.com


Acetone & Phenol Value Chain in India

29

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 & Sulphadrugs

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


Market Opportunity

30

HOC11,600

SI Group39,600 Imports

202,450

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

Thank You

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