Deepak Nitrite investing Rs. 300 Cr on agrochem and pharma intermediates

Deepak Nitrite Limited (DNL) is investing around Rs. 300 crore into products that utilise its core platforms for new agrochemical and pharmaceutical intermediates. 

Introduction of new platforms including fluorination and photochlorination are also being undertaken. The new investment is expected to be completed by the second half of next year. 

The company has continued to develop its core technology platforms that include nitration, reduction, and diazotization. 

In another development, Deepak Nitrite Limited Q4 FY21 revenues reached Rs. 1,469 crore, up by 39% Y-o-Y whereas PAT (Profit After Tax) at Rs. 290 crore, rose 68% on a Y-o-Y basis. 

The Board has recommended a dividend of 275% including a special dividend of 50% to commemorate the Golden Jubilee in addition to the regular dividend of 225%. 

The Basic Chemicals segment has performed well driven by higher contribution from key products. The Fine & Specialty Chemicals (FSC) segment has also been a growth engine for the quarter as favourable absorption by end user industries has driven volumes and realisations higher. In the Performance Product segment, DASDA prices are now exceptionally lower after prevailing at abnormally high levels in the same quarter last year. 

This impact was more than offset by the Phenolics business which has capitalized on the improved demand landscape by elevating plant efficiency to generate higher volumes thereby benefiting from prevailing firm realisations. 

PAT was Rs. 290 crore in Q4 FY21 higher by 68% as compared to Rs. 172 crore in the same period of last year aided by revenue growth and improved operational and financial efficiency. 

Revenues for FY21 were at Rs. 4,382 crore as compared to Rs. 4,265 crore in FY20, up 3%. The accretive performance of the Phenolics business and that of the FSC segment has driven the performance. The Basic Chemicals segment, which witnessed lower demand for products catering to diesel refining has been able to register good traction in nitration based products. 

Apart from overcoming impact in the Performance Products segment performance this year due to the high base of DASDA prices in FY20, the current year’s performance is even more resilient given the fact that there was one month of production loss due to lockdown. 

PAT was Rs. 776 crore in FY21 as compared to Rs. 611 crore in FY20, higher by 27% aided by higher revenue, more efficient operations and lower interest cost. 

Commenting on the performance, Deepak C. Mehta, Chairman & Managing Director said, “In April, 2020, we decided that the company would prioritize both lives and livelihoods. That financial targets were exceeded was an unexpected outcome. The company ensured that all its locations operated with the highest attention to man and material safety. We have also taken up the responsibility of vaccinating all our employees and spouses and will continue to look for opportunities to provide succour to the 2,000 families that depend on us. The company, in partnership with Deepak Foundation has put up a 40 bed COVID hospital with ICU and oxygen beds, purchased oxygen PSA plants to be deployed at nearby facilities and has taken other appropriate measures. DNL also expanded medical and life insurance coverage for all employees." 

"The company paid very close attention to internal processes of people management, supply chain and operations and worked to maximize productivity wherever possible. The company gained value from these focused efforts in terms of crossing 115% capacity on the phenol plant, while at the same time optimizing product mix particularly in the Fine and Speciality SBU. As always, the wide range of Deepak’s products helped it to overcome some businesses whose demand was affected by COVID/oil crisis such as fuel additives and paper chemicals. R&D investments have continued and we are in the process of building a world class," added Mehta. 

The Basic Chemicals segment reported revenues of Rs. 245 crore in Q4 FY21 compared to Rs. 226 crore in Q4 FY20, higher by 9%. The Fine & Specialty Chemicals segment revenues grew by 30% to Rs. 206 crore in Q4 FY21 compared to Rs. 158 crore in Q4 FY20 supported by volume increment of 15%. The Performance Products segment revenues came in lower at Rs. 87 crore in Q4 FY21. Overall volumes in the PP segment improved by 12% in-line with the opening of the economy. 

Deepak Phenolics revenues grew by 77% to Rs. 938 crore in Q4 FY21 compared to Rs. 531 crore in Q4 FY20. Revenue realization for both Phenol and Acetone has increased significantly from last year as a result of healthy demand.