Deepak Fertilisers: Q1 FY24 commenced with a Net Profit of Rs. 114 Cr

Deepak Fertilisers And Petrochemicals Corporation Limited (BSE: 500645; NSE: DEEPAKFERT), one of India’s leading producers of industrial chemicals and fertilisers (″DFPCL″or the ″Company″), announces its results for the quarter ended June 30, 2023.

Consolidated Financial Highlights

• Subsidy Impact of Rs. 161 Cr - Reduced NBS subsidy of Rs.161 Cr on channel inventory significantly impacted consolidated profitability in Q1 FY24
  

• Greenfield Ammonia facility began trial production on July 10, 2023, with all pre-commissioning activities completed. Stabilisation of operations and monitoring of performance parameters underway
  

• Better volumes of IPA in Q1 FY24 were supported by Implementation of SGQR
  

• Key RM prices movement YoY in Q1 FY24: Ammonia▼ ~39%; Phos Acid ▼ ~38%; RGP ▼ ~23%; MOP ▲ ~5 %, Gas ▼ ~7.1%
  

• Raised Rs. 900 Crores through its Maiden Listed NCDs; primarily used for replacement of ICDs to parent MAL (through Performance Chemiserve Limited, a step-down subsidiary)
  

• Unveiling new corporate logo for Mahadhan AgriTech Limited (‘MAL’)
  
  

Chairman’s Message

Commenting on the performance, Mr. Sailesh C. Mehta, Chairman & Managing Director:

″Despite facing various challenges in our Chemical and Fertiliser businesses during the Q1 FY24, we remained resilient and committed to growth.

• We encountered adverse price fluctuations in TAN due to dumping of cheap Russian FGAN into India, as Russian products found resistance in countries sympathetic to the Ukraine cause.
  

• NA sales volumes were better y-o-y although NA production impacted on account of extended shutdown, while IPA sales volumes exceeded expectations with more favourable market conditions and SGQR implementation.

• Reduced NBS subsidy on channel inventory of Rs.161 Cr and delayed monsoons impacted our Crop Nutrition business.

As it was envisaged in the post-Covid swing back of prices of Raw Material and Finished Product, it was expected that in a quarter or so, there is a possibility of gaps in margins as the re-calibration between RM and FG settles back into a fair and balanced equilibrium (which has been the typical long-term average).

The Q1 quarter price swings seemed a transitory quarter in this journey of finding the typical balance.

I am delighted to announce the successful commencement of trial production at our greenfield Ammonia facility in Taloja. We are passionately advancing toward its commercial production. The successful backward integration into Ammonia will provide a long-term risk mitigation on the Supply disruption risk for all the three businesses of the group. This strategic investment shall not only generate returns to our shareholders but also benefits the Indian economy by reducing import dependence and creating local employment opportunities.″

Read more at Deepak Fertilisers' Press Release on Unaudited Standalone and Consolidated Financial Results for the first quarter ended 30th June, 2023.