Deepak Nitrite profit surges 55 pct during Q3 2018-19

Ranked among Fortune Next 500 and recognized among the top 25 wealth creators by Fortune Magazine, India, Deepak Nitrite is acknowledged as one of the country's fastest-growing chemical companies. It has a diversified portfolio of intermediates that cater to the dyes and pigments, agrochemical, pharmaceutical, plastics, textiles, paper and home and personal care segments in India and abroad. Its products are manufactured across five locations, which are all accredited by Responsible Care. Deepak Nitrite Limited has announced its standalone financial results for the quarter and nine months ended December 31, 2018.

Deepak Nitrite has reported a robust financial performance during the quarter under review driven by sharp improvement in the Performance Products segment supported by steady progress in other segments. Initiatives undertaken in recent quarters to enhance product quality drive operating efficiencies and increase capacity of select products have yielded results. The Performance Products segment has delivered a turnaround performance registering positive PBT, which has propelled growth in profitability. In a notable development, the Greenfield Plant of Phenol & Acetone, which commenced commercial production in November 2018, has already ramped up capacity utilization above 80% during Q3. As a result, Deepak Phenolics has reported positive EBITDA and PBT in the very first quarter of plant commissioning.

CMD's Message:

Commenting on the performance, Mr. Deepak C. Mehta, Chairman & Managing Director, said, "We are pleased to have sustained our growth momentum in Q3 of this fiscal year with revenues increasing by 23% on a year-on-year basis. This was due to improved realisations in the domestic market on the back of healthy demand in the end-user industries. Favourable shifts in product mix and benefits of operating leverage have propelled PAT higher by 55% yoy."

"The turnaround of the Performance Products segment that reported over 50% growth in turnover is heartening. This is an outcome of careful planning and reorientation of focus towards customers and end-user industries that are exhibiting steady growth and value the high-quality and differentiation in our offerings."

"A development to note during the quarter was the commissioning of our Greenfield facility of Phenol and Acetone. I am delighted to share that we have already stabilised this mega plant and consistently achieved above 80% utilisation in a short span upon commissioning. Through rigorous efforts undertaken towards seed marketing, creation of complementary supply chain infrastructure and logistics as well as a selection of the right team, we have been able to report positive EBITDA and PBT in the first quarter of commissioning itself. I would like to congratulate the entire team at Deepak Phenolics for seamless planning and execution."

"This is just the beginning and I am confident that the several exciting opportunities in downstream intermediates will assist us in further elevating our performance in times ahead."

Financial Highlights (Standalone)

Q3 FY2019

Revenues were Rs. 457.8 crore in Q3 FY19 compared to Rs. 371.6 crore in Q3 FY18, resulting in strong growth of 23% YoY. Timely assessment of market demand has enabled the company to optimise benefit from higher realisations across key products in all segments leading to robust topline growth. EBITDA came in at Rs. 71.7 crores, higher by 36% as against to Rs. 52.7 crore reported in the same period last year. EBITDA margins improved by 150 basis points to 15.7%, as compared to 14.2% in Q3 FY18. Strong EBITDA performance was driven by product mix adjustments, which enabled the company to benefit from improved realisations in key products. Improved EBITDA supported by cost optimisation efforts undertaken.

PBT stood at Rs. 48.1 crores in Q3 FY19 increasing by 56% over Rs. 30.7 crores in the same period last year. PAT grew by 55% to Rs. 31.6 crore in Q3 FY19 as compared to Rs. 20.34 crore in Q3 FY18.

EPS for Q3 FY19 stood at Rs. 2.32 per share (of the face value of Rs. 2 each) on an enlarged capital base as compared to Rs. 1.56 per share in Q3 FY18.

Performance Highlights

Domestic & Exports

Domestic revenues stood at Rs. 293.1 crore in Q3 FY19 from Rs. 227.4 crore in the same period last year, growth of 29% YoY. Domestic revenues registered healthy growth owing to improved realisations and better customer acceptance for the company's products. Revenues from exports came in at Rs. 153.5 crore in Q3 FY19 compared to Rs. 139.7 crore in Q3 FY18, higher by 10%. A stable demand environment combined with improved realisations for key products steered the performance during the quarter.

Commissioned the Greenfield Project of Phenol & Acetone

Deepak Phenolics Ltd. (DPL), a wholly-owned subsidiary of Deepak Nitrite Ltd., commenced commercial production at its mega plant of Phenol & Acetone on 1st November 2018. This facility, aligned with the 'Make in India' initiative of Government of lndia, has the capacity to manufacture 200,000 MTPA of Phenol and 120,000 MTPA of its co-product Acetone. This is supported by the capacity to manufacture 260,000 MT of Cumene for captive consumption. DPL is well positioned to benefit from strong demand growth in the local market for these products.

Following are some of the key milestones achieved in Phenol & Acetone in Q3:

Successfully stabilised the plant and ramped up capacity utilisation above 80% during Q3 FY19 delivered positive EBITDA and PBT in the very first quarter of plant commissioning Delivered positive EBITDA and PBT in the very first quarter of plant commissioning

Succeeded in replacing the bulk of imports of phenol and acetone in the local market Succeeded in making pharma grade acetone and also making first export of acetone

Achieved production and despatch of approximately 75% of average capacity utilisation showcasing robust logistics Seed marketing efforts in the pre-commissioning phase have firmly established DPL in a leadership position.

(With inputs from agencies.)