Deepak Nitrite


(Sumeet Shah) #21

Hardik Leafin Pvt. Ltd., one of the major promoters, brought 190000 shares through open market transaction on 16th June 2016. Earlier, they were holding 110000 shares. This acquisition takes it to 300000 shares. Here’s the link to the disclosure:

http://www.bseindia.com/stock-share-price/stockreach_insidertrade_new.aspx?scripcode=506401&expandable=2


(Raj Panda) #22

I think we are (also) mixing up between TPA, MTPA/KTPA

As per GAIL presentaiton, the new capacity addition is

As per Deepak Nitrite , the capacity addition is

I think , KTPA/KTA and MTPA basically mean the same. Correct me if am wrong.

Deepak Nitrite in it’s FY15 AR mentioned the market size as 2.7 lac MTPA

Loosely using TPA, KTPA, MTPA can change the whole equation :wink:

But thinking logically, GAIL is probably adding 108 lac MTPA of phenol capacity and the 67 lac MTPA , at cost of 2000 cr. I hope they too have missed the lac in their presentation :slight_smile:

Coming to market size data from independent sources, here is a nice presentation, check the slide 19 onward. Please note, this data is as of 2014.

http://cpmaindia.com/pdf/presentation2014/phenol_asias_rising_capacity_and_changing_trade_flow.pdf

Few interesting data points from the slides

  • India needs to import around 80% of the phenol & acetone it consumes
  • India imported about 2 lac MTPA of Phenol in 2013. Imports increased at rate of 18-19% between 2011-13
  • India imported about 1.2 lac MTPA pf acetone in 2013. Imports increased at rate of 10% between 2011-13

(ankitkhemka7) #23

Hi,
Just to clarify:
a. MTPA(as used in Deepak Nitrite presentation) is Metric Tonne Per Annum. Imagine if MTPA stood for Million Tonne per Annum, which anyone could mistake it for. Which would mean that, as per Deepak Nitrite, they would drown the country in a tsunami of Phenol !!

b. KTPA (as used by GAIL) means Kilo Tonne Per Annum. Hence, GAIL’s capacity will be 108 KTPA or 108*1,000 Tonne per annum which is 1.08 Lakh Tonne Per Annum. The 108 Lakh Tonne Per Annum figure which you mention as the capacity GAIL is setting up is a flood, if not a tsunami :slight_smile:

If you see my original post closely, I have used Lakh Tonne Per Annum everywhere to avoid any confusion for the reader.

Rgds
Ankit


(Steven P) #24

Just found this PDF on the net, hope its useful.
There seems to be global over capacity of phenol and acetone. see the link below:
http://www.icis.com/globalassets/documents/forms/2016/june-market-outlook-phenol-and-acetone-under-pressure-rob-peacock.pdf

Also a couple of countries seem to be exempt from anti-dumping duties (quoting from the doc) :
The Indian government’s latest antidumping duty decisions
on phenol imports are reinforcing the market view that India
could well be further swamped by phenol.
Although it has long been a net phenol importer, India has
previously imposed prohibitive duties on phenol of various
origins to try to stem cheaper shipments from overseas and
protect its domestic producers.
However, South Korean and Singaporean phenol is
apparently exempt from antidumping duty if sold through
certain major trading companies, which effectively means
that product from South Korea and Singapore can move
unimpeded into India.


(Abhishek Basumallick) #25
  • Net sales for June’16 quarter was lower by 7% due to lower crude based petrochemical prices. Further, generally in June quarter demand remains low and then picks up after every quarter for the rest of the year.

  • There has been a shift in the business especially in the fine and specialty chemical segment. The segment will be renamed as Performance segment. Key sectors to which the segment will be targeting its sales are Pharmaceuticals, Agrochemicals, FMCG, Personal care, dispersions etc. The company already has started selling to Pharma and personal care segment, wherein sales for FY’16 stood at Rs 35 crore. Management expects sales of around Rs 75 crore from these 2 sectors in FY’17 and from thereon, with the increase in contribution from all the sectors in the segment, management aims net sales of around Rs 350-400 crore in next 3-4 years with segmental margin of around 28-30%.

  • Bulk commodities segment will be renamed as basic chemicals segment.

  • The net sales from OBA segment was Rs 120 crore in FY’15 and it increased to Rs 170 crore in FY’16. Management expects the net sales to increase further to Rs 225 crore in FY’17 with company breaking even in this segment in Mar’17 quarter. The company is continuously adding customers in OBA, segment. The customers are mainly international customers who take time to increase the quantum of orders, depending upon the performance and acceptability of the product. The company is supplying to South East Asian countries and to US and now has a 70% market share in India, but the demand in India is limited.

  • Significant development has happened on Phenol and Acetone. The company is working closely with buyers. It is also negotiating for Benzene and Propylene from local suppliers which are available in plenty. The target market for Phenol and Acetone is India, as its basically import substitute where today 95% of total demand of the country of around 2.5 lakh tons p.a is met through imports.

  • Management expects the Phenol and Acetone project to commercialize from Mar’18 quarter onwards. The segment has margin of around 15%.

  • Overall, going forward, management expects a minimum 100 bps margin improvement every year for next 3 years on an annualized basis, with higher margin and realization products share increasing and with OBA breaking even.

  • The company will come out with a QIP again somewhere by the end of FY’17.

  • No major capex planned for FY’17 barring Rs 50 crore for normal business and Phenol and Acetone green field projects.

  • Total debt stands at around Rs 469 crore as compared to Rs 523 crore as on Mar’16.

  • As per the management, H2 FY’17 outlook is very promising.


(Abhishek Basumallick) #26

NOTES FROM AR2015-16

  • Received supplier excellence award from Bayer CropScience this year

  • While topline growth was muted due to re-pricing of products that are linked to crude oil and related petrochemical intermediates, the positive momentum in business is better represented by the growth in volumes while margins improved.

  • Overall, profitability improved during the year as a result of a favourable product-mix, combined with efficiency gains.

  • Exports contributed to 40% of revenues

  • The capacity of the proposed Phenol plant will be 200,000 MTPA and that of co-product Acetone will be 120,000 MTPA. The project aims to tap the entire domestic demand facilitating import substitution. Capex for this is Rs 1200 cr.

  • The Phenol and Acetone business will bring in new platform for growth. Phenol serves as a major building block for the infrastructure industry including housing, roads, construction as well as for wind mills, automobiles, etc. Initially, these chemicals would be filling imports gap as bulk commodities, in the long run they will support specialities for markets such as perfumeries, plastic additions and decorative laminates. A major contribution from phenol segment would be in offering a range of solvents for the pharma industry, thus strengthening its relationship with pharma industries in India.

  • Eminent Board Members - Nimesh Kampani and Sudhin Choksey (MD, Gruh Finance)

  • The BCC (Bulk Chemicals and Commodities) segment contributed 51% to total revenues during the year, with EBIT margin of 11.8%, higher by 199 bps.

  • The Fine and Speciality Chemicals (FSC) segment contributed 29% to the total revenues

  • Fluorescent Whitening Agent (FWA) segment contributed 20% to the total revenues.


(amit anam) #27

AR link : http://www.bseindia.com/bseplus/AnnualReport/506401/5064010316.pdf


(GreyCells) #28

Copied
DEEPAK NITRITE TO ET NOW

Expect to triple turnover in next 3-4 years
Promoters have high stake in co; keeping all options open for QIP participation
Exports and domestic contribute 50% each to revenue
Expect to achieve 70% of revenue from domestic ops by 2019
Phenol & Acetone will contribute maximum to revenues post plant completion
2019 will see spurt in topline growth by almost `2,000 cr given plant completion
Fine and specialty biz contributes 30% of turnover currently
Company remains largest player in specialty chemicals industry
Peak debt will never cross 1.7-1.8 debt to equity levels
Another QIP planned in coming year; wont need any further capital


(amit anam) #29

Detailed Report : http://www.moneycontrol.com/mccode/news/article/article_pdf.php?autono=7427681&num=0


(Sumeet Shah) #30

Results:
http://corporates.bseindia.com/xml-data/corpfiling/AttachLive/03B35D30_29C1_401D_88A8_25C7505FC889_155236.pdf

Investor Communication: (Definitely worth a read)
http://corporates.bseindia.com/xml-data/corpfiling/AttachLive/B045FEF4_F482_4D39_887A_06734440433C_171448.pdf

Top line slightly down (weakness in crude prices was one of the reason)
Bottom line improved
Expenses reduced
Phenol plant progress smooth
This quarter shows slightly reduced EPS compared to Sep 2015 quarter due to higher equity base (QIP was done in January 2016)

All in all, steady and consistent performance. I would not worry about slightly reduced top line as it will improve further due to good pick up in specialty and fine chemicals. Long term story remains intact and this is surely a good long term bet.
PS: The investor communication is worth reading and will give you an insight into proper interpretation of present results as well as future plans.

Disclosure: DNL forms 10% of my portfolio.


(Abhishek Basumallick) #31

Expects to grow more than 15% CAGR for next 5 years in specialty chemicals business

Key highlights

The company reported 10% lower sales largely due to 14% lower sales in bulk chemicals. The fuel additives sales did not turn out to be as expected as there were delay in offtakes and slowdown in India due to volatile crude oil prices.
Specialty chemicals business continues to remain strong, but did not grow as per the expectation. The pharma, personal and healthcare orders received by the company will slowly come under execution and will result
in faster growth going forward.

Management expects that the specialty chemical industry as a whole to grow around 15% CAGR for next 5 years, and company to grow even faster than that in this segment of business. Management expects the turnover to double in next 3 years in this segment, with higher margins.

The company reported Ebidta margin of around 27% in specialty chemical segment and as per the management the margins can improve further, once the contribution towards segments like pharma, healthcare increase. The margins can be around 28-30% in this segment. The company has already received some contracts for exports of fuel
additives which earlier it used to avoid, as domestic market was sufficient enough for growth. Some orders from USA and Canada has been received which will be executed from Jan’17 onwards. Further, the company has started manufacturing some other products as well in one of the manufacturing line of fuel additives.

As far as fire at Roha is concerned, management has clarified that the fire is in one unit at Roha and there has been some disturbance in the production of 1 line and for 1 product. Normalcy has been achieved since then and no major impact is seen for the company as a whole. The company did receive benefits of lower interest rates, forex gains
and repayment of loans which resulted in lower interest cost for the company in Sep’16 quarter.

OBA business has seen some challenges and is taking more time for approval time from customers than anticipated due to some slowdown effect. Once the volumes return to the business, margins will improve and the company will break even in this segment in Q1 FY’18.

Significant development has happened on Phenol and Acetone. The company is working closely with buyers. It is also negotiating for Benzene and Propylene from local suppliers which are available in plenty. The target market for Phenol and Acetone is India, as its basically import substitute where today 95% of total demand of the country of around 2.5 lakh tons p.a is met through imports. Management expects the Phenol and Acetone project to commercialize from Mar’18 quarter onwards. The segment has margin of around 15%.

No major capex planned for FY’17 barring Rs 50 crore for normal business and Phenol and Acetone green field projects.

As per the management, H2 FY’17 outlook is very promising.


(Arun Kumar) #32

Any comments on the competitive intensity of Phenol and Acetone? I read somewhere that GAIL is also coming with a similar capacity. And how does the pricing of Phenol and acetone happen? is it a commodity and dependent upon OIL. Going forward, it seems the Company has taken a huge bet on this.


(JKS) #33

your question on Phenol to some extent is answered in this report, slide 21. It is a bit dated but still very relevant


PS - invested…views may be biased


(Era) #35

The Share price is expected to fall as the Qip is been done at RS 102.Could not understand why the Qip was done at such discount


(sathish kumar jalantran) #36

While announcing qip the price was around 102. After announcement it went up 22%.so I don’t think there is correction due to lower priced qip compared to CMP


(sathish kumar jalantran) #37

Hi,
Is there any advantage to deepak nitrate due to
opening of OPEL at dahej plant?

Regards
Sathish


(Era) #38

Normally people who invest in QIP tend to take advantage of the price differential, an that is the reason for the price correction as well. So with additional shares been issued, there is increasing liquidity in the market and I see it drifting to around 95-100 level


(sathish kumar jalantran) #39

I am not expert but as per my view the share purchased under QIP mostly by long term institutional investor , and they will not sell for small profit


(sathish kumar jalantran) #40

Hi,
Result for q4 out. Top line subdued due to 3 units at roha plant started operation at phased manner and still 1 unit shut down. One positive out of this quarter is OBA segment loss narrowed to 77 lakhs.overall result looks OK, but need to see top line growth Q1 after other unit also operational fully.


(bbbhutra) #41