Key highlights from Deepak Nitrite Q4FY23 concall
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• The company had to shut down their plant for more than 40 days in Nandesari due to a fire incident on 2 June 2022. The company has received an insurance claim of ₹11 crore in March 2023, ₹14 crore in April 2023 and the company hopes to receive the balance payment in Q2FY24.
• The Nandesari plant is now back to full operations and other plants are also running at high utilization.
• The company was able to fulfill all their supply obligations and maintain wallet share with all their customers in spite of the adverse economic
• The company was able to fulfill all their supply obligations and maintain wallet share with all their customers in spite of the adverse economic
environment in which the company is operating right now.
• The advanced intermediates business has achieved a revenue growth of 21% in FY23 due to the robust demand from end-use industries. The company actively pursued opportunities both in the domestic and
• The advanced intermediates business has achieved a revenue growth of 21% in FY23 due to the robust demand from end-use industries. The company actively pursued opportunities both in the domestic and
international markets in FY23. The company expects this business to perform well due to the global shift in supply chains towards Asia.
• The company’s products find end-uses in industries such as dyes and pigments, oil and gas, explosives, personal care, food, rubber and
• The company’s products find end-uses in industries such as dyes and pigments, oil and gas, explosives, personal care, food, rubber and
infrastructure. Dyes and pigments are seeing a slowdown in demand right now. The segments which are comparatively doing better are oil and gas, explosives, personal care, food, rubber and infrastructure. The segments which are relatively neutral in terms of volume are pharma and
agro. The company is protected by volume contracts with pass-through clauses.
• In Q2 and Q3 of FY23, Indian demand for textiles in terms of dyes and other intermediates was very poor. The export needs were higher as Europe had curtailed its available supply.
• In Q2 and Q3 of FY23, Indian demand for textiles in terms of dyes and other intermediates was very poor. The export needs were higher as Europe had curtailed its available supply.
When oil prices were near $120, there was an increase in business activities in oil and gas exploration. As the company makes intermediate products, they were able to shift from a low demand domestic market which was mainly textiles to a high demand export market consisting of
water treatment and oil chemicals. The company has pivoted a bit to the Indian market again as many of the segments which the company serves have started showing some improvement.
• The company expects new multi-year contracts to drive the future performance excluding
• The company expects new multi-year contracts to drive the future performance excluding
the pilot and new product introductions in their basket.
• The company has announced a capex of ₹2500 crores for FY24 and FY25 combined mainly for their Phenolics business and for other areas like photochlorination, fluorination, polycarbonate compounding and others.
• The company has announced a capex of ₹2500 crores for FY24 and FY25 combined mainly for their Phenolics business and for other areas like photochlorination, fluorination, polycarbonate compounding and others.
• Phenolics' business has been using more acetone in their downstream products instead of phenol. The company expects this use of acetone to increase further after they commission their projects on methyl isobutyl carbinol and methyl isobutyl ketone both of which are acetone
derivatives. The company expects to commission both these projects in Q1FY25. The earlier guidance was for Q4FY24. However, due to certain challenges faced by the technology supplier from their sub-contractors, the company had to revise this guidance.
• The MIBC and MIBK that would be made by the company will primarily cater to the domestic market. The company may export these products if the realizations are better. MIBK and MIBC have a market size of 40KT and 8KT respectively for the domestic market.
The company is confident of meeting 100% of the requirements for these products.
• The company does not expect any competition from phenol players in China even though China has come back in January 2023 and is selling all of their unsold inventory which had piled up.
• The company does not expect any competition from phenol players in China even though China has come back in January 2023 and is selling all of their unsold inventory which had piled up.
In terms of Phenol, Acetone and IPA the company is confident of maintaining wallet share even if China has come back into action. The customers of the company are willing to give a premium to the company’s products even if those products are available at a lower price in China.
• The company has undertaken a debottlenecking project for their Phenolics business which will be completed in Q1FY24. The company has approved the implementation of advanced process controls which will become operational in Q2FY24.
• The company plans to commission the photochlorination and fluorination project in Q3FY24 and the acid project in Q3FY24.
• The projects for hydrogenation, MPP distillation and a certain portion of the nitration will all be commissioned between Q4FY24 and Q1FY25.
• The projects for hydrogenation, MPP distillation and a certain portion of the nitration will all be commissioned between Q4FY24 and Q1FY25.
The polycarbonate compound facility will be commissioned in the next 18 months.
• The company announced a capacity expansion project in Oman for the sodium nitrite project. They expect to commission this project in 24-30 months time.
• The company announced a capacity expansion project in Oman for the sodium nitrite project. They expect to commission this project in 24-30 months time.
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