Deepak Nitrite Limited, one of India’s leading chemical intermediates company, revenues were higher by 46% at Rs. 991 crore in Q2 FY21 compared to Rs. 681 crore in Q1 FY21 during which production was affected by about one month. 

 

Despite higher imports, Deepak Phenolics delivered sustainable production in excess of 100% of capacity and identified key export markets in lieu of domestic demand.  

 

Standalone revenues improved by 26% to Rs. 448 crore in Q2 FY21 as compared to Rs. 355 crore in Q1 FY21, during which we operated for only 2 months, as volume demand inched back toward normal from key end segments. The company also increased focus on the export market. All the strategic business units (SBUs) rebounded strongly to report double-digit growth. 

 

Standalone PAT for Q2 was Rs. 92 crore as against Rs. 179 crore in Q2 FY20, lower by 48%. On a Consolidated basis, PAT was Rs. 170 crore in Q2 FY21 compared to Rs. 150 crore in Q2 FY20, higher by 13.3%. Strong performance in DPL coupled with contribution from the entire basket of existing products has driven the sharp growth in profitability. 

 

Standalone EPS for Q2 FY21 was Rs. 6.75 per share (of face value of Rs. 2 each) as compared to Rs. 13.10 per share in Q2 FY20. Consolidated EPS for Q2 FY21 was Rs. 12.48 per share (of face value of Rs. 2 each) as compared to Rs. 11.03 per share in Q2 FY20.

 

Commenting on the performance, Deepak C Mehta, Chairman & Managing Director said, “DNL’s performance and attractiveness is highly influenced by its breadth and depth of products and process competency. This resilience has been instrumental in delivering dependable returns regardless of the myriad challenges that were faced through the quarter. While in the near term, investments that increase our competitiveness will start bearing fruit, the company continues to broaden its range of products as well as invest into value addition. In the long term, increased investments towards R&D, operational excellence, adding new products, are contributing to achieving ‘Atmanirbhar’ for the NationI remain cautiously optimistic that DNL will continue to deliver sustainable value to all its internal and external stakeholders.”

 

In Basic Chemicals margins were sustained, topline suffered by 25% because of slow pick up by end use segments such as textile, oil and fuel additives and also due to temporary supply disruption. The company expects volumes and prices to pick up in upcoming months, with some traction already underway in September, as demand from the dyes industry returns to pre-COVID levels. 

 

The Fine & Specialty Chemicals (FSC) segment delivered a stellar performance with revenue growth of 52% y-o-y. The business remains a star performer although capacity utilization was affected partially by COVID- 19 related government mandates and short term challenges from shipping lines. The Business is supported by a strong order book, thereby improving Q3 performance even better.

 

Performance Products have delivered an exceptional performance last year, the company expected a normalized performance this year particularly in terms of margins. The current pandemic, however, has significantly impacted consumption thereby affecting volumes and margins. The company has seen signs of recoveries in volume and expects to achieve a normalized performance as demand picks up worldwide. 

 

Deepak Phenolics witnessed revenues increase by 26% y-o-y with EBITDA growth of 229%. New products such as IPA contributed to an increase in the EBITDA Margin which at 25.6% in Q2 FY21 was sharply higher from 9.6% in Q2 FY20. 

 

With manifold increase in exports, the company was able to maintain high capacity utilization. The business would continue to put effort in this direction. Despite consistent challenges in interstate logistics for raw materials and finished goods, the team demonstrated admirable agility in ensuring material movement. These challenges are not expected to show up in coming quarters.

 

Domestic revenues stood at Rs. 672 crore in Q2 FY21 as against Rs. 767 crore in the corresponding period last year. This was due to constraints to peak capacity utilisation during the quarter. Export Revenues were Rs. 319 crore in Q2 FY21 compared to Rs. 245 crore in Q2 FY20, higher 30% Y-o-Y. The focus was on regions that were on the path to recovery from the effects of the virus while deploying a strategy to take advantage of a depreciated currency to increase export bias.

 

The company has incorporated a wholly owned subsidiary company named Deepak Clean Tech Limited (DCTL) with effect from 9th October, 2020 and will carry out business of manufacturing of chemical intermediate products.