Maulik Mehta, CEO & Executive Director, Deepak Nitrite Limited shares his perspectives on the growth strategy of the company as well as current market dynamics...

Q: Emerging trends in the global chemical industry and its impact on the Indian chemical industry in the wake of the ongoing geopolitical situation and US-China trade war?

A: The global chemical industry in 2025 is navigating a transformative phase, driven by innovation, sustainability, and geopolitical shifts. Key trends include the adoption of digital technologies like AI and predictive analytics to enhance efficiency and sustainability. The industry is also focusing on decarbonization and circular economy initiatives to meet environmental goals. However, challenges such as supply chain disruptions, high energy costs, and regionalization due to geopolitical tensions persist.

The ongoing US-China trade war has significantly impacted the global chemical landscape. With US tariffs on Chinese imports have disrupted supply chains, the trade war has led to increased costs and market fragmentation, affecting global efficiency. For India, these global dynamics present both challenges and opportunities.

The Indian chemical industry, a key pillar of the economy, is benefiting from robust domestic demand and government initiatives like the Production-Linked Incentive (PLI) scheme. India's specialty chemicals sector is poised for growth, driven by demand in agriculture, pharmaceuticals, electronics semiconductor and advanced polymers. The long-term outlook for the Indian chemical industry remains positive, with opportunities to strengthen its position in the global value chain.

Q: Key milestones achieved by the Deepak Group during FY24-25?

A: The year 2024-25 has been very challenging for the Indian chemical industry including Deepak group with pressures on demand due to oversupply and Chinese dumping, pricing pressures due to recessionary trends in the European and US markets. However, due to our resilient business and focused strategies, we were able to achieve significant milestones during this period.

Deepak Group, through its subsidiary, Deepak Chem Tech has set up a production facility at Dahej to manufacture polycarbonate resins with an initial capacity of 1, 65,000 MT per annum for which we have entered into an agreement with Trinseo. We recently began production of engineering polymers at our state-of-the-art polycarbonate compounding plant at Manjusar, Savli in our subsidiary Deepak Advanced Materials.

Q: With a diversified portfolio catering to multiple industries, which segments have shown maximum growth and how has the company adapted its operations to meet varying demands?

A: We cater to multiple industries and products having varied end applications ranging from agro intermediates to dyes and pigments, plywood industry, epoxy resins, textiles, petrochemicals among many others. At Deepak, our philosophy has always been to drive import substitution and help reduce the nation’s import bill — phenol being one of the most recent products introduced under this strategic approach. We are further targeting other products such as polycarbonate resins for which currently the country is completely dependent on imports. By adding new chemistries such as fluorination chemistry, Deepak group has created a strategic backward integration for our agro chemicals.

Q: In the light of the financial performance during Q3 FY25, are there new strategic initiatives or adjustments to existing plans to enhance profitability and operational efficiency? How do you see your performance in FY 2024-25?

A: Performance during FY 24-25 was marked by a unique confluence of events. Normally, the business cycles of advanced intermediate and phenolics are such that on an overall basis they complement each other. Persistently, stubborn raw material costs have also impacted product margins. We have taken several measures to ensure that profitability and productivity are meaningfully improved.

The company has entered into medium term agreements which align well with its expanded capacity. We have also completed our expansions and cost improvement initiatives for agrochemicals and dye intermediates. This will yield higher volume at a lower cost for segments where demand is resilient.

We introduced new products from existing assets which will have revenue and margin improvement, Methyl Isobutyl Ketone (MIBK), Methyl Isobutyl Carbinol (MIBC), acetophenone and other backward and forward integrations are expected to be commissioned shortly. This will expand our footprint in the energy sector as well as establish our foray into advanced solvents for life science applications.

Q: The company has signed MoUs with the Govt. of Gujarat and a binding term sheet with Petronet LNG. How do these agreements fit into Deepak Group's long-term strategic vision and what benefits are anticipated?

A: Deepak group has been an early adopter of Make in India, Make for the World. We aim to make India self-reliant in responsible chemistry. We as a strategy believe to produce products which substitute imports and thereby reducing India’s import bill and making India self-sustained. Towards this, we have signed two MoU’s with Govt. of Gujarat to cumulatively invest Rs 14,000 crore to set up state-of-the-art units in PCPIR region at Dahej to manufacture specialty chemicals for agrochemicals and pharma sector, phenol and acetone which cater to laminates and plywood industry and bisphenol which cater to epoxy and adhesives sector.

Further down the chain, we plan to manufacture polycarbonate (PC) resins, PC compounds and other advanced materials which have applications in electrical and electronic components, high end telecommunication devices, automotives, aviation, mobility industry, renewable energy medical and consumer devices, construction, lighting and furniture industries, to name a few.

Q: What is the latest development on acquisition of Trinseo’s polycarbonate technology license and stade equipment assets? How is this acquisition going to contribute to Deepak's growth?

A: Our long-term plan for the polymer business is rapidly taking shape. Having entered into long term agreements for pipeline supply of critical feedstock and contracted to acquire German assets for the final product viz polycarbonate resins, we are actively working to complete the entire value chain. We are acquiring their globally accepted brand. India continues to import almost 300 KTA of polycarbonate resin. Deepak will be producing about 160 KTA in the first phase. The project is targeted to be commissioned by December 2027.

Q: In March 2024, Deepak Chem Tech Ltd. (DCTL) commissioned a fluorination plant in Dahej, Gujarat. Could you elaborate on the strategic importance of this plant and how it enhances the company's backward integration for agrochemical intermediates?

A: Last year in March, we commenced our state-of-the-art fluorination plant, and it was a landmark moment for Deepak as the group forayed in the expertise of fluorination chemistry which is core to our future growth plans. Fluorination chemistry plays a significant role in various fields, including materials science, pharmaceuticals, agrochemicals, and electronics, offering a diverse range of properties and applications. This development strengthens Deepak's backward integration for crucial agrochemicals, enhancing the company’s value chain resilience as well as participation in various contract manufacturing opportunities.

Q: Deepak Group has been focusing on strategic investments and building a resilient business model through strong integration. Key initiatives that were undertaken in FY24-25 that align with this strategy?

A: The current developments strengthen the company’s backward integration for crucial agrochemicals and establish Deepak Group as a R&D hub for responsible chemistry in India. It is because of the company's integrated model and India's stability and consumption push that has provided a significant bulwark to our growth fundamentals.

Our considerable investment plans include upstream, downstream and sunrise segments. We are implementing world-scale capabilities which shall be used as a specialty chemical in flavors and fragrance segments, manufactured from recovered byproducts of phenol.

We are undertaking projects to manufacture PC and compounds which are downstream derivatives of the phenol chain. With the commissioning of photo halogenation and fluorination capacities, we are securing our key raw material supply and gearing up for new product capabilities.

Q: What is the overall expansion plan of the Group? How much investment is earmarked for these expansions? How are you going to arrange the investment? Could you provide details on these projects and their expected impact on the company's growth?

A: We have signed 2 MoUs with the Govt. of Gujarat, which encompass an investment to the tune of about Rs 14,000 crore towards the fulfilment of our objective of enhancing our capabilities and seizing the opportunities in both domestic and international markets particularly in building blocks, intermediates and specialty chemicals.

Various projects entailing an outlay of around Rs 2,000 crore are in the final stages of implementation, and these are being commissioned which include projects to manufacture MIBK and MIBC, which are products in the phenol chain, Nitric Acid plant, enhanced nitration and hydrogenation facilities and agrochemicals. We have also signed an agreement with Trinseo to procure the assets, license the technology for manufacture of Polycarbonate which is currently imported in India.

These projects shall be funded by a mix of debt and internal accruals. Since we have a very strong balance sheet and cash generation of around Rs 1,000 crore, we are holding a very healthy financial position for funding the investments.

Q: What is the current status of the development of the R&D Centre at Savli, Vadodara. By when is it expected to be ready and what will be the focus of this facility in terms of developing new products or technologies?

A: With its ability to develop advanced intermediates, our R&D facility is crucial to our success. Our state-of-the-art R&D facility at Savli, Vadodara shall be commissioned soon. Central to the mission of the Savli R&D Centre is the emphasis on sustainability. The facility will prioritise the development of processes and products that minimise environmental impact, aligning with global trends toward greener and more sustainable industrial practices. 

We have a strong line of products offered to various segments of industries for varied applications. These products shall be announced at appropriate time in due course.

Q: Beyond the current projects, what are Deepak Group's plans for capital expenditures in the upcoming fiscal years, and which areas are prioritized for investment?

A: Currently, the company is focussing on the commissioning and completion of the various ongoing projects such as the MIBK and MIBC project and Nitric Acid projects. We are targeting to commission these projects in the upcoming year as well as rapidly progress on the Poly Carbonate project which shall be a key growth driver for Deepak group with our strategy of import substitution.

Q: Deepak Group has a dedicated policy for Employee Health, Safety, Environmental Protection, and Quality. What specific initiatives were undertaken in FY 2024-25 to enhance sustainability, and what outcomes have been observed?

A: In November 2024, Deepak Nitrite released its inaugural Sustainability Report, reaffirming our unwavering commitment to embedding ESG principles in every project. Sustainability is integrated into our core operations—each initiative is designed with energy-efficient technologies to minimize carbon footprint, repurpose waste into value-added products, and align with the 3R principles: Reduce, Reuse, and Recycle.

Over the years, we have implemented wide-ranging measures to cut carbon emissions, recycle water and waste, improve energy efficiency, and prioritize people-centric practices. Notable efforts include scaling biomass use in our boilers from 30 MT to 100 MT per day by utilizing ETP sludge, thereby reducing dependence on conventional fuels. We have also invested in energy-efficient infrastructure, such as a biomass conveying system and Advanced Process Control (APC) systems in our cumene and phenol plants, leading to significant utility and chemical savings.

In FY 2024 alone, we invested over Rs 22 crore in environmental conservation projects. Milestones include the commissioning of a Spent Sulphuric Acid Concentration (SAC) unit at Nandesari, and the deployment of advanced wastewater treatment technologies—Activated Sludge Process (ASP) and Membrane Bio Reactor (MBR)—achieving 80–90 per cent treatment efficiency. We've also implemented Ultra Filtration (UF), Reverse Osmosis (RO), Mechanical Vapour Recompression (MVR), and Multi-Effect Evaporator (MEE) systems to maximize water reuse.

Q: How is Deepak Group leveraging digital technologies to enhance manufacturing processes across its facilities, such as those in Dahej and Vadodara, to improve efficiency and product quality?

A: We have formed a Digital Innovation Lab with an IT team and innovative business team members. This team shall be identifying use cases and experiment the same on our Private LLM. Presently, we are in the Multi Cloud Environment wherein we have created a Data Lake created by collecting data from SAP, CRM, LIMS, and likes on google cloud using VERTEX AI. This data lake can be used in predictive analytics – based on past data, the model will get trained with the trend and give predictions based on regression on Demand, price; Scenario simulation - Financial Planning & Demand Forecasting, Automation in Projects AI is driving our plant.

We have set up Smart Manufacturing using Advanced Process Controls (APC) at our phenol facility. Real-time monitoring of critical variables allows APC to optimise performance and make timely decisions. Due to this, we were able to increase our production by 2 to 3.5 per cent, decrease our CO2 emission, and reduce process deviations by 2 to 7 per cent.

Q: The company has been recognized for its ESG efforts, receiving awards for Health & Safety Excellence, Waste Reduction, and Green Innovation. Can you share more about these achievements and the initiatives that led to them?

A: At Deepak, we believe that ethics, aesthetics, and economics can harmoniously coexist, guiding our journey toward responsible industrial leadership. In 2024, we published our inaugural Sustainability Report, marking a key milestone in our commitment to sustainable growth. By integrating future-focused, sustainable practices, Deepak Group is well-positioned to lead the chemical industry’s shift toward greener operations. In FY 2023–24, we reduced our annual emissions by 12.49 per cent and significantly expanded the use of renewable energy to reduce reliance on fossil fuels.

Recently, we have registered a S&P Global ESG Score of 56/100 which is an impressive 20 per cent growth from the previous year. We have received a rating of “B” in the CDP (Carbon Disclosure Project) on two key categories – Climate Change and Water Security. This is a milestone in our sustainability journey. Our Hyderabad unit won Gold award at the 16^th EXCEED Green Future Environment Awards 2024 for Water management. We also earned seven Gold Awards for safety case studies at the National Safety convention.