Conference Call      
          Deepak Nitrite
Expects input costs to soften


Deepak Nitrite conducted conference call to discuss the financial performance for the quarter ended June 2011. Mr. Umesh Asaikar CEO of the company, Mr. Sanjay Upadhyay– Vice President (Finance) and Mr. Sanjay Deshpande- DGM (Finance) addressed the call.

Highlights of the Concall
Revenues for Q1FY12 of Rs. 164.62 crore were higher by 7% when compared to revenues of Rs. 154.09 crore in Q1FY11. This was driven by an increase in volumes and realisation. EBITDA for Q1FY12 of Rs. 13.33 crore is higher by 0.37% when compared to EBITDA of Rs. 13.28 crore in Q1FY11. PAT for Q1FY12 of Rs. 6.09 crore is higher by 4% when compared to Rs. 5.88 crore in Q1FY11.
Revenue growth has been driven by a mix of volume growth and price increases. For the quarter, volumes are higher by 2%.
The Company has achieved revenue of Rs. 24 crore in the fuel additives business. Revenues are higher by around 47% than Q1FY11.
Exports accounted for 40% of the total revenue.
The Company had announced a green-field expansion at Dahej in Gujarat and a brown field expansion in its production capacity for Inorganic Intermediates at Nandesari. Both the projects are going as per schedule and are likely to be completed before September 2012. Financial closure for the projects is expected by this month end.
Dahej expansion is for fine and speciality chemicals which will result in forward integration of one of its existing products – DASDA with capex of around Rs 150 crore and expected revenues of Rs 350-400 crore.
Nandesari expansion is for sodium nitrate with capex of around Rs 50 crore and expected revenues of Rs 120 crore.
The company expects an EBITDA margin of around 15% for both the expansion plans and ROCE of around 20%.
The company plans to fund the expansion plan with debt. Current Debt equity ratio is 0.24.
New plants are expected to have capacity utilization of 55-60% in first year of operation while it would take around 2 years to reach peak level.
Input costs have displayed an increasing trend. The company uses a mix of crude based, natural gas based and caustic / chlorine based raw materials. Caustic Price and Crude-based raw materials have led the pressure on input costs.
Caustic soda prices have risen mainly due to shut down of plants due to Japan earthquake with sudden shortage in supplies. Demand supply situation is expected to even out eventually as effect of earthquakes settles down and plants restart production. Margins are expected to improve marginally with fall in input costs.
The company expects growth in its existing business to mirror the trends exhibited by the end-user industries it services, for e.g. the paper and pulp industry in India and China is expected to grow at CAGR in excess of 20% for the next 5 years. Also the company sees sustained demand from agro-chemical sectors as the record low in food grain stocks will ensure that the long term outlook for agro intermediate products is very good. However, there will be cyclicality in the business.
DNL expects 10-15% of revenues to be contributed by new products in each of the ensuing financial years

Oops sorry for the blunder Saurabh.