MIRA
INFORM REPORT
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Report Date : |
27.02.2008 |
IDENTIFICATION
DETAILS
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Name : |
DEEPAK NITRITE LIMITED |
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Registered Office : |
9/10, Kunj Society,
Alkapuri, Vadodara - 390 007, Gujarat |
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Country : |
India |
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Financials (as on) : |
31.03.2007 |
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Date of Incorporation : |
06.06.1970 |
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Com. Reg. No.: |
1735 |
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CIN No.: [Company
Identification No.] |
L24110GJ1970PLC001735 |
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TAN No.: [Tax
Deduction & Collection Account No.] |
PNED03452B |
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PAN No.: [Permanent
Account No.] |
AAACD7468A |
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Legal Form : |
A public limited liability company. The company’s shares are listed on
the Stock Exchange. |
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Line of Business : |
Manufacturer of chemicals. |
RATING &
COMMENTS
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MIRA’s Rating : |
Aa |
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RATING |
STATUS |
PROPOSED CREDIT LINE |
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71-85 |
Aa |
Possesses adequate working capital. No caution needed for credit
transaction. It has above average (strong) capability for payment of interest
and principal sums |
Large |
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Maximum Credit Limit : |
USD 6600000 |
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Status : |
Good |
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Payment Behaviour : |
Regular |
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Litigation : |
Clear |
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Comments : |
Subject is a well established and reputed company having fine track.
Trade relations are fair. Business is active. Payments are reported as
usually correct and as per commitments. The company can be considered good for normal business dealings at
usual trade terms and conditions. |
LOCATIONS
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Registered Office : |
9/10, Kunj Society, Alkapuri, Vadodara - 390 007, India |
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Tel. No.: |
91-265-2325113, 2334481-82 |
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Fax No.: |
91-265-2330994 |
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E-Mail : |
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Website : |
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Corporate Office : |
Deepak Complex, National Games Road, Yerawada, Pune - 411 006, India |
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Tel. No.: |
91-20-66090200 |
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Fax No.: |
91-20-26685448 |
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Factory 1 : |
4-12, GIDC Chemical Complex, Nandesari-391340, Dist.
Vadodara |
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Factory 2 : |
Taloja Chemical Division, Plot Nos. K/9-10, MIDC
Taloia, District Raigad-410208 |
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Factory 3 : |
APL Division, Plot
Nos.1,2,26&27, MIDC Dhatav, Roha, District Raigad-402116 |
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Factory 4 : |
Hyderabad Speciamies Division, Plot Nos. 90-F/7O A
& B, Phase II, Industrial Development Area, Jteedimetia, Tal. Qutbulapur
Madal, District Ranga Reddy, Hyderabad-500 055 |
DIRECTORS
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Name : |
Mr. Chimanlal Mehta |
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Designation : |
Chairman |
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Name : |
Mr. Deepak C Mehta |
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Designation : |
Managing Director |
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Name : |
Mr. Ajay C Mehta |
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Designation : |
Managing Director |
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Name : |
Mr. Shrenik Kasturbhai Lalbhai |
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Designation : |
Director |
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Name : |
Mr. S. S. Aggarwal |
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Designation : |
Director |
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Name : |
Mr. M. R. B. Punja |
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Designation : |
Director |
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Name : |
Mr. A. K. Dasgupta |
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Designation : |
Director |
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Name : |
Mr. Hasmukh Shah |
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Designation : |
Director |
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Name : |
Mr. Nimesh Kampani |
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Designation : |
Director |
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Name : |
Mr. Sudhin Choksey |
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Designation : |
Director |
KEY EXECUTIVES
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Name : |
Sanjay Upadhyay |
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Designation : |
Vice President (Finance) and Company Secretary |
MAJOR SHAREHOLDERS
/ SHAREHOLDING PATTERN
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Names of Shareholders |
No. of Shares |
Percentage of
Holding |
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Promoters |
4502049 |
50.23 |
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Mutual Funds |
1800 |
0.02 |
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Financial Institutions, Banks |
364719 |
4.07 |
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Bodies corporate |
676713 |
7.55 |
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Non Resident Individuals |
32217 |
0.36 |
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Resident Individuals and Trust |
3385735 |
37.77 |
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Total |
8963233 |
100.00 |
BUSINESS DETAILS
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Line of Business : |
Manufacturer of chemicals. |
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Products : |
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PRODUCTION STATUS
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Particulars |
Unit |
Installed
Capacity |
Actual
Production |
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Inorganic Salts |
MT |
36430 |
30730 |
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Dinitrosopentamethylene Tetramine |
MT |
1800 |
685 |
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Dye Intermediates |
MT |
660 |
437 |
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Nitro Aromatics |
MT |
35200 |
23664 |
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- By Product |
MT |
-- |
23545 |
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Aromatics Amines |
MT |
12600 |
10472 |
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DASDA |
MT |
6600 |
4253 |
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- By Product |
MT |
-- |
5106 |
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Agro Chemical Intermediates |
MT |
8700 |
11195 |
GENERAL
INFORMATION
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Suppliers : |
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No. of Employees : |
700 |
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Bankers : |
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Facilities : |
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Banking
Relations : |
Satisfactory |
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Auditors : |
B.K. Khare and Company Chartered Accountants |
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Address : |
Mumbai, Maharashtra, India |
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Solicitors : |
M and M Legal Ventures Solicitors |
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Address : |
Mumbai |
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Collaborators : |
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Associates/Subsidiaries : |
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CAPITAL STRUCTURE
Authorised Capital :
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No. of Shares |
Type |
Value |
Amount |
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3,00,00,000 |
Equity Shares |
Rs. 10/- each |
Rs. 300.000
millions |
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20,00,000 |
Preference Shares |
Rs. 100/- each |
Rs. 200.000
millions |
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Total |
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Rs. 500.000
Millions |
Issued, Subscribed & Paid-up Capital :
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No. of Shares |
Type |
Value |
Amount |
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89,63,233 |
Equity Shares |
Rs. 10/- each |
Rs. 89.632
Millions |
Of the above Equity Shares:
a. 19,80,000
(19,80,000) Equity Shares of Rs.10/- each were allotted as Bonus Shares by
capitalisation of General Reserve.
b. 29,16,000
(29,16,000) Equity Shares of Rs. 10/- each fully paid up were allotted at a
premium of Rs. 40/- per share on conversion of Debentures.
c. 2,32,062
(2,32,062) Equity Shares of Rs. 10/- each fully paid up were allotted pursuant
to Schemes of Amalgamation without payment being received in cash.
d. 29,81,171 (Nil)
Equity Shares of Rs. 10/-each fully paid up at a premium of Rs. 140/-per share
are allotted during the year on Rights basis in the ratio of 2 equity shares
for every 4 equity shares held, along with 1490586 Detachable Warrants
FINANCIAL DATA
[all figures are in Rupees Millions]
ABRIDGED BALANCE
SHEET
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SOURCES OF FUNDS |
31.03.2007 |
31.03.2006 |
31.03.2005 |
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SHAREHOLDERS FUNDS |
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1] Share Capital |
89.632 |
59.821 |
59.800 |
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2] Share Application Money |
0.000 |
10.401 |
0.000 |
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3] Reserves & Surplus |
1562.212 |
830.742 |
731.100 |
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4] (Accumulated Losses) |
0.000 |
0.000 |
0.000 |
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NETWORTH |
1651.844 |
900.964 |
790.900 |
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LOAN FUNDS |
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1] Secured Loans |
1203.982 |
924.310 |
609.800 |
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2] Unsecured Loans |
500.567 |
415.033 |
694.800 |
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TOTAL BORROWING |
1704.549 |
1339.343 |
1304.600 |
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DEFERRED TAX LIABILITIES |
216.887 |
194.152 |
0.000 |
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TOTAL |
3573.280 |
2434.459 |
2095.500 |
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APPLICATION OF FUNDS |
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FIXED ASSETS [Net Block] |
1788.518 |
1327.938 |
1271.200 |
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Capital work-in-progress |
26.358 |
36.067 |
53.500 |
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INVESTMENT |
20.863 |
15.613 |
15.600 |
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DEFERREX TAX ASSETS |
0.000 |
0.000 |
0.000 |
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CURRENT ASSETS, LOANS & ADVANCES |
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Inventories |
659.230
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461.155 |
457.300 |
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Sundry Debtors |
1091.741
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586.769 |
731.600 |
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Cash & Bank Balances |
60.504
|
39.720 |
51.500 |
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Other Current Assets |
96.555
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22.491 |
0.000 |
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Loans & Advances |
590.672
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278.476 |
424.600 |
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Total
Current Assets |
2498.702
|
1388.611 |
1665.000 |
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Less : CURRENT
LIABILITIES & PROVISIONS |
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Current Liabilities |
691.504
|
294.596 |
718.500 |
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Provisions |
96.780
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82.476 |
192.500 |
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Total
Current Liabilities |
788.284
|
377.072 |
911.000 |
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Net Current Assets |
1710.418
|
1011.539 |
754.000 |
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MISCELLANEOUS EXPENSES |
27.123 |
43.302 |
1.200 |
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TOTAL |
3573.280 |
2434.459 |
2095.500 |
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PROFIT & LOSS
ACCOUNT
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PARTICULARS |
31.03.2007 |
31.03.2006 |
31.03.2005 |
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Sales Turnover |
4171.541 |
3472.883 |
3654.600 |
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Operating Income |
31.948 |
52.888 |
0.000 |
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Other Income |
318.300 |
12.365 |
57.200 |
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Total Income |
4521.789 |
3538.136 |
3711.800 |
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Profit/(Loss) Before Tax |
379.005 |
204.463 |
148.600 |
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Provision for Taxation |
22.209 |
63.099 |
48.100 |
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Profit/(Loss) After Tax |
356.796 |
141.364 |
100.500 |
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Earnings in Foreign Currency : |
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Total Earnings |
1779.039 |
1647.578 |
NA |
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Imports : |
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Raw Materials |
732.883 |
569.061 |
NA |
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Stores & Spares |
0.000 |
0.936 |
NA |
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Capital Goods |
2.546 |
8.707 |
NA |
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Others |
97.454 |
53.627 |
NA |
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Total Imports |
832.883 |
632.331 |
NA |
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Expenditures : |
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Manufacturing Expenses |
0.000 |
0.000 |
166.100 |
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Administrative, Selling and General Expenses |
221.817 |
205.836 |
121.200 |
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Raw Material Consumed |
2868.989 |
2249.800 |
1949.800 |
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Increase/(Decrease) in Finished Goods |
[123.626] |
[83.928] |
32.800 |
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Employees Remuneration |
290.111 |
251.487 |
237.900 |
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Interest and Financial Chares |
162.956 |
127.840 |
112.900 |
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Power & Fuel |
0.000 |
0.000 |
329.600 |
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Depreciation & Amortization |
147.970 |
114.418 |
100.000 |
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Other Expenditure |
574.566 |
468.220 |
512.900 |
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Total Expenditure |
4142.783 |
3333.673 |
3563.200 |
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QUARTERLY RESULTS
|
PARTICULARS |
30.06.2007 |
30.09.2007 |
31.12.2007 |
|
Type |
1st
Quarter |
2nd
Quarter |
3rd
Quarter |
|
Sales Turnover |
909.900 |
1111.900 |
1229.400 |
|
Other Income |
1.600 |
2.000 |
6.000 |
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Total Income |
911.500 |
1113.900 |
1235.400 |
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Total Expenditure |
939.500 |
1079.900 |
1072.300 |
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Operating Profit |
[28.000] |
34.000 |
163.100 |
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Interest |
41.300 |
39.800 |
36.100 |
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Gross Profit |
[69.300] |
[5.800] |
127.000 |
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Depreciation |
40.400 |
41.800 |
40.800 |
|
Tax |
[10.200] |
[8.000] |
11.100 |
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Reported PAT |
[99.500] |
[39.600] |
75.100 |
KEY RATIOS
|
PARTICULARS |
31.03.2007 |
31.03.2006 |
31.03.2005 |
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Debt-Equity Ratio |
1.21 |
1.61 |
1.55 |
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Long Term Debt-Equity Ratio |
0.78 |
1.12 |
1.02 |
|
Current Ratio |
1.45 |
1.32 |
1.18 |
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TURNOVER RATIOS |
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Fixed Assets |
1.67 |
1.61 |
1.64 |
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Inventory |
8.16 |
8.36 |
8.59 |
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Debtors |
5.44 |
5.82 |
6.21 |
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Interest Cover Ratio |
1.54 |
2.86 |
2.32 |
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Operating Profit Margin(%) |
8.75 |
12.51 |
9.89 |
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Profit Before Interest And Tax Margin(%) |
5.51 |
9.53 |
7.16 |
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Cash Profit Margin(%) |
5.55 |
7.29 |
5.49 |
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Adjusted Net Profit Margin(%) |
2.31 |
4.31 |
2.75 |
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Return On Capital Employed(%) |
9.19 |
17.24 |
13.77 |
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Return On Net Worth(%) |
8.41 |
20.10 |
13.47 |
LOCAL AGENCY
FURTHER INFORMATION
HISTORY
Deepak Nitrite Limited (DNL) - The flagship company of the
Deepak Group of Companies, started with the manufacture of an import substitute
chemical - Sodium Nitrite in 1972. Today it is a multi product company with a
diversified product portfolio manufacturing basic and intermediate chemicals,
Colourants and Imaging Chemicals Intermediates, Agrochemical Intermediates,
Pharmaceutical Intermediates, Rubber Chemical Intermediates, Chemicals for the
Refineries, Cosmetics etc.
Subject manufacturing facilities at different locations in the Western part of
India. The company manufactures Inorganic, Organic and Fine and Speciality
chemicals. There are two units in the state of Gujarat and three units in the
state of Maharashtra. The Inorganic Chemicals are produced at one of the
facilities in Gujarat while the Organic and Fine and Speciality chemicals are
produced at the other facilities. One of the facilities is devoted to the
activity of Hydrogenation and Reductive Alkylation. Each of the facilities has
DCS controlled operations.
The company's technological growth has been achieved through its In-house
Research as well as assistance from premier Research Institutes like the
University Department of Chemical Technology, Mumbai, National Chemical
Laboratory, Pune, Indian Institute of Chemical Technology, Hyderabad as well as
Projects and Development India Limited, New Delhi.
Subject has a global presence in over 20 countries, including USA, European
Union and East European nations, Japan, ASEAN countries, South Korea and South
America. The company foresees a quantum leap in export turnover through Custom
Manufacturing for the specific needs of the end users and the manufacture of
high-value, speciality products either based on its own end products or
developed especially for the user. DNL has been ranked amongst the top 500 Body
corporates by Dun and Bradstreet for the last three years.
With an investment of Rs. 13 million the company began its operations with a
fully indigenous Sodium Nitrite and Nitrate plant at Nandesari, Baroda. The
acquisition of Sahyadri Dyestuffs and Chemicals, brought into its fold a unit
for dyes, organic intermediates and fine chemicals in 1984. Guanidine nitrate
and hydroxylamine sulphate, vital ingredients for the drug industry, were
introduced in 1988-89. To intensify exports, DNL set up a new division, Deepak
International in 1989.
To diversify into nitroaromatics and allied products in technical collaboration
with Biazzi, Switzerland, the company tapped the market with a rights issue in
1991. It proposed to produce a range of nitroaromatics like nitro
chlorobenzene, ortho nitro chlorobenzene, para nitro toluene, ortho nitro
toluene, ethyl hexyl nitrate and other nitrated esters which find application
in dyes, pharmaceuticals, Defence, agrochemicals, etc.
During 1999-2000, the Taloja Chemical Division and Sahyadri Dyestuffs and
Chemicals Division received a prestigious certificate under ISO 9002 from KPMG
Quality Register to its current range of products. The company having achieved
the Export House status showing a growth of 13% over the last year and hence
received a Merit Certificate by the Indian Chemical Manufacturers Association
(ICMA) in the category of export of chemical products
The company sucessfully completed a Public Offer to the Aryan Pesticides
Limited (APL) and thereby acquired about 8% of the paid up capital of APL. APL
is engaged in the manufacture of intermediates for agrochemicals and dyestuffs.
In 2002-03, the company acquired the additional equity in Aryan Pesiticides
Limited which stands at 76.92%.As a result Aryan Pesticides became subsidiary
of the company
During April 2004, Aryan Pesticides Limited has been amalgamated with the
company and according to the scheme of amalgamation, shareholders of Aryan
Pesticides Limited will get One Equity Share of Rs.10 each of Deepak Nitrite
Limited for every Five Equity Shares of Rs.10 each held in Aryan Pesticides
Limited.
During 2005-2006, the company is in the process of relocating/shifting its
manufacturing activities of Sahyadri Dyestuffs and Chemical Division located at
Sinhagad Road, Pune in view of the environmental considerations.
The companies production capacity of Aromatic Amines expanded during the year
from 9600 MT to 12600 MT and Dinitrosopentamethylene Tetramine expanded from
600 MT to 1800 MT.
REVIEW
OF THE YEAR:
The Company recorded an increase in turnover of around 20 %. However the
operating margins were under pressure due to steep increase in prices of major
raw materials and inability to proportionately increase the selling prices of
its products due to the market conditions. The export turnover registered a growth
of 12% over the last year, from Rs. 1702.700 Millions to Rs. 1897.300 Millions.
The profit before tax for the year was Rs. 379.000 Millions registering a
growth of 85% compared to Previous Year. However, the profit for the current
year includes non-recurring income of Rs.298.500 Millions on account of sale of
factory plot of land located at Singhagad Road, Pune.
ACQUISITION OF BUSINESS OF DASDA
DIVISION FROM VASANT CHEMICALS AT HYDERABAD:
During the year, the Company acquired DASDA business of M/s Vasant Chemicals
Limited, a closely held Company based in Hyderabad, effective 1st
August 2006 on a 'going concern' basis, for a consideration of Rs.550
Millions.
The said division has been named by the Company as 'Hyderabad Specialities
Division.' It has one of the best chemical processes for manufacturing DASDA,
the environmental standards practice being amongst the highest in the industry.
The quality of DASDA is also amongst the best in the industry worldwide. The
major competition, volume wise, is from China.
DASDA accounts for 50% of PNT market worldwide and 80% in India. The Company
has considerable synergy by integrating the DASDA business and will strengthen
its position by moving up the value chain.
DASDA is a very critical intermediate for manufacture of Optical Brightening
Agents (OBA) used in paper, textiles and detergent industries.
The division registered a turn-over of Rs. 560 Millions during the period 1st
August, 2006 to 31st March, 2007.
FINANCE:
1) The Rights Issue proceeds amounting to Rs. 447.200 Millions were received by
the Company during the year under review. The proceeds of the rights issue have
been utilised for the purposes mentioned in the Letter of Offer for the rights
issue.
2) The Company raised long-term Secured Loans aggregating Rs. 163.500 Millions.
The
Company also repaid installments aggregating Rs. 160.500 Millions during the
year.
MANAGEMENT DISCUSSION AND ANALYSIS
INDUSTRY STRUCTURE AND RECENT
DEVELOPMENT:
The company has
a fairly diversified portfolio grouped under three business segments: Inorganic
Intermediates, Organic Intermediates and Fine and Specialty Chemicals.
The Inorganic
Intermediates contributes about 13% of the total sales turnover. Sodium Nitrate
and Sodium Nitrite are far the most significant products of this segment. The
Company commands a leadership position in the market with about 70% market
share. The industry structure has not changed much over several years.
Relatively large investment for minimum economic size of operation has been the
key deterrent. Besides, strong market position enjoyed by the Company hardly
leaves enough space for the new entrant.
The Organic
Intermediates forms about 61% of the Company's sales. Within the segment, nitro
chloro benzenes (NCB), nitro toluenes (NT), para cumidine (PC) and xylidines
(XLD) constitute the bulk. The NCB industry has undergone a structural change
in the recent past. Though the domestic industry did not witness any major
shift, there were large capacity additions in China. Even in NT business
segment the competition seems to have intensified.
The Fine and Specialty Chemical division is characterized by low volume and
knowledge intensive products. Close interaction with the market place and
realignment of product portfolio is the key to the success in this
segment.
OPPORTUNITIES AND THREATS:
The competitive
pressure has left most businesses with little option but to shift the
production base to a location where it makes most sense. While China enjoys
competitive advantage in products where scale of operations holds the key to
the success, India continues to hold an edge in knowledge-intensive niches. The
momentum in favor of Contract Research and Manufacturing opportunity has only
intensified. The company has significant strength in R&D capabilities and
strong customer base. It provides a great opportunity for growth.
The Company
needs to judiciously balance its product portfolio to avoid such threat and
leverage on its technological advantage and value-selling to enhance its
competitive edge.
SEGMENT-WISE PERFORMANCE:
(a) Inorganic
Intermediates: The turnover of this segment declined by about 10%, i.e. from Rs
610 Millions in the previous year to Rs
550 Millions during the year. The operating margins were lower compared to the
previous year. There was an abnormal increase in the prices of ammonia during
the last quarter of the year, having a significant impact on the margins.
(b) Organic
Intermediates: This segment has been a mixed bag during the year. While the
sales registered a growth of about 7% compared to the previous year, there was
significant drop in margins. The increase in sales was largely on account of
xylidines. The NCB business came under severe price competition from Chinese
manufacturers. It has adversely affected the size of domestic market for NCBs.
The prices of key raw materials, i.e., benzene, toluene and cumene were quite
volatile. On the postitive side, the xylidines business has done well.
(c) Fine and Specialty Chemicals: The turnover of this segment has almost
doubled largely due to turnover from DASDA business acquired from M/s.
Vasant
Chemicals Limited. DASDA forms a key intermediate for Optical Brightening
Agents which goes into paper, textile and detergent industry.
This business
has enjoyed long years of preferred-vendor relationship with large
multi-nationals. DASDA accounts for about 50% of PNT demand world-wide. This
would help in strengthening of value chain of NT business.
However, the
operational margins of this segment are under pressure.
The agro
intermediate requirement was significantly lower due to the seasonality of
business thereby lowering the net realization.
OUTLOOK:
The
outlook for Inorganic Intermediates is stable. With the objective to bridge the
gap between the Company's cost structure vis-&-vis the competition, the
Company is planning to switch to more cost effective power and steam options.
It would help in consolidation of the Company's position in the market.
The commodity
segment of Organic Intermediates division is likely to face stiff competition
from China and margins are under pressure. We are evaluating the feasibility of
upstream and downstream integration to have integrated value chain as a
potential source of competitive advantage against China. In parallel, we are
evaluating alternate products for better utilization of assets.
The outlook for
niche products in the segment remains challenging. The Company expects to
consolidate its position to retain market share. In addition, the Company is
making progress towards developing more value added applications or derivatives
for long isomers like ONT.
The Company has
taken up several Continuous Process Improvement initiatives to improve
productivity, and competitive position of Fine and Specialty segment. The
Company has taken initiatives to derive better value from by-products which is
likely to bear results in the near future.
FIXED ASSETS
- Freehold land
- Leasehold
land
- Plant and
Machinery
- Research and
Development Equipments
- Factory and other
buildings
- Research and
Development buildings
- Roads
- Office
Equipments
- Furniture and
Fixtures
- Vehicles
- Ammonia
Tankers
AS PER WEBSITE
Products
The company's strength includes years of in-house expertise,
a proven track record of innovation and indigenous development, an R&D
facility with a range of sophisticated equipment and expertise in storing and
handling various types of chemicals.
Subject produces a spectrum of chemicals. It caters to a wide range of
industries including Colourants, Agrochemicals, Pharmaceuticals, Rubber,
Speciality and Fine chemicals.
It is
also a manufacturer of a wide range of intermediates for use in industrial
explosives, paints, cosmetics, lubricants, polymers, optical brighteners,
photographic chemicals, petroleum additives, specialty fibres and water
treatment chemicals. Other products manufactured are tailor made as per the
needs and specific requirements of the customer.
The
spectrum of Industries catered:
· Agrochemical Intermediates
· Intermediates for Colourants and Imaging Chemicals
· Pharmaceutical Intermediates
· Fine and Speciality Chemicals
· Rubber Chemical Intermediates
· Intermediates for OBA (Optical Brightening Agents)
Media
From an import substitution company to an export powerhouse
Company Profile
Subject is the flagship company of the Deepak Group of
Companies – has come a long way since it was set up in the 1970s to support
India's drive towards self-sufficiency and import substitution. Today, revenues
from its exports to over 20 countries, including the US, Japan, Korea and
Europe, contribute almost 40% of its turnover of Rs.2800- Millions. Subject
recently crossed a landmark in its export thrust - touching the Rs. 1000
Millions mark from its international business. For the year 2003-04, exports
rose an impressive 44% over the previous year to close at Rs. 1120- Millions
driven by the strong performance of exports of fine chemicals. However, the
company has no plans to rest on its laurels, but has already set sights on the
next milestone of achieving 50% of its turnover from exports.
Moving up the value chain
The DNL saga began way back in the 1970s,when the well-known
industrialist, Mr. C. K. Mehta, then a budding entrepreneur, set up a
small company for trading in chemicals. In 1970, he set up a plant at
Nandesari. Near Vadodara in Gujarat, for manufacturing two import substitutes -
sodium nitrite and sodium nitrate using indigenous technology. At that time
global suppliers like BASF and ICI, were supplying a bulk of the sodium nitrite
and by manufacturing these two chemicals indigenously, subject managed to make
a dent in their market-share. From these humble beginnings, subject has grown
continuously across the value chain by forward, backward and lateral
integration. Today, it manufactures inorganic, organic and fine and speciality
chemicals catering to the needs of a host of industries, from textiles and
pharmaceuticals o rubber, agrochemicals, paints, dyes, explosives, glass, paper
and cosmetics. The company is now focussed on making its plants ore versatile
to switch from intermediaries to speciality chemicals and to progressively take
to customisation. Over the years, it has successfully and seamlessly moved from
being a commodity-oriented, bulk volume product company to a fine intermediate
company.
Multi-location at manufacturing facilities
Subject has four manufacturing facilities at different
locations in the western part of India -one at Nandesari. Gujarat and three in
Maharashtra at Pune. Taloja and Roha. The inorganic chemicals are produced in
Gujarat, while organic and fine and speciality chemicals are produced at the
other facilities. One of the facilities is devoted to hydrogenation and
reductive calculation. In inorganic chemicals, the major products manufactured
include nitrites, nitrates, blowing agents, hydroxyl amine derivatives and
guanidine nitrate, while in organic chemicals the major products include nitrochlorobenzenes,
nitrotoluenes, tolu-idines, DEMAP, resorcinol, xylidines and cumidines. While
the company's main strengths are in nitration, chlorination and hydrogenation,
subject also has the technical capabilities to carry out many other reactions at
its plants.
Growing through acquisitions
Subject immensely benefited by acquiring companies whose
product lines complemented its own. In 1984, it acquired Sahayadri Dyestuffs
and Chemicals Division. Located at Vithalwadi, Pune, this division today produces
a whole range of innovative intermediates for colourants and imaging chemicals.
This expansion in product line has resulted in the company progressing to
become a global supplier of advanced colourant intermediates and a major
contributor to subject's export turnover. In 2000, subject acquired Aryan
Pesticides Limited, an agrochemicals specialities company, located at Roha in
Maharashtra to boost its speciality chemicals business. Aryan is India's
largest producer of p-cumidine and the only manufacturer of xylidines in the
country. The acquisition brought about synergy in three areas: inputs, as Aryan
was subject's largest customer for nitrochlorobenzene; in the extension of
subject's technology with Aryan's three speciality products supplementing subject’s
existing intermediates range of six products; and in international customers,
as Aryan was a supplier to many of subject's customers.
Investing in research
R&D has been an integral part of subject's growth. In
2003-04, DNL spent over Rs. 300 lakhs on its R&D activities, which
constitutes around 1% of its turnover. Many of its products have been developed
at its central R&D facility at Pune. The Deepak Research and Development
Foundation (DRDF). Approved by the Government of India, Dept. of Science and
Technology, the centre is primarily engaged in research and process development
for new products, as well as optimisation of the manufacturing process for
existing products. Situated at Pune, it encompasses a sophisticated analytical
laboratory and facilities for testing new technologies and new products.
The Centre works in close association with reputed universities and research
institutes of The company's strengths in this area include years of in-house
expertise and a proven track record of innovation and indigenous development.
Going global
After crossing the Rs. 1000 Millions turnover mark from its
international business this year the company foresees a quantum leap in export
turnover through custom manufacturing for the specific needs of end-users and
manufacture of high-value, speciality products, either based on its own
end-products or developed especially for the user. Apart from a hike in R&D
and capacity expansion, subject has adopted a new business model for growing
its international business - development of new products based on joint
research programmes and eventually becoming exclusive suppliers to large
companies. The company is looking at doubling the revenue from long-term or
exclusive contracts abroad to 70% of total exports. For DNL, international
business has been growing at a faster rate and is considered less volatile than
the domestic business. But it certainly is not ignoring the domestic market. As
subject's Managing Director. Mr. Deepak Mehta says, "Deepak will
always be significantly large in the domestic market also. Deepak has one of
the largest numbers of end-product customers. So it would be prudent to see
that we are in both domestic as well as exports markets." This approach
has indeed paid rich dividends to DNL in the past few years and is expected to
help the company scale new heights of success in the future.
CMT REPORT
(Corruption, Money Laundering & Terrorism]
The Public Notice information has been collected from various sources
including but not limited to: The Courts, India Prisons Service,
Interpol, etc.
1] INFORMATION ON
DESIGNATED PARTY
No records exist designating subject or any of its beneficial owners,
controlling shareholders or senior officers as terrorist or terrorist
organization or whom notice had been received that all financial transactions
involving their assets have been blocked or convicted, found guilty or against
whom a judgement or order had been entered in a proceedings for violating
money-laundering, anti-corruption or bribery or international economic or
anti-terrorism sanction laws or whose assets were seized, blocked, frozen or
ordered forfeited for violation of money laundering or international
anti-terrorism laws.
2] Court Declaration :
No records exist to suggest that subject is
or was the subject of any formal or informal allegations, prosecutions or other
official proceeding for making any prohibited payments or other improper
payments to government officials for engaging in prohibited transactions or
with designated parties.
3] Asset Declaration :
No records exist to suggest that the property or assets of the subject
are derived from criminal conduct or a prohibited transaction.
4] Record on Financial
Crime :
Charges or conviction
registered against subject: None
5] Records on Violation of
Anti-Corruption Laws :
Charges or
investigation registered against subject: None
6] Records on Int’l
Anti-Money Laundering Laws/Standards :
Charges or
investigation registered against subject: None
7] Criminal Records
No
available information exist that suggest that subject or any of its principals
have been formally charged or convicted by a competent governmental authority
for any financial crime or under any formal investigation by a competent
government authority for any violation of anti-corruption laws or international
anti-money laundering laws or standard.
8] Affiliation with
Government :
No record
exists to suggest that any director or indirect owners, controlling
shareholders, director, officer or employee of the company is a government
official or a family member or close business associate of a Government
official.
9] Compensation Package :
Our market
survey revealed that the amount of compensation sought by the subject is fair
and reasonable and comparable to compensation paid to others for similar
services.
10] Press Report :
No press reports / filings exists on
the subject.
CORPORATE
GOVERNANCE
MIRA INFORM as part of its Due Diligence do provide comments on Corporate
Governance to identify management and governance. These factors often have been
predictive and in some cases have created vulnerabilities to credit
deterioration.
Our Governance Assessment focuses principally on the interactions
between a company’s management, its Board of Directors, Shareholders and other
financial stakeholders.
CONTRAVENTION
Subject is not known to have contravened any existing local laws,
regulations or policies that prohibit, restrict or otherwise affect the terms
and conditions that could be included in the agreement with the subject.
FOREIGN EXCHANGE
RATES
|
Currency |
Unit
|
Indian Rupees |
|
US Dollar |
1 |
Rs.39.91 |
|
UK Pound |
1 |
Rs.78.44 |
|
Euro |
1 |
Rs.59.13 |
SCORE & RATING
EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
8 |
|
PAID-UP CAPITAL |
1~10 |
8 |
|
OPERATING SCALE |
1~10 |
8 |
|
FINANCIAL CONDITION |
|
|
|
--BUSINESS SCALE |
1~10 |
9 |
|
--PROFITABILIRY |
1~10 |
7 |
|
--LIQUIDITY |
1~10 |
8 |
|
--LEVERAGE |
1~10 |
8 |
|
--RESERVES |
1~10 |
8 |
|
--CREDIT LINES |
1~10 |
8 |
|
--MARGINS |
-5~5 |
- |
|
DEMERIT POINTS |
|
|
|
--BANK CHARGES |
YES/NO |
YES |
|
--LITIGATION |
YES/NO |
NO |
|
--OTHER ADVERSE INFORMATION |
YES/NO |
NO |
|
MERIT POINTS |
|
|
|
--SOLE DISTRIBUTORSHIP |
YES/NO |
YES |
|
--EXPORT ACTIVITIES |
YES/NO |
YES |
|
--AFFILIATION |
YES/NO |
YES |
|
--LISTED |
YES/NO |
YES |
|
--OTHER MERIT FACTORS |
YES/NO |
YES |
|
TOTAL |
|
72 |
This score serves as a reference to assess SC’s credit risk and
to set the amount of credit to be extended. It is calculated from a composite
of weighted scores obtained from each of the major sections of this report. The
assessed factors and their relative weights (as indicated through %) are as
follows:
Financial
condition (40%) Ownership
background (20%) Payment
record (10%)
Credit history
(10%) Market trend
(10%) Operational
size (10%)
RATING
EXPLANATIONS
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
>86 |
Aaa |
Possesses an extremely sound financial base with the strongest
capability for timely payment of interest and principal sums |
Unlimited |
|
71-85 |
Aa |
Possesses adequate working capital. No caution needed for credit
transaction. It has above average (strong) capability for payment of interest
and principal sums |
Large |
|
56-70 |
A |
Financial & operational base are regarded healthy. General
unfavourable factors will not cause fatal effect. Satisfactory capability for
payment of interest and principal sums |
Fairly Large |
|
41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
|
26-40 |
B |
Unfavourable & favourable factors carry similar weight in credit
consideration. Capability to overcome financial difficulties seems
comparatively below average. |
Small |
|
11-25 |
Ca |
Adverse factors are apparent. Repayment of interest and principal sums
in default or expected to be in default upon maturity |
Limited with full
security |
|
<10 |
C |
Absolute credit risk exists. Caution needed to be exercised |
Credit not
recommended |
|
NR |
In view of the lack of information, we have no basis upon which to
recommend credit dealings |
No Rating |
|