Deepak Fertilizer doubles Q3 net profit to 181 crores

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28 January 2022, Pune: Deepak Fertilisers And Petrochemicals Corporation Limited, one of India’s leading producers of industrial chemicals and fertilisers, announced its results for quarter ending December 31, 2021. 

The company showed a strong top-line growth across business segments; Operating Profit continued to build on growth momentum despite unfavourable raw material prices impacting Iso Propyl Alcohol and Fertiliser segment profitability. Chemical Segment contributed about 93% of total segment profit. 

Shift of global supply chain trend towards India driving strong demand of Nitric Acid from downstream customers. The company also launched unique crop-specific nutrition solution “Mahadhan Croptek” having essential primary, secondary and micronutrients required for crops.

Commenting on the performance, Mr. Sailesh C. Mehta, Chairman & Managing Director said, “Our robust business performance reflects our deep strengths emerging out of integrated operations and diversified end user segments with continuous improvement in operating margin despite significant raw materials price increase” 

Also Read: Union Budget 2022-23: Transformation Agriculture through irrigation and win back India’s farmer

During the Quarter, the Net Profits doubled owing to significant margin expansion in Chemicals Segment; whilst Fertiliser Segment faced challenges due to uncertainties around raw material availability and costs. The company continued to work closely with Mining Chemicals customers to demonstrate technical capability and value benefits. Furthermore, we are leveraging advanced technologies like Drones & AI-based blast modelling to improve productivity in the mines and infrastructure projects

Going Forward:

Market leadership in key product segments and strong demand outlook to strengthen business growth and profitability

  1. Mining Chemicals: With the positive outlook for the mining, infrastructure and power sector, the Company is expected to benefit from the increased TAN demand, a trend that is likely to sustain
  2. Pharma / Speciality Chemicals: Shift of global supply chain trend towards India to continue to drive strong demand of Nitric Acid from downstream customers
  3. Fertilisers: We are focussing on a crop-specific product portfolio which shall provide value to farmers by enhancing product quality, increase in yield and thus more income to farmers

Furthermore, the new Ammonia Project at Taloja (Maharashtra) and the TAN Plant at Gopalpur (Odisha) are making strong progress on the ground and are on track.”

Chemical Review

Q3 FY22 Revenues increased by 49% to Rs. 1,182 Cr in Chemical segment comprising Mining Chemicals and Pharma / Speciality Chemicals. Segment Profit increased from Rs. 173 Cr in Q3FY21 to Rs. 319 Cr in Q3 FY22 (an increase of 84% Y-o-Y)

Mining Chemicals:

  • In Q3 FY22, TAN Business achieved a capacity utilization of 110%
  • Despite adverse impact of increasing Ammonia and Commodity costs, margins in all product segments (i.e. HDAN, AN Melt and LDAN) improved as supported by robust demand, sales  volume growth (24% YoY & 31% QoQ) and improved product mix

Pharma / Speciality Chemicals:

  • Despite significant increase in Ammonia Prices, Nitric Acid demonstrated improvement in both volumes (6%) and margins backed by the improved demand from the downstream industries
  • Production at Dahej WNA Plant suffered due to technical issue which has been resolved and resumed normal operations in Dec 2021. Despite this, the overall revenue and margins were maintained
  • IPA demand remained subdued, significant increase in price of RGP (76%) impacted margins

Fertilizer Review

  • Q3 FY22 Revenues grew by 19.1% to Rs. 769 Cr with segment profit of Rs. 28.5 Cr
  • Fertiliser segment profitability was impacted due to unfavorable movement of key RM Prices Y-o-Y (Ammonia▲ ~115%; Phos Acid ▲ ~78.5%)
  • Uncertainties of raw material availability impacted the NP and NPK volumes in Q3
  • For the first time in India, the Company, launched ‘Mahadhan Croptek’, a Crop Specific Nutrient which provide balance and Complete crop nutrient to crops

Strategic Outlook

  • Shift of global supply chain trend towards India to continue to drive strong demand of Nitric Acid from downstream customers
  • Demand for explosives are expected to increase with the positive outlook for infrastructure, power and mining sectors
  • Strategically directed efforts right from crop specific product to farmer-focused marketing drive are expected to benefit DFPCL’s market share and margins
  • With almost full reservoir levels across the country, the stage is set for a good Rabi harvest
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