Management Outlook


Your Company is one of the dominant players in India's chemical industry, manufacturing a vast range of products across three major Strategic Business Units i.e. Basic Chemicals, Fine & Speciality Chemicals and Performance Products. Given the established manufacturing infrastructure at competitive locations along with expertise across complex processes, your Company holds a solid market position in India across select products and chosen niches within the chemical industry. Key initiatives by the Government of India have further helped your Company to enhance and create multiple growth opportunities both in domestic as well as export markets.

Moreover, your Company 's internal R&D team has consistently facilitated in introducing more efficient processes and pathways to add more chemical intermediates to its line-up in addition to modifying the established products in-line with the growing demand. Also, the global distribution network of your Company covers more than 30 countries and this has bolstered the exportsperformance over the years. Overall, the business continues to be well positioned to take advantage of newer prospects by leveraging your Company's deep market expertise, significant experience as well as the cost competitive manufacturing platform, which have all allowed your Company to deliver consistent results year-on-year. Plans are ripe to further accelerate this performance by growing consistently in the targeted regions, markets and creating value for all stakeholders. With increased scope for market development and implementation of strategic initiatives to forward integrate into downstream derivatives, your Company is optimistic to continue on its promising growth path in the times ahead.

Consistent growth trajectory in Basic Chemicals backed by targeted expansions

Basic Chemicals segment continues to achieve positive topline growth with higher contribution supported by demand traction in key products including Nitro Derivatives. Supported by healthy demand across major end-user industries, this segment is poised to sustain its growth trajectory. The fundamental approach is to maintain cost leadership and also in introducing superior grade products for niche markets. Besides that, benefits coming out of incremental expansions, will drive future growth and allow your Company to increase its productivity in a cost-effective way.

Fine & Speciality Chemicals-Benefiting from strategic initiatives; capacity increments to support momentum

Fine & Speciality Chemicals segment has been further strengthened its operations in the past one year through steady capacity additions and cost leadership initiatives. This along with favorable product-mix in key export geographies has helped maintain your Company's leadership position in the segment. FSC has shown consistency in the past and is well poised to demonstrate encouraging performance in the times ahead.

Positive demand momentum continues in Performance Products

Your Company manufactures Performance Products right from the basic building block, thereby present throughout the value-chain. This segment has capitalized on the temporary price surge in the DASDA over the last few periods, resulting in a stellar leap in profitability on the back of improved manufacturing efficiency and elevated demand.

Phenol and Acetone - Key to import substitution; value-addition to continue

The Phenol and Acetone segment has delivered on its target of import substitution. Amid uncertainties in the global market for these products and sluggish economic growth in the domestic market, your Company through it's wholly owned subsidiary, Deepak Phenolices Limited (DPL) was still able to sustain its dominant position in the domestic market. The capacity utilization continues to remain high, above 90% on sustained basis with increased sales volumes. While DPL navigates this phase of the Phenol and Acetone cycles, it is progressing in the advancement of value-added derivatives via forward integration to achieve its goal of providing a diverse basket of downstream derivatives. With the addition of Isopropyl Alcohol in April, 2020, the product basket has become more versatile to capture current market demand.

Business Environment and Customer Industries

The COVID-19 pandemic has caused unprecedented impact on the global economy. It has disabled global trade and cross border transactions like never before. The lockdown of countries and economies has resulted in overnight evaporation of demand for industries such as airlines, hotels, cinemas, and entertainment among others.

Global supply chains have been hindered and it is expected that consumption will pick up gradually where it was disrupted. This disruption has accelerated some of the emerging trends like virtualization, remote interactions and electronic transactions.

Your Company is closely monitoring the development in its customer industries and assessing the near term as well as long term effects of this development. In its own operations, your Company is mindful and has taken all the necessary precautions while resuming plants operations to provide desired safety and security to its the employees. Your Company believes that the customer industries, in aggregate, will recover and grow to be larger in the future. Your Company has robust, well-integrated operations, deep capabilities and a healthy balance sheet position which will allow it to overcome the near term challenges and return to creating value in the long run.