Looking forward, we would continue adhering to the three P’s of sustainable growth – People, Planet, and Profit in that order – as we maintain focus on value creation for all stakeholders.
Dear Stakeholders and Well-wishers,
Deepak, in its 50th year of operations, delivered a resilient performance amidst challenges of an unprecedented nature and scale. We placed utmost importance on the health and safety of our associates, their families and the communities in which we operate. Of equal priority was our commitment to customers and to the nation to deliver products, some of which assumed heightened importance during the pandemic.
Despite losing a month’s production at the start of the fiscal year, we reported revenues of Rs. 4,382 Crores in FY 2020-21, growing 3% on a year-on-year basis. The growth was driven by strong performance in the Phenolics and Fine and Speciality Chemical businesses. Our wide portfolio of products helped mitigate lower sales in businesses whose demand was impacted by the pandemic or the oil crisis. We also delivered enhanced profitability, reporting a 29% growth in Profit before Tax to Rs. 1,042 Crores in FY 2020-21, and thus surpassing the milestone of Rs. 1,000 Crores. The financial performance has been accompanied by implementation of strategic initiatives and growth plans, positioning us to be able to set aspirational targets for the coming years.
Over the last five decades, our product portfolio and embedded process expertise have served as role model for addressing first domestic, and then global opportunities. Looking forward, we would continue adhering to the three P’s of sustainable growth – People, Planet, and Profit in that order – as we maintain focus on value creation for all stakeholders
FOCUSING ON OUR PRIORITIES
The outbreak of the pandemic brought with it high uncertainty given the limited information on nature of the disease. We swiftly moved our teams to work from home to minimise risk. For those employees who were required to be on site to operate facilities, stringent processes and protocols were implemented which continued to be followed long after the official gradual unlock. Medical and COVID life coverage was expanded to cover all employees and workers. Keeping in mind the implicit hazard of chemical manufacturing, safety of man and material was given top priority.
Unfortunately, the country then witnessed a devastating second wave of the pandemic during which lockdowns were implemented at state and territory levels unlike the national lockdown earlier. Taking note of lessons learnt from the first wave, we responded with agility to sustain operations. We also partnered with our philanthropic arm to set up a 40-bed COVID-19 care centre with ICU and oxygen beds. Medium and large size oxygen PSA plants were purchased and deployed at nearby facilities. We have taken the responsibility of vaccinating all our employees and their families, have empanelled specialists for stress and trauma counselling and are doing our bit to help society through focus on healthcare and livelihood. Needless to say, we believe these are our basic responsibilities and all employees, their families and the communities in which we operate remain our priorities.
UNPARALLELED PERFORMANCE AND EXECUTION
In FY 2020-21, Deepak demonstrated robust year-over-year recovery, attributed to its capability of maintaining high level of plant efficiencies despite on-ground challenges relating to COVID-19. We effectively examined and identified prospects across domestic and export markets to facilitate this revival, both in terms of manufacturing and value sustainability.
Phenolics was able to maintain more than 100% capacity utilisation sustainably by building a bench strength of suppliers & customers. This allowed us to pivot effortlessly when one or more end segments were facing challanges.
Internal processes such as people management, supply chain management and logistics were all closely monitored, and efforts were made to maintain business continuity while improving the productivity levels as key employees were working virtually. Our team’s relentless efforts and dedication in ensuring maximum capacity utilisation combined with apt raw material management ensured outstanding results. The ongoing challenges have put our business model to test, and so far, the results have been encouraging, and Deepak continues to be a supplier of choice in all industry segments.
Investments to widen our portfolio and strengthen our core business will fructify in the coming years, with a consistent focus on Deepak’s ‘Right to Win’. Increased investments in R&D, operational excellence, and the addition of new products will support our drive to improve customer dependability on DNL.
DEPLOYING A CALIBRATED APPROACH
Deepak is poised for success through numerous strategic initiatives and as we return to pre-COVID levels, there is a clear preference from global customers who value our superior quality products and reliability. We also stand to benefit from global initiatives to de-risk supply chains from overdependence on China.
Based on the encouraging demand trajectory, we have initiated key capex projects during the fiscal. This includes land development at our newly acquired Dahej site, comprising 55 acres out of total 127 acres in the first phase. This facility will support capacity enhancement for key products in the standalone business. Brownfield expansion of IPA is also nearing completion which will double our IPA capacity to 60,000 MTPA, and other existing products are being expanded in line with market growth. Forward integration projects based on phenol and acetone are currently being finalised, and shall be launched soon.
In another important development, we will be investing around Rs. 300 Crores into new products based on environmentally friendly technologies for agrochemical and pharmaceutical intermediates. We are also in the process of building a world-class Technology Centre at Vadodara which will further strengthen our R&D and piloting capabilities. In terms of our technology platforms, we have further developed our competency in nitration, reduction and diazotisation – and also added new platforms like fluorination and photochlorination.
As a result of these planned developments, we are confident that the consolidated entity will see promising improvement across the length and breadth of the Group’s verticals
STEWARDSHIP TOWARDS SUSTAINABILITY
Deepak prioritises Environment, Health, and Safety (EHS) standards as a signatory to Responsible Care, Together for Sustainability (TFS), and Nicer Globe. We are committed to responsible chemistry and develop efficient processes. As a result, hazard studies, process safety studies, and environmental safety studies are all part of any new product development where we actively engage an internal team and comply with all necessary Government regulations and standards. We are also investing in furthering the move toward a circular economy, by introducing various programmes to minimise our thermal and water footprint, as well as developing value-added chemicals from by-products. I am pleased to share that DPL’s facility at Dahej has the lowest thermal and water footprint for a phenol plant of comparable size anywhere in the world.
Our EHS team understands that a restrictive manufacturing environment can result in severe process lapses and storage oversights. With an objective of restricting such errors, we have increased focus on development and deployment of IoT based automation and plant safety systems. Emphasis on quality, environmental standards, human resource practices and efficiency in hazardous and complex chemical processes makes us the natural choice for global customers who share our values.
I would like to express my gratitude to all of our stakeholders for their unwavering support and encouragement.
Maulik D Mehta
Executive Director and CEO