Efficient handling of project & team building
In a significant development for your Company, its greenfield facility for the manufacture of Phenol and Acetone at Dahej, Gujarat, through the whollyowned subsidiary Deepak Phenolics Limited (DPL), was commissioned on November 1, 2018. The Greenfield facility has made excellent progress in a short period of time. One, we have efficiently handled the project through successful stabilisation and optimal capacity utilisation during the first few months after commissioning; and two, we also delivered positive EBITDA and PBT within a very short span of commissioning.
The credit for this, undoubtedly, goes to the entire team of DPL which undertook the project with seamless planning and execution. Care was taken to identify and invest in an experienced and capable team at DPL to ensure timely completion of the plant, rapid scale-up of operations, and smooth conduct of complicated logistics. Our seed marketing initiative undertaken during the precommissioning phase also played a vital role in establishing DPL in a leadership position in the domestic market.
This project goes a long way to support the ‘Make in India’ initiative of the Government. It has a capacity of producing 2,00,000 MTPA of Phenol and 1,20,000 MTPA of its co-product Acetone, supported by an in-house facility to manufacture 2,60,000 MT of Cumene for captive consumption.
During the financial year under review, your Company commissioned the Phenol plant through its wholly-owned subsidiary DPL within envisaged project cost of ` 1,400 crore. Your Company has fully funded the committed equity into this project. Apart from commissioning the Phenol plant, your Company also spent on capital expenditure towards enhancing capacities in the existing SBUs of Basic Chemicals and Fine & Speciality Chemicals segment. This was aimed at capitalising on the ensuing demand available across crucial products. Moreover, we have further plans of growth across SBUs, given the buoyant demand expected in the near future.
After all such initiatives, your Company has been able to reduce the intensity in working capital. The capital structure also remains healthy with standalone gearing at around 0.30X and consolidated gearing at around 1.10X. We may keep in mind that the entire investment of the Phenol plant shall yield its first complete year of result in FY 2019-20, which should make the cacapital structure even healthier. Having said this, I take this opportunity to convey that your Company has clear plans of growth commencing in the current financial year, both in existing products and in new products. Once operationalised, the contributions out of such growth plans are also expected to make the Company’s capital structure healthier.
Enhanced credit rating
It gives us pleasure in informing you that your Company has been assigned a longterm rating of AA- Stable and a short-term rating of A1+ by CRISIL Limited, while the credit rating of Deepak Phenolics Limited has also undergone a significant upgradation assigned by ICRA Limited : long-term rating from ICRA BBB Stable to ICRA A- Stable and short-term rating from A3+ to A2+.
Shareholder value creation
Our foremost objective of all our above initiatives and our business plan is to generate value for our shareholders on a sustainable basis. In this backdrop, I am delighted to share that our Board has recommended a Dividend of 100%, i.e., ₹ 2 per share on a Face Value of ₹ 2 each, in light of the improved performance of the Company.
We take this opportunity to convey that with untiring efforts, we have been able to deliver on our promises – turning around the Performance Product business segment, flawless commissioning of the Phenol project within cost, retaining a healthy capital structure, and a rapid ramp-up of the Phenol facility.
Let me assure you that we endeavour to build onto this momentum and create further value for all our stakeholders.
Director-Finance & Chief Financial Officer