Thread by @sj_learner4life

#DFPCL
Deepak Fertilizers is one of the largest manufacturers of chemicals in India. It manufactures Technical Ammonium Nitrate (mining chemicals), Industrial Chemicals and Crop Nutrition. The products of the company have uses in Explosives, Mining, Infrastructure and Healthcare

- Only Manufacturer of Nitro Phosphate (NP) 24:24:0 fertilizer in India
- Largest producer of Nitric Acid in India and South East Asia
- Leading Manufacturer of Iso Propyl Alcohol(IPA) - 65% market share in India.

- Largest Manufacture of Bentonite Suplhur
- Market leader in speciality and water soluble fertilizer in India
- Only producer of Technical Ammonium Nitrite (TAN) in Prill/Solid form. Others manufacture in Liquid/Melt form.

INDUSTRIAL CHEMICALS
-Caters to Pharma,Nitroaromatics,Paints & Coatings,Steel,Inks,Explosives,Dyes,etc.
-Concentrated Nitric Acid(CNA)- Plant at Dahej & Taloja-231000MTPA-70% Market share
-Diluted Nitric Acid(DNA)- Plant at Taloja,Dahej & Srikakulam-888960MTPA-30% Market share

-Scope of import is limited due to transportation & NA is corrosive in nature
-Demand of NA is expected to exceed supply in India-China+1 theme will further increase demand for NA as Downstream Nitroaromatic products to use NA with benzene, Toulene, chlorobenzene, naphthalene,etc

-Iso Propyl Alcohol - Plant at Taloja - 70200MTPA - Approx 65% market share (Both manufacturing & Trading together)
- refinery grade propylene used as feed stock whereas competitors use acetone. Acetone prices have declined in recent years which has lead to pressure on margins.

- DFPCL is the only India Pharmacopia complaint company in India which produced Pharma Grade IPA
- The major demand for IPA still remains from Pharma industry and the sanitizer business was only of 20-25KTPA out of 220KTPA demand in FY21.

-TECHNICAL AMMONIUM NITRITE (TAN) - Plant at Taloja (444000MTPA) & Srikakulam (42900MTPA) - Market share of approx 45%
- Planned capacity addition of 376000MTPA - to be commissioned by Q2FY25 - Capex - Rs.2200crs - Approx 41% EPCM engineering and 12.41% Overall EPCM completed

-Expansion in Gopalpur to bring EBITDA of 400crs starting FY25-26
-This will propel the company in the Top 3 global players
- TAN volumes have grown at 10%CAGR from 70KTPA in FY02 to 430KTPA in FY21
-Blast in Beirut port has made govt pose strict restrictions wrt import of TAN

-Greenfield plant in Gopalpur is strategically located in proximity to mines in East & Central India where the scope of growth of explosive consumption is expected.All the 3 competitors have their plants in west.This further help in improving the bottom-line in terms of logistics

Govt. has given a boost for the mining sector with the development in
-Infrastructure -Use Of Ores for iron,steel,etc
-Cement –Use of limestone
-Coal – for Thermal power generation,etc
-There is an entry barrier in terms of the amount of investment & the knowhow of the products

-Current size of TAN market is 1MTPA n we are net importers. So once plant is commissioned, opportunity for import substitution
-Strategy being followed to move more towards consumers need as downstream with bundling product with value addition like drones and AI model blasting.

AMMONIA - Plant in Taloja -128700MTPA
- Planned Capacity addition - 510000MTPA - Commissioning by Q1FY24
- Currently ammonia is imported
- The completion of project can bring Rs.25000crs import substitution in next 10yrs
- Ammonia Plant to bring 800-900crs EBITDA Starting FY24

- Management expects this 510ktpa project to reduce
the cost of ammonia by approx US$220-230/T
- Completion of Land acquisition, Environmental approvals, receipt of 95% of required equipment and EPC contractor moving into site.
- Overall progress of 59.49% achieved.

- Capex initially planned for this project was 2900crs which subsequently rose to 4350crs due to :
>Challenges in land acquisitions and regulatory clearances
>greater clarity on all cost elements,
which were not fully visible at the time of the original
announcement.

CROP NUTRITION BUSINESS
- NP (Taloja) – 325000MTPA
- Nitrogen Phosphorous Potassium Fertilizer (Taloja) – 600000MTPA
- Debottlenecking (Taloja) can increase output by another 200000MTPA
- Bentonite Sulphur (Taloja & Panipat) – 60720MTPA

- 100% NPK Capacity moved to SMARTEK – Capex taken up to triple NPK capacities.
- Strong repeat customer base for Smartek.
- Smartek commands 10-15% premium price versus bulk fertilizers.

- Business model shifting to providing value to the end consumers to address the current discount pricing - result of which the fertilizer segment grew by 38%
- Emphasizing Value over price has helped in growing the base to 2.5 million farmers (20% market share in Core markets)

- The company has a 10yr exclusive agreement with an Australian manufacturer to use this technology, which helps crops absorb nutrients uniformly over the life-cycle.
- Subsequently the company started manufacturing tailor made solutions for specific crop by the name Croptek.

-The marketing of Smartek was initiated with approx 25000 demo plots to exhibit the superiority of the product followed by 270+ market development officers to interact with the farmers. This has helped to gain the market share & increase sales of high margin specialty fertilizers

Challenges
-Ammonia is produced from Natural gas. Historically there have been disputes to gas supplies
-With Global trend towards decarbonization, setting up new plants with natural gas may turn more challenging.

-Further delay in completion of projects may hamper the Balance sheet
-Any additions of debt to fund the projects would affect the ratios.

Disc: Not Sebi Registered. Tweets are for Educational purpose. Personally Invested.
Data source : Annual Reports/Concalls/Investor Presentations/Research Reports.

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