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#DMCC FY 22 Annual Report Highlights

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1. Company Overview
The Dharamsi Morarji Chemical Company Limited (DMCC), established in 1919, was the first producer of Sulphuric Acid and Phosphate fertilizers in India. But the company exited from the

fertilizer business because of the government policy which was adverse for the phosphate fertilizer and there was a preferential subsidy towards other fertilizers.

It is now engaged in manufacturing of bulk chemicals and speciality chemicals used in industries such as

pharmaceuticals, agrochemicals, detergents, dyes, textile etc. and are majorly served in Europe, Asia, US, etc

2. Revenue Mix
In FY22, Bulk chemicals contributed 46% to the revenues whereas speciality chemicals contributed 54% to the revenues.

3. Geographical Mix
Domestic: 73% in FY22
Exports: 27% in FY22
In FY22, the domestic market contributed 73% to the revenues whereas the international contributed 27% to the revenues. Export market is driven majorly by Europe which contributed 68.79% to the export revenues in FY22

Contribution of North America in export revenues is 23.91%, for Asia it is 6.58% whereas for South America it is 0.72%

4. FY22 Highlights
1. FY22 witnessed another year of resilient performance of the Company in the light of several challenges posed by multiple waves of COVID19

and its impact on supply chains, raw material costs and inflationary pressures emerging out of the prevailing geopolitical scenario.

2. FY22 was a year of sound financial performance with growth in sales and EBITDA and a record high cash flow generation from operations.

Revenue from operations grew by 63.02% to Rs 326.30 crores against Rs 200.15 crores in the previous year.

3. An increase in realizations primarily drove this growth, but the company also witnessed growth in volumes.

4. However, due to the significant rise in raw material prices, the sharp increase in turnover did not translate to a corresponding growth in EBITDA and profitability.

5. For instance, the price of sulfur, a key raw material, rose more than 300% in the previous

year while the price of benzene increased twofold.

6. However, the company could successfully pass on the price increase to its customers, enabling it to attain the same EBITDA and profitability on an absolute basis, adjusting for one-offs.

7. In FY22, the company recorded EBITDA of Rs 46.09 crores as against Rs 43.27 crores in FY21. Profit before taxes came in at Rs 34.14 crores as against Rs 34.04 crores in FY21.

The speciality chemicals vertical witnessed a good year on the back of growing demand and

increased volumes, contributing 54% to the Company’s top line.

8. During the year the company successfully completed the planned debottlenecking at the Roha site and added two multi-purpose plants at the Dahej Site.

9. Furthermore, with expected commercialisation of incremental capacities for intermediates for agrochemicals and pharmaceuticals and a dedicated plant for manufacturing products under contract, the company expects FY23 to be year driven by strong volumetric growth.

10. Subject to realization and product mix, the company anticipates a 2-2.5x asset turn on its investment in the speciality chemicals vertical and plans to reach optimum capacity utilization by end of FY24.

11. The bulk chemicals business recorded strong growth contributing 46% to the Company’s topline. The growth in this vertical was primarily driven by

the surge in realizations. In addition, the company initiated commercial production at the new 350 TPD bulk chemicals plant at Dahej site.

12. This was a part of the strategic plan to secure the company’s backward integration for the speciality chemicals and thus maintain its leadership across products.

13. The company anticipates a 1.5x asset turn on its investment in the bulk chemicals vertical and

plans to reach optimum capacity utilization by Q2FY23.

14. For the foreseeable future, the company does not intend to make any additional investments in the bulk chemicals vertical.

15. With significant capacity addition, the bulk chemicals will continue to anchor the performance in the short term, however, the incremental capacities in the speciality chemicals will pave the way for sustained and profitable growth in the long run.

16. The boron business has weighed on our profitability in the past couple of years. The import of raw materials, especially technical-grade boric acid, posed a formidable obstacle due to government restrictions which were further exacerbated by supply chain disruptions.

However, the company is optimistic that the business will accelerate in FY23 as the availability of raw materials improves after a two-year wait.

17. The company is working diligently towards the goals set for reducing carbon emissions, replacing traditional fuel sources with nonconventional sources, and managing water and waste responsibly, to become carbon negative by end of FY23.

The Roha site is equipped with zero liquid discharge, and the Dahej site will follow suit.

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