As of today the total capacity are running at 70% capacity utilization. The management said that they are not facing any problem with respect to raw material or labor. The biggest challenge has been logistics but they are seeing normalization there.
During the quarter, the company lost revenue of ₹52 cr & EBITDA of 30 cr due to lockdown.
Some of the end application industry of Deepak Nitrite Ltd has seen demand shrinking caused by lockdown such as Paper, Ply & Textile and whereas the same lockdown has led to demand growth in Pharma, Detergent etc. Agro chemicals which is the company’s biggest application category continues to do better on the back of good monsoon.
The biggest contributor of profitability has been DASDA/OBA which comes under performance product segment. Now, due to the drop in prices to one-fourth level of the earlier prices, the sales figure will be one fourth to the earlier reported earning(₹767cr in FY20) and may see some decline because of demand drop in the end application segment. Hopefully, in the second half of the financial year, once schools & colleges open as well as consumption increase, these segment will see some recovery.
Given that Deepak Nitrite have a wide variety or products with wide range of application, what I have seen to date, is that if one goes down, the other compensates. But such high margin of one segment doesnot happen often(performance product for FY2o). Keeping expectations right, the company will continue to do well. Also, Despite being in a commodity business, their execution has been remarkable.