From
an import substitution company to an export
powerhouse
Company Profile
DEEPAK NITRITE LIMITED Deepak Nitrite Ltd. (DNL) -the
flagship company of the Deepak Group of Companies – has
come a long way since it was set up in the 1970s
to support India's drive towards self-sufficiency
and import substitution. Today, revenues from its
exports to over 20 countries,including the US,
Japan, Korea and Europe,contribute almost 40% of
its turnover of Rs.280-crore. DNL recently crossed
a landmark in its export thrust - touching the
Rs. 100-croremark from its international business.
For the year 2003-04, exports rose an impressive
44% over the previous year to close at Rs. 112-crore
driven by the strong performance of exports of
fine chemicals. However, the company has no plans
to rest on its laurels, but has already set sights
on the next milestone of achieving 50% of its turnover
from exports.
Moving up the value chain The DNL saga began way back
in the 1970s,when the well-known industrialist, Mr.C.K.Mehta,
then a budding entrepreneur, set up a small company
for trading in chemicals. In 1970,he set up a
plant at Nandesari. Near Vadodara in Gujarat,
for manufacturing two import substitutes - sodium
nitrite and sodium nitrate using indigenous technology.
At that time global suppliers like BASF and ICI,
were supplying a bulk of the sodium nitrite and
by manufacturing these two chemicals indigenously,
DNL managed to make a dent in their market-share.
From these humble beginnings, DNL has grown continuously
across the value chain by forward, backward and
lateral integration. Today, it manufactures inorganic,
organic and fine & speciality
chemicals catering to the needs of a host of
industries, from textiles and pharmaceuticals
o rubber, agrochemicals, paints, dyes, explosives,
glass, paper and cosmetics. The company is now
focussed on making its plants ore versatile to
switch from intermediaries to speciality chemicals
and to progressively take to customisation. Over
the years, it has successfully and seamlessly
moved from being a commodity-oriented, bulk volume
product company to a fine intermediate company.
Multi-location at
manufacturing facilities DNL has four manufacturing facilities
at different locations in the western part of
India -one at Nandesari. Gujarat and three in
Maharashtra at Pune. Taloja and Roha. The inorganic
chemicals are produced in Gujarat, while organic
and fine & speciality chemicals are produced
at the other facilities. One of the facilities
is devoted to hydrogenation and reductive calculation.
In inorganic chemicals, the major products manufactured
include nitrites, nitrates, blowing agents, hydroxyl
amine derivatives and guanidine nitrate, while
in organic chemicals the major products include
nitrochlorobenzenes, nitrotoluenes, tolu-idines,
DEMAP, resorcinol, xylidines and cumidines. While
the company's main strengths are in nitration,
chlorination and hydrogenation, DNL also has
the technical capabilities to carry out many
other reactions at its plants.
Growing through acquisitions DNL immensely benefited by acquiring
companies whose product lines complemented its
own. In 1984, it acquired Sahayadri Dyestuffs & Chemicals
Division. Located at Vithalwadi, Pune, this division
today produces a whole range of innovative intermediates
for colourants and imaging chemicals. This expansion
in product line has resulted in the company progressing
to become a global supplier of advanced colourant
intermediates and a major contributor to DNL's
export turnover. In 2000, DNL acquired Aryan
Pesticides Ltd., an agrochemicals specialities
company, located at Roha in Maharashtra to boost
its speciality chemicals business. Aryan is
India's
largest producer of p-cumidine and the only manufacturer
of xylidines in the country. The acquisition
brought about synergy in three areas: inputs,
as Aryan was DNL's largest customer for nitrochlorobenzene;
in the extension of DNL's technology with Aryan's
three speciality products supplementing DNL's
existing intermediates range
of six products; and in international customers,
as Aryan was a supplier to many of DNL's customers.
Investing in research
R&D has been an integral part of
DNL's growth. In 2003-04, DNL spent over Rs.
300 lakhs on its R&D activities, which constitutes
around 1% of its turnover. Many of its products
have been developed at its central R&D facility
at Pune. the Deepak Research & Development
Foundation (DRDF). Approved by the Government
of India, Dept. of Science & Technology,
the centre is primarily engaged in research and
process development for new products, as well
as optimisation of the manufacturing process
for existing products. Situated at Pune, it encompasses
a sophisticated analytical laboratory and facilities
for testing new technologies and new products.
The Centre works in close association with
reputed universities and research institutes
of The company's strengths in this area include
years of in-house expertise and a proven track
record of innovation and indigenous development.
Going global After crossing the Rs. 100-crore
turnover mark from its international business
this year the company foresees a quantum leap
in export turnover through custom manufacturing
for the specific needs of end-users and manufacture
of high-value, speciality products, either based
on its own end-products or developed especially
for the user. Apart from a hike in R&D and
capacity expansion, DNL has adopted a new business
model for growing its international business
- development of new products based on joint
research programmes and eventually becoming exclusive
suppliers to large companies.The company is looking
at doubling the revenue from long-term or exclusive
contracts abroad to 70% of total exports. For
DNL, international business has been growing
at a faster rate and is considered less volatile
than the domestic business. But it certainly
is not ignoring the domestic market. As DNL's
Managing Director. Mr. Deepak
Mehta says, "Deepak
will always be significantly large in the domestic
market also. Deepak has one of the largest numbers
of end-product customers. So it would be prudent
to see that we are in both domestic as well as
exports markets." This approach has indeed
paid rich dividends to DNL in the past few years
and is expected to help the company scale new
heights of success in the future.
Deepak Nitrite Ltd. (DNL) -the
flagship company of the Deepak Group of Companies – has
come a long way since it was set up in the 1970s
to support India's drive towards self-sufficiency
and import substitution. Today, revenues from its
exports to over 20 countries,including the US,
Japan, Korea and Europe,contribute almost 40% of
its turnover of Rs.280-crore. DNL recently crossed
a landmark in its export thrust - touching the
Rs. 100-croremark from its international business.
For the year 2003-04, exports rose an impressive
44% over the previous year to close at Rs. 112-crore
driven by the strong performance of exports of
fine chemicals. However, the company has no plans
to rest on its laurels, but has already set sights
on the next milestone of achieving 50% of its turnover
from exports.
