India’s $212 billion chemical industry is seeing unprecedented growth on the back of consumption economy, niche products, rapid import substitution, and a global geo-strategic demand shift from China.
In 2015-16, Deepak Nitrite, a five decades old basic chemical, specialty and intermediates major, was India’s leading producer of sodium nitrate, a preservative used in cured meat, bacon, medicines and industrial products like dyes. However, revenues were below ₹1,500 crore. Investor interest was limited. Market capitalisation was under ₹3,000 crore. Just then, Chairman and Managing Director Deepak C. Mehta floated a subsidiary, Deepak Phenolics, to make phenol, acetone and isopropyl alcohol (IPA), used in household cleaners, antiseptics, disinfectants hand sanitisers and detergents. Public sector Hindustan Organic Chemicals and SI Group India were the only two rivals, with 30,000 tonnes capacity each, but India’s consumption was three times more at two lakh tonnes. Till 2018, Deepak Phenolics invested ₹1,400 crore to build annual capacity of two lakh tonnes phenol, 1.2 lakh tonnes acetone and 26 lakh tonnes cumene.
That changed its fortunes. With phenolics plants, net revenues grew more than four times from ₹1,651 crore in FY18 to ₹6,802 crore in FY22. Net profit rose 83% to ₹1,060 crore. Today, more than half the consolidated revenue comes from Deepak Phenolics. Deepak Nitrite is in the midst of an expansion, which includes doubling of IPA capacity to 60,000 MTPA, at a cost of ₹1,500 crore, says the company’s CEO and executive director, Maulik Mehta. Deepak Nitrite’s market capitalisation grew over seven times from ₹3,475 crore in FY19 to ₹25,951 crore on June 6, 2022, catapulting the Mehta family into the billionaire club with ₹11,864 crore wealth.
