From the desk of the Vice-Chairman and Managing Director

From the desk of the Vice-Chairman and Managing DirectorThe Ultimate Pursuit:Profits or Value Creation?"’Business is to make profits’...... the answeris not only false, it is irrelevant." – Peter DruckerThe year 2008-09 witnessed financial volatilitycomparable to a tsunami, marked by sharp priceswings in commodities, real-estate and stock-markets.During the course of the year, oil, DAP, Sulphur andAmmonia touched their highest-ever levels, bolsteringrevenues to unprecedented levels.Just about as suddenly thereafter came the decline witha speed, magnitude and ferocity that spared no one –banks, companies and countries.What could possibly be our take-home learning from thisturbulent period? At the root of it all, what went wrong?My answer: the singular pursuit of short-term profits."Profitability is not the purpose of, but alimiting factor on business. Profit is not theexplanation, cause or rationale of businessbehaviour and business decisions but ratherthe test of their validity." – Peter DruckerIf organisational actions are focused on short-termprofits as opposed to the creation of true,comprehensible and sustainable value, there could bethe risk of creating the basis for another speculativeeuphoria leading to value depreciation and finallyprofit erosion.At DFPCL, the one overriding question that weconstantly ask ourselves is: how do we add value toour 29 years of fertiliser and chemical experience andour insight into the Indian and global scenario? Howdo we focus on sustainable value-creation as opposedto a fleeting increase in profits? How do we reconcileshort-term aspirations with long-term considerations?6 Deepak Fertilisers And Petrochemicals Corporation Limited

The answer points to a considerable potential before usin our specific businesses for the following reasons:India represents a large local marketThe country possesses untapped and vast mineralresourcesThe region’s sun-soil-labour advantage powers itsagricultureEach of these provide a growing scope for profits todayas well as opportunities in synergic value creation in theyears to come."The highest use of capital is not to makemore money, but to make money do more forbetterment of life." – Henry FordAt DFPCL, after another record breaking year of toplineand bottomline despite the global meltdown, goingforward we see ourselves poised to capitalise on the vastpotential in four high-growth sectors of:AgricultureMiningChemicals andValue-added real estateDuring 2008-09, we undertook a number of strategicallyguided and decisive steps, which will help us leverageIndia’s macro-economic momentum through thefollowing businesses:Our Speciality Fertiliser Business grew 139 percent,creating a firm footprint in the non-subsidised fertilisersegment and making in-roads into the high potential fruitand vegetable sectors. At the front-end, small butpotentially attractive steps were taken to enter the agriproduce,purchase and export businesses. A state-of-theartSulphur Bentonite manufacturing facility wascommissioned and a world-class speciality fertiliserproduct was placed in a market deficient of Sulphurnutrients in the soils.A detailed analysis of the needs of the mining industry(including contract mining) was undertaken following theopening up of the coal sector, indicating newopportunities. The new project for tripling capacities ofTechnical Ammonium Nitrate to service the mining sectorwas well underway for commissioning during FY2011leading to further avenues for growth.In the Chemical Segment, a cosmetic grade IPA wasdeveloped, a strategic step towards conversion of someof our commodity chemicals into speciality niches. A450 TPD Nitric Acid project was undertaken and theplant is under commissioning, slated to give a fillip todownstream fertilisers and chemicals.In the Value-added real estate space, with over a millionfootfalls and over 35 percent conversions achieved atIshanya, a sharper positioning with value-added servicesfor the B-2-B and B-2-C segments was underway.The pages that follow are a peep into an exciting futurethat we see… value creation that will synergise India’smacro-drivers with DFPCL’s proven past to chisel a futureof promising potential… where profits will be a test ofour validity and sustainability but not the overridingrationale of our existence.Sincerely,S. C. MehtaAnnual Report 2008-09 7