From the desk of the Vice-Chairman and Managing Director
From the desk of the Vice-Chairman and Managing Director
From the desk of the Vice-Chairman and Managing Director
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<strong>From</strong> <strong>the</strong> <strong>desk</strong> <strong>of</strong> <strong>the</strong> <strong>Vice</strong>-<strong>Chairman</strong> <strong>and</strong> <strong>Managing</strong> <strong>Director</strong>The Ultimate Pursuit:Pr<strong>of</strong>its or Value Creation?"’Business is to make pr<strong>of</strong>its’...... <strong>the</strong> 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 <strong>and</strong> stock-markets.During <strong>the</strong> course <strong>of</strong> <strong>the</strong> year, oil, DAP, Sulphur <strong>and</strong>Ammonia touched <strong>the</strong>ir highest-ever levels, bolsteringrevenues to unprecedented levels.Just about as suddenly <strong>the</strong>reafter came <strong>the</strong> decline witha speed, magnitude <strong>and</strong> ferocity that spared no one –banks, companies <strong>and</strong> countries.What could possibly be our take-home learning from thisturbulent period? At <strong>the</strong> root <strong>of</strong> it all, what went wrong?My answer: <strong>the</strong> singular pursuit <strong>of</strong> short-term pr<strong>of</strong>its."Pr<strong>of</strong>itability is not <strong>the</strong> purpose <strong>of</strong>, but alimiting factor on business. Pr<strong>of</strong>it is not <strong>the</strong>explanation, cause or rationale <strong>of</strong> businessbehaviour <strong>and</strong> business decisions but ra<strong>the</strong>r<strong>the</strong> test <strong>of</strong> <strong>the</strong>ir validity." – Peter DruckerIf organisational actions are focused on short-termpr<strong>of</strong>its as opposed to <strong>the</strong> creation <strong>of</strong> true,comprehensible <strong>and</strong> sustainable value, <strong>the</strong>re could be<strong>the</strong> risk <strong>of</strong> creating <strong>the</strong> basis for ano<strong>the</strong>r speculativeeuphoria leading to value depreciation <strong>and</strong> finallypr<strong>of</strong>it erosion.At DFPCL, <strong>the</strong> one overriding question that weconstantly ask ourselves is: how do we add value toour 29 years <strong>of</strong> fertiliser <strong>and</strong> chemical experience <strong>and</strong>our insight into <strong>the</strong> Indian <strong>and</strong> global scenario? Howdo we focus on sustainable value-creation as opposedto a fleeting increase in pr<strong>of</strong>its? 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 <strong>the</strong> following reasons:India represents a large local marketThe country possesses untapped <strong>and</strong> vast mineralresourcesThe region’s sun-soil-labour advantage powers itsagricultureEach <strong>of</strong> <strong>the</strong>se provide a growing scope for pr<strong>of</strong>its todayas well as opportunities in synergic value creation in <strong>the</strong>years to come."The highest use <strong>of</strong> capital is not to makemore money, but to make money do more forbetterment <strong>of</strong> life." – Henry FordAt DFPCL, after ano<strong>the</strong>r record breaking year <strong>of</strong> topline<strong>and</strong> bottomline despite <strong>the</strong> global meltdown, goingforward we see ourselves poised to capitalise on <strong>the</strong> vastpotential in four high-growth sectors <strong>of</strong>:AgricultureMiningChemicals <strong>and</strong>Value-added real estateDuring 2008-09, we undertook a number <strong>of</strong> strategicallyguided <strong>and</strong> decisive steps, which will help us leverageIndia’s macro-economic momentum through <strong>the</strong>following businesses:Our Speciality Fertiliser Business grew 139 percent,creating a firm footprint in <strong>the</strong> non-subsidised fertilisersegment <strong>and</strong> making in-roads into <strong>the</strong> high potential fruit<strong>and</strong> vegetable sectors. At <strong>the</strong> front-end, small butpotentially attractive steps were taken to enter <strong>the</strong> agriproduce,purchase <strong>and</strong> export businesses. A state-<strong>of</strong>-<strong>the</strong>artSulphur Bentonite manufacturing facility wascommissioned <strong>and</strong> a world-class speciality fertiliserproduct was placed in a market deficient <strong>of</strong> Sulphurnutrients in <strong>the</strong> soils.A detailed analysis <strong>of</strong> <strong>the</strong> needs <strong>of</strong> <strong>the</strong> mining industry(including contract mining) was undertaken following <strong>the</strong>opening up <strong>of</strong> <strong>the</strong> coal sector, indicating newopportunities. The new project for tripling capacities <strong>of</strong>Technical Ammonium Nitrate to service <strong>the</strong> mining sectorwas well underway for commissioning during FY2011leading to fur<strong>the</strong>r avenues for growth.In <strong>the</strong> Chemical Segment, a cosmetic grade IPA wasdeveloped, a strategic step towards conversion <strong>of</strong> some<strong>of</strong> our commodity chemicals into speciality niches. A450 TPD Nitric Acid project was undertaken <strong>and</strong> <strong>the</strong>plant is under commissioning, slated to give a fillip todownstream fertilisers <strong>and</strong> chemicals.In <strong>the</strong> Value-added real estate space, with over a millionfootfalls <strong>and</strong> over 35 percent conversions achieved atIshanya, a sharper positioning with value-added servicesfor <strong>the</strong> B-2-B <strong>and</strong> 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 future<strong>of</strong> promising potential… where pr<strong>of</strong>its will be a test <strong>of</strong>our validity <strong>and</strong> sustainability but not <strong>the</strong> overridingrationale <strong>of</strong> our existence.Sincerely,S. C. MehtaAnnual Report 2008-09 7