DEEPAK NITRITE LIMITED

Registered Office: 9/10, Kunj Society, Alkapuri, Vadodara 390 007. Tel: +91 265 2351013, www.deepaknitrite.com

Q1FY2011 INVESTOR COMMUNICATION

Revenues up 45% to Rs. 154.09 Crore, PAT up 82% to Rs. 5.88 Crore Fuel Additives gaining traction
Pune, July 31, 2010: Deepak Nitrite Ltd. (DNL), a leading manufacturer of organic, inorganic, fine & specialty chemicals and preferred business partner of global chemical companies, has announced its financial results for the first quarter ended June 30, 2010.

Financial Highlights
Revenues for Q1FY11 of Rs. 154.09 crore were higher by 45% when compared to revenues of Rs.106.67 crore in Q1FY10. Revenues have increased due to increase in volumes by 39%. EBITDA for Q1FY11 of Rs. 13.28 crore is higher by 19% when compared to EBITDA of Rs. 11.15 crore in Q1FY10. Interest cost for Q1FY11 is lower by 11% at Rs. 1.81 crore against Rs. 2.03 crore in Q1FY10. PBT for Q1FY11 of Rs. 8.22 crore is higher by 81% when compared to Rs. 4.53 crore in Q1FY10. PAT for Q1FY11 of Rs. 5.88 crore is higher by 82% when compared to Rs. 3.23 crore in Q1FY10.

MDs message
Commenting on the results, Mr. Deepak C. Mehta, Vice Chairman & Managing Director, said, Our performance for this quarter has been encouraging as we have seen an increase in both topline and bottom line over the corresponding quarter last year. This has been driven by an increase in overall volumes, meaningful increase from our fuel additives business coupled with increase in demand for new Xylidine intermediate products introduced last year. Our plans for augmenting capacity at our four existing locations are on .We are confident that our strong balance sheet, improved working capital management and low gearing represented by our debt/equity ratio of 0.16 provide us flexibility for further growth and we remain positive about our prospects over the long term.

Page 1 of 9

Operating Highlights
Prices have been fairly stable and the company has been able to increase revenues during Q1FY11 when compared to the corresponding period of last year on account of increase in volumes by 39%. Fuel additives products introduced last year have performed well with a contribution of over Rs. 15 crore of revenues from this segment. The company expects the annualised turnover from these products to be about Rs. 75 crore per annum. Fine & Specialty sales have increased over the corresponding quarter last year on account of buoyant demand from the colour business. Agro business segment has moderately performed due to seasonality. The Inorganic segment continues to do well, contributing effectively towards sales. New Xylidine products that were introduced last year as agro intermediates have performed well and the company expects healthy demand for these products in the future. The company effectively optimised working capital cycle & the positive cash flow generated from operations was used to reduce debt. The company continues to compete well in China & USA markets with focus on gaining market share in select product categories. Utilisation of manufacturing facilities across all locations has increased substantially. Exports account for about 47% of revenues. The companys prudent foreign exchange management policy has ensured in negating the effect of volatility in the exchange rates, on profitability.

Outlook
The company will be augmenting the capacity at its four existing locations at Vadodara, Taloja, Roha and Hyderabad.. The full year impact of this expansion in hydrogenation facilty at Taloaja will be reflected in FY 2011. DNL has taken effective steps in the Fuel Additives segment to increase its market share & will accordingly enhance capacity, the effect of which will be realised in the near future.

-ENDS-

Page 2 of 9

Attached: Details to the announcement For further information please contact:

Sanjay Deshpande Deepak Nitrite Limited Tel: 020 6609 0206 Fax: 020 2668 5760 Email: sdeshpande@deepaknitrite.com Mayank Vaswani / Rishab Barar Citigate Dewe Rogerson Tel: +91 22 4007 5021 / 5040 Fax: +91 22 2284 4561 Email: mayank@cdr-india.com / rishab@cdr-india.com

Page 3 of 9

About Deepak Nitrite Limited

Deepak Nitrite Limited [NSE - DEEPAKNITR, BSE - 506401] is a leading manufacturer of organic, inorganic, fine and speciality chemicals and is the partner of choice for several global chemical majors. Headquartered at Pune, DNL is a multi-division and multi-product company with manufacturing facilities at Nandesari in Gujarat, Roha and Taloja in Maharashtra, and at Hyderabad in Andhra Pradesh. The organic intermediates segment consists of Nitro Aromatic plants and Multi Purpose Aromatic Amines Plant based on Catalytic Hydrogenation Technology. The inorganic intermediates segment consists of manufacture of Sodium Nitrite and Sodium Nitrate by the ammonia oxidation process, where DNL is the largest on purpose manufacturer. The Fine & Speciality Chemicals segment produces a broad and innovative range of Effect Chemicals meeting customized needs of Speciality Producers. The end user industries for DNL range from agro-chemicals, dyestuffs, pigments, inks, whiteners, pharmaceuticals to fuel additives. DNL prioritises R&D activities and invests over 1% of its annual revenues in this area. It has a government approved central R&D facility in Pune which has a sophisticated analytical laboratory, state-of-the-art equipment and advanced facilities. The company expects to launch new products through its R&D efforts. As a part of its growth strategy, the company anticipates that it will be able to add around 15% of its revenue through new products. This will help the company to broad base its presence in the market segment.

Safe Harbour
Some of the statements in this document that are not historical facts are forward-looking statements. These forward-looking statements include our financial and growth projections as well as statements concerning our plans, strategies, intentions and beliefs concerning our business and the markets in which we operate. These statements are based on information currently available to us, and we assume no obligation to update these statements as circumstances change. There are risks and uncertainties that could cause actual events to differ materially from these forwardlooking statements. These risks include, but are not limited to, the level of market demand for our services, the highly-competitive market for the types of services that we offer, market conditions that could cause our customers to reduce their spending for our services, our ability to create, acquire and build new businesses and to grow our existing businesses, our ability to attract and retain qualified personnel, currency fluctuations and market conditions in India and elsewhere around the world, and other risks not specifically mentioned herein but those that are common to industry.

Page 4 of 9

Details to the Results (All figures in Rs. Crore)

Revenues During Q1FY2011, volumes have increased by 39% when compared to the
corresponding period of last year.

Revenues
Organic Intermediates Inorganic Intermediates Fine & Specialty Others Total Inter Segment Net Sales/Operating Income

Q1FY11
92.96 30.16 42.35 1.37 166.84 9.67 157.18

Q1FY10
54.58 26.18 32.80 0.64 114.21 5.83 108.38

Raw Materials & Inventories

The prices of raw materials have remained stable compared to Q1FY10

Other expenditure
Particulars Employee Costs
Other Operating exp

Q1FY11
11.44 27.95

Q1FY10
9.38 23.41

Other Operating costs for Q1FY11 are higher mainly due to increase in utility cost because of increase in volumes.

Page 5 of 9

Interest, Depreciation & other income

Q1FY11 Interest Depreciation
Other Income 1.81 4.55 1.30

Q1FY10
2.02 4.68 0.09

The depreciation cost continues to remain in line with the earlier quarters. The company has been able to decrease its interest costs by 11% due to reduction of debt. Net Debt equity ratio is 0.16 :1 as compared to 0.30 as on 31st March 2010. Other income includes sundry receipts Rs. 48 lacs, dividend on mutual funds Rs 22 lacs, interest on deposits/others Rs. 59 lacs.

PBT, PAT & EPS (EPS in Rs.) Q1FY11 PBT PAT

EPS (Rs.) 8.22 5.88 5.62

Q1FY10
4.53 3.23 3.60

Page 6 of 9

Deepak Nitrite Limited a brief background

Overview: Deepak Nitrite Limited (DNL) was incorporated in 1970 by Mr. C.K Mehta, the current chairman of the company, with the aim to manufacture Sodium Nitrite and Sodium Nitrate. Over the years the company has expanded its offering and operations. Currently, DNLs principal activity is to manufacture basic and intermediate chemicals. These chemicals are used in the manufacture of products such as colorants, imaging chemicals, agrochemical, pharmaceuticals and rubber chemical intermediates, chemicals for refineries, cosmetics etc. The Company operates in three segments, namely, Inorganic Intermediates, Organic Intermediates and Fine / Specialty Chemicals. The Inorganic Intermediates segment includes manufacture and sale of sodium nitrate and sodium nitrite. The Organic Intermediates segment comprises the manufacture and sale of nitro chlor-benzenes, nitro toluenes, para cumidine and xylidines. The Fine and Specialty Chemicals consists of sale of low volume and knowledge intensive products. The Company has a presence in more than 20 countries, including the U.S.A., member countries of the European Union, East European nations, Japan, Asean countries, South Korea and South America. The DNL Advantage: Competence in Key Processes DNL has set product quality and specifications to match the standards set by the worlds best producers. The increasing international business and growing customer base which includes some of the marquee names in the global chemical industry demonstrates the satisfactory and reliable performance with respect to quality of products manufactured by DNL. DNL is uniquely positioned to produce intermediates for industries catering to diverse market sectors like pharmaceuticals, rubber chemicals, leather chemicals, pesticides, fertilizers, tyre industries, dyes and dyestuff, etc. DNL portrays a high level of expertise in the processes / reactions mentioned below: Hydrogenation Chlorination Nitration Sulfonation Alkylation Condensation Phenylation Oxidation Nox Production & Absorption.

Relationships and Partnerships with Key Customers: DNL has aligned its customer relationship management systems with its core business to empower the customer with trust and reliability in the areas of product quality, technical support and supply continuity.

Page 7 of 9

Some of the key customers of DNL are Sygenta Global, Bayer Crop Science, BASF, Kemira, Lanxess, Clariant, Isochem, Lonza and Sun Chemical. Leadership position in several products: DNL is Indias largest producer of sodium nitrite and sodium nitrate by the ammonia oxidation process. Sodium nitrite also forms the raw material for several other valueadded products manufactured by the company such as hydroxylamine derivatives, oximes, alkylated hydroxylamine and a rubber-blowing agent. DNL has expertise to safely handle bulk and hazardous chemicals. DNL is the market leader (65% market share) for sodium nitrite in India. Cost leadership, supported with well-entrenched market network & customer understanding has seen steady rise in market share for DNL. In the Organic Intermediate sector, DNL is market leader in India in Nitro Toluene (NT) business, it is global leader in the Xylidine & Cumidine business and has significant presence in Nitro Chloro Benzene (NCB). In Fine & Specialty business, DNL is among top 3 players globally in Color Intermediate and Oxime business. DNL has a niche positioning in various product categories in this segment. DNL is strengthening its relationship with different customers in the export market and its product is also gaining recognition due to its superior quality. Of the exports, 70% is to Europe and the rest to Japan, Korea, USA & China. Facilities: Sr. No. 1 2 3 4 5 6 7 Facility Corporate Office Manufacturing Facility Manufacturing Facility Manufacturing Facility Manufacturing Facility R&D Facility Proposed Facility Location Pune, Maharashtra Roha, Maharashtra Taloja, Maharashtra Nandesari, Gujarat Hyderabad, AP Pune, Maharashtra Dahej, Gujarat

Cost competitive operations: DNL has a cost competitive setup of operations. Some key competitive advantages are Scale of operations and location of facilities helps to provide DNL with a competitive edge. The company has been able to secure assured supply of piped gas which enables it to increase the cost effectiveness and reliability of its processes. The established presence and track record in the industry. The plants set up by the company run on high efficiency with low maintenance outgo.

. Earlier, competitiveness vs. Chinese companies was low due to incentives provided by the Chinese Government to smaller chemical manufacturers such as access to low cost capital, liberal labor laws and less stringent pollution control norms. However, the incentives provided by the Chinese Government have been withdrawn. Additionally due to heightened environmental concerns global customers have enhanced their focus on adherence to environmental norms which has led to a level playing field. Given the Page 8 of 9

withdrawal of these unsustainable incentives DNL has been able to improve its cost competitiveness in global markets. Research & Development: DNL invests over 1% of its revenue into Research and Development. The R&D facility at Pune has been approved by the Government of India. It has advanced facilities for testing new technologies and products. The R&D has highly skilled and experienced technical man power consisting of 50 post graduates in science and 9 Ph. Ds. Furthermore, R&D investments have paid off through introduction of newer products and variants of existing products as well as through improvement of processes to cut costs or reduce wastage. Acquisitions and Unlocking: DNL has a fairly successful track record with acquisitions. The strategy implemented in this area is to identify a business which has significant potential but is underperforming acquire the business at a price which is comfortable given DNLs overall financial position and also leaves adequate room to realise returns increase the efficiency of the business acquired to fully realise benefits.

DNL immensely benefited by acquiring companies whose product lines complemented its own. In 1984, it acquired Sahyadri Dyestuffs & Chemicals. In 2000, DNL acquired Aryan Pesticides Ltd., the agrochemical intermediate producer company located at Roha in Maharashtra to boost its specialty chemicals business. The company was acquired as a strategy of forward integration. During FY07, DNL acquired the DASDA (diamino stilbene disulfonic acid) business of Vasant Chemicals Limited (as a forward integration step), a closely held company based in Hyderabad. Outlook: Industry growth: The company expects growth in its existing business to mirror the trends exhibited by the end-user industries it services, for e.g. the paper and pulp industry in India and China is expected to grow at CAGR in excess of 20% for the next 5 years the company sees sustained demand from agro-chemical sectors as the record low in food grain stocks will ensure that the long term outlook for agro intermediate products is very good however there will be cyclicality in the business.

Contribution from new products: The company has a very advanced R&D program and expects to introduce new products through its R&D initiatives. DNL expects a revenue contribution of 10-15% of revenues to be contributed by new products in each of the ensuing financial years.

Page 9 of 9