Meghmani Organics Limited. 1Q FY2006 Results Briefing 26 August 2005

Transcription

1 Meghmani Organics Limited 1Q FY2006 Results Briefing 26 August 2005

2 Corporate Overview Established in 1986, Meghmani Organics is amongst the leading pigments and agrochemicals manufacturers in India Core competency = Organic chemistry Capitalising on the global outsourcing trend Page 2

3 Corporate profile Business Focus PIGMENTS & AGROCHEMICALS Specializes in the manufacture of green & blue pigment products and a broad spectrum of commonly used generic pesticides PIGMENTS: Multiple applications in printing inks, plastics, paints, textiles, leather, paper & rubber AGROCHEMICALS: Crop protection and non-crop applications like Public health, termite & insect control, veterinary applications Industry Focus Market Focus GLOBAL FOCUS with key markets in India, the US, Europe, Latin America & Asia Pacific Page 3

4 Manufacturing Facilities 4 multi location plants in Gujarat, Western Part of India Total floor area of 180,000 sq m ISO certified Panoli Plant Pigments Ankleshwar Plant Agrochemicals Vatva Plant Chharodi Plant Page 4

5 Global Markets Extensive network of 20 overseas distributors North America Europe Asia (excluding India) South America Africa Australia Over 1,000 stockists, agents, distributors & dealers covering India market Warehouses in Belgium & Uruguay 73% of total revenue from export sales as at FY05 Page 5

6 Key Developments Since Listing Listed 10 Aug 2004 Issue price S$0.28 Raised S$28.1m Established presence in Europe & USA: Meghmani Europe BVBA (Belgium) Meghmani Organics USA Inc. 13 new product registrations in 8 countries: China Paraguay Bangladesh Thailand Indonesia Turkey Nigeria Vietnam. Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul st agrochem label registration for the USA: Permethrin 98.5% Technical Live on SAP Wins global WHO tender Obtained 4 product registrations in Malaysia Page 6

7 Our Business Model

8 Business Overview Products Multiple Applications Brands PIGMENTS CPC Blue (Copper Phthalocynine Blue) Pigment Green 7 Pigment Blue 15, 15:1, 15:3, 15:4 Printing inks, plastics, paints, textiles, leather, paper & rubber Wider than dyes Meghafast PESTICIDES Synthetic Pyrethroid, Organophosphorous and neonicotinoid Pesticide intermediates Technical Grade pesticides Pesticide Formulations Crop protection Non-crop applications Megastar Megacyper Owns 23 brands in India 3 of which are leading brands in its segments Page 8

9 Pigment Manufacturing PHTHALOCYANINE GREEN AND BLUE PIGMENTS CPC BLUE Upstream product Sold to other pigment manufacturers PIGMENT GREEN PIGMENT BLUE End products Sold to Industrial application users like ink, paint, plastic etc. manufacturers Design capacity of Pigment Blue plants at Panoli is 14,400 tonnes per annum 85% of production is exported worldwide as at FYE 31 Mar 05 More than 200 customers in 55 countries Page 9

10 Pesticides Manufacturing Encompasses the entire value chain Pesticide Intermediates Sold to technical grade pesticides manufacturers Technical Grade Pesticides Sold to pesticides formulators Pesticide Formulations Bulk Packing Small Packing Sold to institutional customers Sold to retailers, dealers or directly to farmers Vertically integrated manufacturing processes- approximately 59% of production exported worldwide as at FYE 31 Mar 05 Continued momentum of outsourcing trend for pesticides by MNCs More than 90 customers Page in countries

11 Financial Performance 1Q FY2006

12 Revenue Rs m 1, % Export Domestic QFY QFY06 Growth in revenue from both export and domestic divisions Page 12

13 Revenue Breakdown (1Q2006) By Geographical Markets Domestic: 25% Export: 75% Export sales up 49.9% to comprise 75% of revenue (1QFY05: 71%) Domestic sales up 24.2% to comprise 25% of revenue (1QFY05: 29%) Pigments sales up 30.2% Agrochemicals sales up 55% By Business Divisions Page 13 Pigments 42% Others 2% Agrochemicals 56%

14 Revenue Breakdown (1Q2006) By Continents South America: 6% North America: 26% Africa: 5% Asia (excluding India): 12% Australia: 2% India: 25% Europe: 24% Page 14

15 Profits Rs m 200 Gross Profit +35.2% Rs m 200 Net Profit % QFY05 1QFY06 0 1QFY05 1QFY06 Margins (%) Increase in cost of raw materials from rise in crude oil price as well as copper and aluminum prices. Distribution expenses rose 36.5% to Rs 69.8 m from Rs 51.1 m from increase in freight clearing forwarding and Page packing 15 costs.

16 Balance Sheet Highlights (Rs m) 30 Jun 05 (1QFY06) 30 Jun 04 (1QFY05) 31 Mar 05 (FY05) Trade receivables 1, ,308.2 Inventories Cash & bank balances Shareholders equity 2, ,170.5 NTA per share (Rs) Debtors turnover 139 days 150 days 144 days Inventory turnover 99 days 104 days 78 days Page 16

17 Segmental Financial Review Pigments Division

18 Revenue: Pigments Rs m % QFY QFY06 Export and Domestic sales comprise 76.1% & 23.9% of 1Q pigment revenue Export sales rose 18.5% due to higher sales of Pigment Green 7, Copper Phthalocynine Crude, Alpha Blue and Beta Blue Domestic sales grew strongly by 89.4% due to expansion of customer base in India Page 18

19 Gross Profit: Pigments Rs m % QFY05 1QFY06 Margins 25.8% 24.3% Page 19

20 Capacity Utilisation: : Pigments Installed Capacity 1QFY06 PG 7 CPC Blue Alpha Blue Beta Blue # Hysol-P Pigment Additives and Pigment Blue 60 (MT per annum) % 127%* 96% 82% 0% 16% *Usage of hysol-p capacity to manufacture the additional CPC blue orders # Additional capacity of 600MTA begun commercial production from 1 st April 2005 Page 20

21 Segmental Financial Review Agrochemicals Division

22 Revenue: Agrochemicals % QFY QFY06 Export and Domestic sales comprise 72.4% & 27.6% of 1Q agrochemical revenue 93.5% increase in export sales due to higher sales of Acephate Technical, Cypermethrin Technical, Chlorpyriphos Technical, Permethrin and Alphamethrin in new markets with more registrations 1.7% rise in domestic sales due to higher sales of Chlorphyriphos and MPB in India Page 22

23 Gross Profit: Agrochemicals Rs m % QFY05 1QFY06 Margins 23% 21.9% Page 23

24 Capacity Utilisation: : Agrochemicals Installed Capacity (MT per annum) 1QFY06 Additional Capacity (MT per annum) Date of commercial production Agro I unit : Chharodi MPB / MPBA* CMAC/CMA* Acephate Cypermethrin Permethrin Alpha Cypermethrin Agro II unit : Ankleshwar Chlorpyriphos # 96% 87% 166% 112% 39%^ 240% 67% CMAC* ^ Part of production capacity used to manufacture Acephate January 2006 # Includes additional capacity of 700MT per annum following completion of trial production in Nov First full-year contribution expected to have positive financial impact in FY2006 *Intermediates used as captive consumption to manufacture value-added products such as Cypermethrin, Permethrin etc. Page 24

25 Outlook & Business Strategies Meghmani Organics Limited

26 Industry Prospects: Pigments Global demand likely to increase 6.4% per year to US$5.5 billion by 2006 Continual expansion of key user markets printing ink and coatings which account for about 80% of total demand Trend in printing ink and coatings markets towards products that feature higher pigment loadings Increasing outsourcing opportunities in India India as an important source of direct supplies to the US, Europe, Central and South America and Japan Page 26

27 Industry Prospects: Agrochemicals Robust agrochemicals growth with sales up by 12.6% to US$32.2 billion in 2004 Growing demand for Organophosphorous, Synthetic pyrethroid & neonicotinoid insecticides compounds Positive long term outlook for Indian market with continued expansion of economy Increasing outsourcing opportunities in India Page 27

28 Outlook for FY2006 Raw materials prices: Crude Oil and Metal Sharp oil price increases > impact on derivatives such as Phathlic, Ortho Nitro Toluene and solvents Rise in prices of copper & aluminium Stabilisation of Chlorine gas and Caustic Market prices Recovering sales price of certain pigment & agro products Page 28

29 Outlook for FY2006 Measures to protect profit margins Continuous price negotiation efforts to pass on increase in raw material costs to customers : a market-dependent process difficult to predict price adjustment period Improve management of raw materials Manage currency exposure to retain benefits of increase in our product selling prices Page 29

30 Growth Strategies: Pigments Continue to expand production capacity Shifting from blue crude supplier to a high margin and technology oriented pigments like alpha blue or beta blue Raised production capacity of Beta Blue by 600MT per annum to 3600MT per annum in 1Q Additional capacity operational from 1 April and expected to have a financial impact in FY2006 Continue to expand product range Hysol-P CPC Blue samples approved by overseas customers and undergoing commercial discussion Started production of Activated Blue Crude at Hysol-P facility New production line for Pigment Additives commenced in 1Q FY2006. Page 30

31 Growth Strategies: Agrochemicals Continue to expand production capacity Ankleshwar plant: Increased production capacity of Chlorpyriphos Increase total production of CMAC by 1,000 MT per annum (Commercial production expected to commence in January 2006) Registration of agrochemical products in overseas markets Obtained a total of 13 registrations for agrochemical products in the first quarter of 2005 in 8 countries including China Has a total of 43 registrations worldwide and 89 CIB registrations in India till date. 226 registrations are under process at various stages in 61 countries Continue to expand product range Develop manufacturing processes for off-patent generic pesticides Continue building our global sales and distribution network Page 31

32 Conclusion Meghmani achieved a record set of results in 1QFY2006 Impressive top and bottomline growth Revenue up 42.4% to Rs m Net profit up 56.1% to Rs 77.0 m Healthy profit margins despite continued cost pressures Gross margin 22.7% and net margin 8.9% Strong sales in July Page 32

33 Thank You Question and Answer Session

34 Pigments Division Raw Material Prices Price trend of primary raw materials used at Panoli Plant Apr- 04 Oct- 04 Nov- 04 Dec- 04 Mar- 05 Apr- 05 Jun- 05 Particulars Price/Kg Price/Kg Price/Kg Price/Kg Price/Kg Price/Kg Price/Kg Copper Scrap Phthalic Anhydride Urea Cuprous Chloride Ammonia Molybdate , , , , , , Ortho Nitro Toluene Page 34

35 Agrochemicals Division Raw Material Prices Petroluem Base Inorganic Paw Material / Month-Yr Dimethyl Phosphoro Amido Thioic Acid Iso Butylene Di-ethyl Thiophosphoryl Chloride C-9 Carbon Tetrachloride Acetic Anhydride Thionyl Cloride ($/MT) ($/MT) ($/MT) ($/MT) (RS/KG) (RS/KG) ($/MT) Apr- 04 1, , Jul- 04 1, , Oct- 04 1, , Jan- 05 2, , Apr- 05 1, , Jun- 05 1, , Jul- 05 1, , Page 35