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First Quarter Financial Statements And Dividend Announcement

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Income Statement

Balance Sheet

Review of Performance

The principal activities of the Group are (i) manufacturing and trading of Pigments, Agrochemicals, Basic Chemicals and (ii) trading of intermediates, bulk and small packing of Agrochemicals technical and intermediates products.

Revenue - Group

Group revenue for Q1 FY 2018 increased by 16.9% from Rs. 3541.95 million in Ql FY 2017 to Rs. 4140.14 million in Q1 FY 2018.

Breakdown of Revenue by Product

Breakdown of Domestic Sales by Product

Reasons for Increase / (Decrease) in Domestic Sales

  1. Domestic sales of Pigment Division decreased marginally by 3.1 % due to decrease in quantity sales of CPC Blue.
  2. Domestic sales of Agrochemical Division decreased by 5.2% due to decrease quantities sales of CMAC, CPP, Cypermethrin and Profenophos.
  3. Domestic sales of Basic Chemicals increased by 20.1 % mainly due to increase in sales quantity of Caustic.

Breakdown of Exports Sales by Product

Reasons for Increase / (Decrease) in Export Sales

  1. Export sales of Pigment Division increased by 25.7%. This was mainly due to increase in sales quantity of Beta Blue.
  2. Export sales of Agrochemical Division increased by 32.7% on account of increase in quantity sales of MPB and Zeta Cypermethrin and also increase in sales price.

Gross profit - Group

Breakdown of Gross Profit by Division

Reasons for increase / (decrease) in GP margin

GP of Pigment

The amount of gross profit of Pigment Division decreased by 6.1 %, while GP margin of Pigment Division decreased from 22.3% in Q1 FY 2017 to 18.0 % in Q1 FY 2018 due to decrease in quantity sales of CPC Blue, Alpha Blue and PG7.

GP of Agrochemical

The amount of gross profit of Agrochemical Division increased by 206.1 % and GP margin increased from 10.4 % in Q1 FY 2017 to 27.1 % in Q1 FY 2018 due to increase in sales price and decrease in raw material cost of MPB and Cypermethrin.

GP of Caustic Chlorine

The amount of gross profit of Caustic Chlorine Division increased by 21.1 %, while GP margin of Caustic Chlorine Division decreased from to 34.2 % in Q1 FY 2017 to 32.7 % in Q1 FY 2018 due to increase in sales quantity.


Other operating income of the Group consists mainly of export benefits such as duty entitlement passbook benefit (DEPB), Duty Draw Back and MEIS, etc.

Other operating income increased by Rs. 5.51 million to Rs. 67.77 million in Q1 FY 2018 respectively mainly due to increase in export sales. The Government has introduced new export incentive scheme MEIS.


Distribution expenses

Distribution expenses of Group increased by Rs. 65.88 million, i.e. by 33.3%. This is due to increase in export clearing & forwarding, transportation and packing material consumption.

Administrative expenses

Administrative expenses of Group increased by Rs. 20.46 million i.e. by 30.7% mainly due to increase in rent, rates & taxes, insurance premium, legal and professional fees and directors remuneration.

Other Operating Expenses

Other operating expenses indicates income mainly on account of favorable foreign currency exchange adjustment. The fluctuations in the exchange rate of the Indian Rupee against the US dollar is main contributory. Other operating expenses reflect income in current and previous financial year. The expenses has been increased by Rs. 58.82 million.

Finance costs

Finance costs of the Group decreased by Rs. 34.54 million, i.e. by 24.0 % due to repayment of term loan and lower utilization of working capital.

Income from investments

During the year there is no change in Income from investments in Q 1 FY 2018.


Income tax at the Group level increased by Rs. 64.91 million in Q1 FY 2018 Due to increase in profit of Meghmani Organics Limited and Meghmani Finechem Limited (MFL - Subsidiary).

Interest in Subsidiaries

  1. Meghmani Organics USA Inc., is a 100% wholly owned subsidiary of the Company. The Company is in the trading business.
  2. Meghmani Europe BVBA is a 100% wholly owned subsidiary of the Company. The Company is in the trading business.
  3. Meghmani Finechem Limited (MFL) is a company formed to set up Rs. 555 Crore Caustic Chlorine project. Meghmani Organics Limited holds 57% of the Equity.
  4. P T Meghmani Indonesia is a 100% wholly owned subsidiary of the Company set up for the trading purpose.
  5. Meghmani Overseas FZE, Sharjah is a 100% wholly owned subsidiary of the Company. The Company is in the trading business.

SGX Rule 716

As per Rule 716, we declare that no one of the above Subsidiaries or Associates is listed on any of the Stock Exchanges.

Other Comprehensive income.

Other comprehensive income (OCl) is defined as comprIsmg 'items of income and expense (including reclassification adjustments) that are not recognized in profit or loss.


Trade receivables

Trade receivables of Group increased by Rs.637.22 million from Rs. 33.09.10 million in FY 2017 to Rs. 3946.32 million in Q1 FY 2018. Trade receivables at Company level increased by Rs. 427.52 million from Rs. 2977.66 million in FY 2017 to Rs. 3405.19 million in Q1 FY 2018. Trade Receivables has increased due to increase in sales.

Other receivables & Prepayments

During the first quarter, other receivables & prepayments at Group increased by Rs. 3.42 million (or 0.2%) and at Company level decreased by Rs. 58.88 million (4.5 %) due to utilization of excise balance on account of increase in sales.


Inventories at group level increased by Rs. 279.37 million from Rs. 2416.81 million in FY 2017 to Rs. 2696.18 million in Q1 FY 2018 due to increase in raw material stock at Meghmani Finechem Limited (MFL - Subsidiary) While inventories at Company level increased by Rs. 245.79 million from Rs.2090.36 million in FY 2017 to Rs. 2336.15 million in Ql FY 2017 due to increase in finished goods stock and raw material stock.

Property, Plant and Equipments

Property, plant and equipments at Group level decreased by Rs. 47.95 million. and at Company level increased by Rs. 42.66 million.

Bank Borrowings and Long Term Loan

Bank borrowings at Group level (current and non current) decreased by Rs. 488.96 million and at Company level decreased by Rs. 315.31 million respectively due to repayment of term loan.

Trade payables and Other payables

Trade payables at Group level increased by Rs. 698.62 million and at Company level increased by Rs. 570.97 million respectively due to increase in operational activity.

Other payables at Group level increased by Rs. 175.85 million and at Company level increased by Rs. 88.09 million respectively.

Cash flow statement

During the period, the Group has generated positive net cash flow of Rs. 569.07 million from operation.





Pigments are classified as either organic or inorganic. Organic pigments include azo pigments, which contain a nitrogen group; they account for most of the organic red, orange, and yellow pigments. Copper phthalocyanines provide brilliant, strong blues and greens that are unusually colourfast for organic colours. Some pigments, such as fluorescent ones, are simply dyes that have been rendered insoluble by chemical reaction. Traditionally organic pigments are used as mass colorants. They are popular in plastics, synthetic fibres and as surface coatings-paints and inks. In recent years, the organic pigments are used for hi-tech applications that include photoreprographics, opto-electronic displays and optical data storage.

Organic Pigments Market Dynamics :-

Major factors driving growth of the organic pigments market include their increasing use in plastic, paint, coatings and textile industries.

Moreover, upswing in number of textile industries and increasing demand of plastic products owing to various macro-economic factors is expected to boost the demand of organic pigments, in turn, fuelling the growth of global organic pigments market over the forecast period.

Manufacture of organic pigments with good light fastness propelty is gaining traction among global manufacturers. Besides, developing countries such as China & India are shifting towards becoming the center of global organic pigments market, both from the demand and supply side. Moreover, owing to their ability to providing a wide color spectrum compared to their inorganic counterpart, organic pigments are expected to substitute inorganic pigments for some specific applications over the coming years.

Organic Pigments Market: Segmentation :-

Global organic pigments market is segmented on the basis of source of production and application.

  • On the basis of production source, global organic pigments market is categorized into natural and synthetic segments.
  • On the basis of application, global organic pigments market is segmented into paints and coatings, plastics, printing inks, textiles, cosmetics, food, chemical, and others.

Organic Pigments Market: Regional Outlook :-

Global organic pigments market is segmented into seven key regions namely NOlth America, Latin America, Eastern Europe, Western Europe, Asia-Pacific Excluding Japan (APEJ), Japan and Middle East and Africa (MEA). Upsurge in development of textile & plastic industries in Asiapacific is expected to boost the demand of organic pigments market in the region by 2026 end.

Overview of the global organic pigments market :-

Organic pigments have peculiarly unique properties that ensure hues that other kinds of pigments fail to produce. They are used to provide metallic finishes and elastic properties. Owing to superior property, organic pigments are highly preferred in specialized applications in the original equipment manufacturers (OEMs), refinished, and high-end automobile industries. Organic pigments are also being used to improve aesthetics and the functional values in both paints and plastics segments. These pigments are used in paints that can protect against harsh weather, dampness, corrosion, fungi, and other destructive influences on the building. Moreover, some of them are also used as a plasticizer dampened powders that allow functional advantages such as light reflection, heat reflection, opacity, and gas and vapor barrier. With paints and coatings with low VOC content gaining prominence, the market for organic pigments is expected to witness massive growth during the forecast period.

In terms of geography, Asia Pacific (APAC) is the largest and dominating region in the global market due to the presence of several manufacturers who offer pigments at lower costs in comparison with other regions. APAC is anticipated to lead the market in terms of consumption over the next four years due to increase in infrastructural activities that require paints and coatings with functional benefits. Moreover, the sustainability factor of organic pigments is expected to drive the overall market globally throughout the predicted period.

Competitive landscape and key vendors

The global organic pigments market is extremely competitive owing to the presence of several vendors both at international and regional levels. BASF, Clariant, DIC, Heubach, and LANXESS are some of the global vendors who primarily dominate the market.

The printing inks segment was the largest application segment of organic pigments in 2016 and will continue its dominance during the forecast period. Organic pigments are preferred in printing inks because of their brilliance and rich tinctorial strength. Disazo pigments and naphthol AS pigments are the commonly used organic pigments in the manufacture of printing inks.

Moreover, the rapidly changing consumer demands, along with the growing importance of packaging as a means of branding and advertising, have increased the applications of organic pigments in the packaging sector; which will further drive the market growth for organic pigments for printing inks.

Based on in-depth research, TMR projects the global pigments market to exhibit a moderate CAGR of 3.8% between 2015 and 2023. If the projection holds true, the global pigments market will reach US$31.98 bn by 2023, from a valuation of US$22.86 bn in 2014. Volume-wise the market is expected to report a CAGR of 2.9% during the forecast period (Source: - Transparency Market Research)

Organic Pigment business (coloured) is estimated to be close US $ 6 billion market, of which Phthlocyanine, Azo and High Performance Pigment are main areas. In case of Phthlocyanine pigments, market size is in the range of 20% i.e. about US $ 1 to 1.25 billion in size. In its latest study, Ceresana forecasts global revenues generated with pigments to increase to US$34.2 billion in 2020.

In its latest study, Ceresana forecasts global revenues generated with pigments to increase to US$34.2 billion in 2020. The main factors that are contributing to the growth in the industry are increase in demand for high performance pigments (HPP), growth in end-user industries and increasing preference for environmentally-friendly products.

The paints & coatings industry is recording significant growth due to growing infrastructure. According to the industry estimates, the global demand for paints & coating is anticipated to grow at a CAGR of 5.4% during the next five years. Printing ink is another application of the colorants market. The demand for printing ink is driven by various factors such as technological developments and increasing demand for digital inks.


The report confirmed that the Asia Pacific region is anticipated to witness highest regional gains at over 5% CAGR.

Pigment market growth in Asia Pacific is primarily driven by the automotive and construction industries, as well as increasing manufacturing and infrastructure development (specifically in China and India). Asia-Pacific region, organic pigment demand is expected to reach 316.2 thousand MT by 2018, at a high CAGR of 6.6% from 2013 to 2018. The key countries covered in Asia-Pacific Pigments Market are China, India and othersEastern Europe, the Middle East and South America will see demand rise by more than 3% p.a. each as well and thus contribute to the positive development of the pigment industry. The rather saturated markets in Western Europe and North America will slowly return onto a growth path after they suffered losses in the past couple of years. (Source: Crersana.)


There are broadly 5 categories of crop protection products:

  1. Insecticides: Manage the pest population below the economic threshold level
  2. Fungicides: Prevent the economic damage due to fungal attack on crops
  3. Herbicides: Prevent! inhibit! destroy the growth of unwanted plants in a crop field
  4. Bio pesticides: These are derived from natural substances like plants, animals, bacteria & certain minerals. These are non-toxic & environmental friendly
  5. Plant growth regulatorsIndia's agrochemical industry can be divided into producers of technical agrochemicals - the bulk actives - and formulators who compound actives in forms that enable use.

In India, there are about 125 technical grade manufacturers (10 multinationals), 800 formulators, over 145,000 distributors. 60 technical grade pesticides are being manufactured indigenously.

Many technical producers are forward-integrated into formulations, unlike in the pharmaceutical industry where there are who make nothing but active pharmaceutical ingredients CAPIs).


The global agrochemicals market is estimated to reach USD 265.04 Billion by 2022 at a CAGR of 4.51 %. Factors like growing demand for food and consumer awareness, changing agrochemicals usage patterns, advantages of fertilizers and pesticides in crop production, increasing horticulture industries are the drivers for the market.

Development in technology to boost farm production with increasing government investments in agriculture to increase crop yields provides huge opportunities to this market. Asia-Pacific dominates the global agrochemicals market, accounting for major share in overall market and expected to remain the largest market in the near future due to the increasing demand for food crops from its key countries such as China and India

Lucintel's research indicates that developing countries such as China and India are demanding higher volumes of nutritious food, which will increase demand for agrochemicals. Agrochemicals have significantly increased farm productivity in both developed and developing countries.

Growth in revenue is expected to be higher than volume, owing to the increasing cost of pesticides. Development and registration of a pesticide active ingredient is one of the biggest components of cost for a pesticide company.

Presently, the cost of innovation and registration of an active ingredient is about $200 million, which is a 25% increase from 2000. Companies spend extensively on the research and development of new chemicals and improving the performance of the existing ones.

The pressure, therefore, is for the agriculture industry to increase yields per acre, which can be achieved through increased usage of agrochemical products.

As the study indicates, a large untapped market, shrinking of arable land in recent years, increasing demand for food grain production, and increasing population are anticipated to drive the global agrochemicals industry. The industry is expected to face certain challenges such as regulatory standards to reduce toxicity, high inventory, low profit margins, and patent expirations.

The global market has been witnessing lot of technological advancements and developments over the past few years. The changing buyers' preferences, stringent environmental regulations, changing weather conditions, increased agricultural trade and improved farming practices are triggering the innovations and research efforts of the industry.

North America dominates the global herbicide market and has the largest market share in terms of volume and revenue. Europe is the second largest market for herbicides. North America and Europe are mature markets and are dominated by a few major players. To survive intense competition, companies in this region are focused on new product development.

The global agrochemicals industry experienced robust growth over the last five years but is expected to experience moderate CAGR of 5.4% over next five years (2012-2017) and reach approximately US $262 billion in 2017. New product development and innovation at competitive prices are anticipated to drive the agrochemicals industry.


Insecticides are largest sub-segment of agrochemicals with 60% market share whereas herbicides with 16% market share are the fastest growing segment in India. Other segments are rodenticidesl nematocides with 15% and 4%, respectively.

India is fourth largest producer of agrochemicals worldwide, after United States, Japan and China. Indian Agrochemical industry is valued at USD 4.76 billion in FY15 and is estimated to grow at a CAGR of 12% to reach USD 8.38 billion by FY19. Out of this, the domestic market is ~USD 2.43 billion in FY15. Almost 50% is constituted by exports, which is expected to grow by 16% CAGR to reach USD 4.87 billion by FY19, resulting in 60% market share in Agrochemical industry. On the other hand, domestic market will grow at ~8% CAGR to reach USD 3.57 billion by FY19. Indian Agrochemical consumption is one of the lowest in the world (0.6kg/ha). Compared to agrochemical usage, India's feliilizer consumption (~144 kg/ha) is much higher than the global average (~122 kg/ha). This reflects a large potential for agrochemical usage in India.

Availability of cheap labour and low processing costs offers opportunity for MNCs to setup their manufacturing hubs in India for their export markets. The sector is also driven by huge opportunity for contract manufacturing and research for Indian players due to large availability of technically skilled labour.

Indian population is expected to be 1.4 billion by 2020. The increasing population, coupled with growing income will generate increased demand for food grains and non-food grain crops. Therefore, Indian agriculture has to achieve and maintain a consistent and higher growth rate of 4 per cent per annum.

Agrochemicals play a critical role in ensuring food and nutrition security of the nation. With estimated 355 MMTPA (million metric tonne per annum) food grain requirement by 2030 from current 253 MMTPA, efficient usage of crop protection products and solutions for Indian agriculture are the need of the hour. In order to realise the true potential, industry, government and regulatory bodies need to work in tandem and embrace digital technologies to further improve farmer connect," (Source :- National Conference on Agrochemicals 2016 in New Delhi.)

The Companies in this sector should increase their investment in the field of research and development of agrochemicals which in turn will spur the exports increasing competitiveness in the global scenario.

The demand is also seasonal. India due to its inherent strength of low cost manufacturing and qualified low cost manpower is a net exporter of pesticides to countries such as USA and some European and African Countries.

Outlook for FY 2018

Raw Material Price

The volatility in foreign exchange market, increase in crude oil prices and raw material prices may impact on finished goods prices, as a result, our profitability is likely to be affected in 1 Q FY 2018.

Market Price

The global markets for Pigment and Agrochemical products are improving, while Caustic Chlorine ECU have shown sign of improvement.


The Group and Company revenue for FY 2017 has increased due to higher production. We expect to see the improvements in revenue from our Agro - III Plant and Dahej SEZ Pigment Plant.

The Market Dynamics are changing rapidly. While Net Profit after tax at Group and Company level has increased in FY 2017. The Group Profitability may be affected due to unpredictable market trends, rupee/dollar exchange rate and crude oil prices Fluctuation in ECU prices of Caustic Chlorine.

The erratic monsoon season might have impact on the sales and profitability of Agrochemicals in 1Q FY 2018