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First Quarter Financial Statements And Dividend Announcement

Financials Archive

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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 2017 increased by 3.7% from Rs. 3330.78 million in Q1 FY 2016 to Rs. 3455.26 million in Q1 FY 2017.

Breakdown of Revenue by Product

Breakdown of Domestic Sales by Product

Reasons for Increase / (Decrease) in Domestic Sales

1) Domestic sales of Pigment Division increased by 49.4% due to increase in quantity sales of CPC Blue & Alpha Blue.

2) Domestic sales of Agrochemical Division increased by 76.4% due to increase quantities sales of CMAC, CPP, Cypermethrin and Profenophos.

3) Domestic sales of Caustic Chlorine decreased marginally by 1.8 % mainly due decrease in sales quantity

Breakdown of Exports Sales by Product

Reasons for Increase / (Decrease) in Export Sales

1) Export sales of Pigment Division decreased by 4.5%. This was mainly due to Pressure on sales price.

2) Export sales of Agrochemical Division decreased by 15.1% on account of decrease in quantity sales of MPB and Pressure on 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 increased by 49.4%, while GP margin of Pigment Division increased from 14.7 % in Q1 FY 2016 to 20.4 % in Q1 FY 2017 due to increase in quantity sales of CPC Blue, Alpha Blue and Beta Blue.

GP of Agrochemical

The amount of gross profit of Agrochemical Division decreased by 40.8% and GP margin decreased from 23.2% in Q1 FY 2016 to 12.4 % in Q1 FY 2017 due to pressure on sales price and increase in raw material consumption.

GP of Caustic Chlorine

The amount of gross profit of Caustic Chlorine Division increased by 35.9 %, while GP margin of Caustic Chlorine Division increased from 25.6% in Q1 FY 2016 to 34.2 % in Q1 FY 2017 due to higher ECU and decrease in raw material consumption.

Other Operating Income

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 8.8 % to Rs.62.26 million in Q1 FY 2017. The Government has introduced new export incentive scheme MEIS.


Distribution expenses

Distribution expenses of Group decreased by Rs. 16.54 million, i.e. by 8.6%. This is due to decrease in export clearing & forwarding, transportation and sales commission expenses.

Administrative expenses

Administrative expenses of Group increased by Rs. 4.24 million i.e. by 6.8 % mainly due to increase in rent, rates & taxes, stamp expenses, travelling expenses and swachh bharat cess expenses.

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.

Finance costs

Finance costs of the Group decreased by Rs. 39.57 million, i.e. by 21.7 % due to repayment of term loan.

Income from investments

During the year there is no change in Income from investments in Q1 FY 2017 .


Income tax at the Group level increased marginally by Rs. 1.75 million in Q1 FY 2017 Due to increase in profit of 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 are listed on any of the Stock Exchanges.

Balance sheet

Trade receivables

Trade receivables of Group increased by Rs.428.37 million from Rs. 4051.82 million in FY 2016 to Rs. 4480.19 million in Q1 FY 2017. Trade receivables at Company level increased by Rs. 299.57 million from Rs. 3805.13 million in FY 2016 to Rs. 4104.70 million in Q1 FY 2017. The receivables turnover ratio increased from 111 days as at 31 March 2016 to 118 days in Q1 FY 2017.

Other receivables & Prepayments

During the first quarter, other receivables & prepayments at Group decreased by Rs. 72.87 million (or -7.5%) and at Company level decreased by Rs. 51.05 million (or -6.5 %) due to utilization of excise balance.


Inventories at group level decreased by Rs. 200.23 million from Rs. 2446.99 million in FY 2016 to Rs. 2246.76 million in Q1 FY 2017 due to decrease in raw material stock at Meghmani Finechem Limited (MFL – Subsidiary) While inventories at Company level decreased by Rs. 136.38 million from Rs.1900.18 million in FY 2016 to Rs. 1763.80 million in Q1 FY 2017 due to decrease in finished goods stock.

Property, plant and equipment

Property, plant and equipments at Group level decreased by Rs. 88.48 million and at Company level decreased by Rs. 17.21 million. This has depreciation effect.

Bank Borrownings and Long Term Loan

Bank borrowings at Group level (current and noncurrent) decreased by Rs. 419.66 million and at Company level decreased by Rs. 241.55 million respectively due to repayment of term loan.

Trade payables

Trade payables at Group level increased by Rs. 20.44 million and at Company level increased by Rs. 128.80 million respectively due to increase in operational activity.

Other payables at Group level increased by Rs. 103.47 million and at Company level increased by Rs. 41.52 million respectively. This is due to payment of basic excise duty of Meghmani Finechem Limited.

Cash Flow statement

During the period, the Group has generated positive net cash flow of Rs. 700.53 million from operation.

Financial Analysis



Pigments are organic or inorganic compounds, which can impart a wide range of colors to various substrates. Pigments can offer versatile range of colors in paints and coatings, plastics, inks, etc., while improving aesthetic properties. These help to enhance various properties such as opacity, hiding power, light and weather fastness, heat stability, and tinting strength. Pigments are mostly insoluble in common solvents and remain physically and chemically unaffected after application on different substrates. These absorb light of selective wavelengths to produce vibrant colors via reflection or transmission

Paints & coatings was the largest end-user segment of the pigments market in 2015. Rapid urbanization and economic progress in developing countries have propelled the construction industry in the recent past. On the other hand, the automotive industry has witnessed promising trends in emerging economies in the past few years. Consequently, growth in the decorative and architectural paints and coatings industries has fueled demand for pigments in the past couple of years. Plastics end-user segment of the pigments is estimated to grow at a significant rate in the next few years owing to increased consumption in various applications such as packaging, health care, building & construction, and automotive. Consequently, steady growth in the plastics industry is likely to propel demand for pigments in the next couple of years.

Specialty pigments is anticipated to exhibit the fastest growth rate during the forecast period owing to rising demand for high performance pigments with excellent aesthetic features in various end-user industries.

The global pigments market has witnessed impressive growth in the past few years. Rise in population coupled with increase in per capita income has boosted the consumption of paints and coatings in the building and construction, automotive, and consumer goods industries in the past few years. This, in turn, generated considerable demand for pigments in paints & coatings, enabling it to be the largest end-user segment in 2015. Furthermore, the per capita consumption of paints and coatings is expected to rise significantly in developed and developing economies in the next few years.

Therefore, paints & coatings is projected to be the fastest growing segment of the pigments market during the forecast period. Moreover, rise in global plastics production is estimated to spur demand for pigments in the next couple of years. Emerging use of nanoparticles is anticipated create lucrative opportunities in the global pigments market during the forecast period.

Global - Pigment Markets:-

Transparency Market Research has published a new report titled, "Pigments (Inorganic, Organic, and Specialty Pigments) Market – Global Industry Analysis, Size, Share, Growth, Trends and Forecast 2015 – 2023." According to the report, the global pigments market was valued at US$ 22.86 bn in 2014 and is anticipated to reach US $31.98 bn by 2023, expanding at a CAGR of 3.8% between 2015 and 2023.

Global - High performance & Speciality Pigment Markets:-

A new report from Smithers Rapra, Shropshire, UK, examines the future of high-performance and specialty pigments. Smithers Rapra forecasts an annual growth rate of 2.7% over the next five years to reach $5 billion, by 2019

Global -Organics Pigment Markets:-

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.

Global - Speciality Pigment Markets

Specialty pigments are expected to be the most promising product segment, and are estimated to grow at a CAGR of 4.7% from 2013 to 2018. Under growing regulatory pressure, specialty and organic pigments are being increasingly investigated for substitution potential over their inorganic counterparts. . (Source: - Transparency Market Research)

Paints & Coatings Industry market share

The paints & coatings industry continues to take away major share of the global pigments market, accounting for 38.5% of the overall end user market.

This is mainly due to growth in this industry along with the preference of consumers towards unique optical effect colors in certain segments such as automobiles. The global paints and coatings end use market is projected to grow at a CAGR of 5.1% during the forecast period.

Paints and varnishes account for the most important sales market for pigments worldwide. More than 43 percent of global demand originates in this segment. "Processing plastics accounts for 27 percent of total demand for pigments. This segment will develop at the second-highest growth rate in the future," explained Oliver Kutsch, CEO of Ceresana. Only the printing inks segment will grow at higher rates, thanks to an increase in demand for printed packaging.


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 Asia Pacific pigments market revenue is expected to reach market size of over USD 6.4 billion by 2018

The relocation of the pigments market towards emerging economies such as Asia Pacific, particularly India and China has been a major trend observed in the industry. Since the past few decades, production of these pigments has rapidly increased in India and China with the latter becoming the largest manufacturer of organic color pigments, particularly for commodity pigments. However, the production scenario in emerging regions and economies such as United States, Europe and Japan is expected to be on a downward trend due to certain factors such as globalization of the market as well as reduction in profit margins resulting in plant restructurings and shutdowns. Moreover, as more finished pigments are being imported from China, market trends such as imports of unfinished pigments to Japan, Europe and North America for finishing is expected to fall down over the next few years.

In terms of volume, Asia Pacific dominated the global pigments market in 2014. The pigments market in Asia Pacific is anticipated to exhibit the fastest growth rate during the forecast period. Increasing population and rising per capita income in developing countries in Asia Pacific have generated significant demand for paints and coatings in the building & construction and automotive industries. On the other hand, Asia Pacific is expected to be the major producer of plastics during the forecast period.

This, in turn, is projected to generate significant demand for pigments in the paints & coatings and plastics industries in Asia Pacific. Europe accounted for the second-largest share of the global pigments market in 2015. Middle East & Africa and Latin America are estimated to be the emerging market for pigments, exhibiting promising growth rate during the forecast period.


The Indian crop protection industry is dominated by generic products with more than 80% of molecules being non-patented. This results in very low entry barriers for the industry. Hence, strong distribution network, appropriate pricing, brand recall and dealer margins are some of the critical factors for companies to succeed. Crop protection chemicals are manufactured as technical grades and converted into formulations for agricultural use.

TThe Indian Agrochemical value chain comprises of technical grade manufacturers, formulators producing the end products, distributors and end use customers. According to the Pesticide Monitoring Unit, GOI, there are about 125 technical grade manufacturers, including about 10 multinationals, more than 800 formulators and over 145,000 distributors in India. More than 60 technical grade pesticides are being manufactured indigenously.

Erstwhile Andhra Pradesh (Seemandhra and Telangana), Maharashtra and Punjab are top three states contributing to 45% of pesticide consumption in India. Erstwhile Andhra Pradesh is the leading consumer with 21% share. The top seven states together account for more than 70% of crop protection chemicals usage in India

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.


The world's population currently stands at 7 billion and is estimated to rise to 9.3 billion by 2050. This will require global food production to increase by 70% over the same time period in order to meet the increased demand. To add to the problem, 25% to 40% of world crop output is lost due to the attack of pests, weeds and diseases. To minimize these losses, and to enhance yield, it is essential to use crop protection chemicals responsibly.

The adoption of new technologies that increases crop production through the optimal use of scarce resources such as land, water, and fertilizers is gaining attention in the field of agriculture. The high growth potential in emerging markets and untapped regions, provides new growth opportunities for the market players. The growth of this market is driven by growing farmer's attention towards superior quality agrochemicals, which should be balanced and nutritive.

Growing population and declining arable land to feed the resultant population are driving the overall agrochemicals market. Increasing pest concerns and emergence of a variety of agrochemicals are expected to drive the demand for agrochemicals in the near future. The agrochemicals market is also driven by factors such as rigorous research & sharing of intellectual property rights and shifting R&D investments.

Expansion in crops such as oilseeds and sugarcane is mainly expected due to the widening applications such as food, feed, fuel, and other industrial uses, which in turn drive the agrochemicals market. Development of safe alternatives such as bio-farming and organic pesticides is restraining the growth of the agrochemicals market.

The global market for agrochemicals was valued at USD 207.5 billion in 2014. It is projected to reach USD 250.5 billion by 2020, at a CAGR of 3.2% from 2015 to 2020. Asia-Pacific dominated the global market with a share of around 36.7%. The European region is expected to be the fastest-growing market in the near future, for the growing concentration of farmers towards technology driven agriculture practices.

Market for agrochemicals is being driven by increasing awareness among the farmers across developing nations with the technology driven farm practices. The regional government supports to increase the agricultural crop output with minimized use of agrochemicals.


The Indian crop protection industry is estimated to be USD 4.25 billion in FY14 and is expected to grow at a CAGR of 12% to reach USD 7.5 billion by FY19. Exports currently constitute almost 50% of Indian crop protection industry and are expected to grow at a CAGR of 16% to reach USD 4.2 billion by FY19, resulting in 60% share in Indian crop protection industry.

Domestic market on the other hand would grow at 8% CAGR, as it is predominantly monsoon dependent, to reach USD 3.3 billion by FY19. Globally, India is fourth largest producer of crop protection chemicals, after United States, Japan and China. The crop protection companies in India can be categorized into three types –Multi-National, Indian including public sector companies and small sector units

Per hectare yield in India is amongst the lowest in the world. Yields in India stand at 3 tons/ha compared to the global average of 4 tons/ha. Developed countries like USA, UK, France and Germany are able to achieve higher per hectare yields than India due to better farming practices.

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.

However, the consumption of agrochemicals in India is surprisingly low (0.58 kg/hectare) as compared to USA where the consumption of agrochemicals is as high as 4.5 kg/hectare and Japan with an even higher consumption of 11 kg/hectare. Paddy (one of the chief crops of India) has the maximum pesticide consumption of 28% followed by cotton (20%) of the total agrochemicals consumption. (Source 3rd National Agrochemicals conclave 2013)

India has raised the level of its export competency with a consistent quality and supply record and possession of a vast unexplored market. Chemicals manufacturers have targeted product awareness campaigns at Indian farmers, as the country's affordability has increased with the cultivation of high-value crops.

Outlook for FY 2017

Raw Material Price

The volatility in foreign exchange market, increase in crude oil prices may impact raw material prices, as a result, our profitability is likely to be affected in Q2 FY 2017.

Market Price

The global markets prices for Pigment and Agrochemical products are under pressure, while Caustic Chlorine ECU has shown sign of improvement.


The Group and Company revenue for Q1 FY 2017 has increased due to higher production. We expect to see the improvements in revenue from our Agro – III Plant.

The Market Dynamics are changing rapidly. The Net Profit after tax at Group level has increased in Q1 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 monsoon season might have impact on the sales and profitability of Agrochemicals in Q2 FY 2017