Meghmani Organics Limitedmeghmani.com › ... › Meghmani_2QFY06_Presentation_Slides.pdfConversion based on an average exchange rate of S$1: Rs26.0752 for September 2005 Page 3 Revenue

Meghmani Organics LimitedMeghmani Organics Limited

2Q FY2006 Results Briefing

15 November 2005

Page 2

Profit & Loss HighlightsProfit & Loss Highlights

20.75.81527.01833.63.91024.1106Profit after tax

(12.4)(2.7)(71)(2.4)(62)(16.5)(1.8)(46)(1.5)(38)Income tax

10.18.52239.4245(2.6)5.71485.5144Profit before tax

9.59.524910.4272(0.5)6.21616.1160Profit from operations

21.414.638217.846412.99.123810.3268Gross Profit

20.561.41,60174.01,9297.138.199440.81,065Revenue

%S$’mRs’mS$’mRs’m%S$’mRs’mS$’mRs’m

Chg20042005Chg20042005

Half Year ended 30 SeptemberQuarter ended 30 September

Conversion based on an average exchange rate of S$1: Rs26.0752 for September 2005

Page 3

RevenueRevenue

Revenue growth in 1HFY06 primarily driven by export sales of Agrochemicals products

YY--oo--Y ComparisonY Comparison QQ--oo--Q ComparisonQ Comparison

1,601.31,929.5

0

500

1,000

1,500

2,000

1H05 1H06

993.9 1,064.7

0

500

1,000

1,500

2,000

2Q05 2Q06

+20.5%

+7.1%

Rs’m

864.81,064.7

0

500

1,000

1,500

1Q06 2Q06

+23.1%

Rs’m Rs’m

Page 4

Gross ProfitGross Profit

382.1463.7

0

100

200

300

400

500

1H05 1H06

195.5

268.1

0

100

200

300

1Q06 2Q06

YY--oo--Y ComparisonY Comparison

237.5 268.1

0

100

200

300

400

500

2Q05 2Q06

+21.4%

+12.9%

QQ--oo--Q ComparisonQ Comparison

+37.1%Rs’mRs’m Rs’m

Group continues to enjoy healthy gross profit margin in spite ofincrease in crude oil and metal prices.

Page 5

Net ProfitNet Profit

YY--oo--Y ComparisonY Comparison QQ--oo--Q ComparisonQ Comparison

The Group enjoyed a 12.4% dip in income taxIncrease in exempted profits at Panoli EOU plant

Conversion of Ankleshwar plant as EOU

Reduction in tax rate to 33.7% from 36.6%

151.5182.9

0

100

200

1H05 1H06

77.0105.9

0

100

200

1Q06 2Q06

102.2 105.9

0

100

200

2Q05 2Q06

+20.7%

+3.6%

Rs’m

+37.5%

Rs’m Rs’m

Page 6

Profit Margins 1HProfit Margins 1H--oo--1H Comparison1H Comparison

Overall Gross Profit margin increased despite rise in costs of raw materials

Success in passing on raw material costs to customers due to consistent high quality and brand loyalty

Overall, Net Profit margin remained stable at 9.5%

24.1

0 5 10 15 20 25

1H05

1H06

%

23.9

Page 7

Revenue Breakdown (1H2006)Revenue Breakdown (1H2006)

Pigments sales +5.7% 47.5% rise in domestic sale from continued expansion in customer base

Agrochemicals sales +25.8%71.7% rise in export sales of certain products

7.8% dip in domestic sales due to delay in start of monsoon season

Export sales +32.1%

Domestic sales +1.5%

Others 6.1%

Pigments36.8%

Agrochemicals57.1%

By Business Divisions

By Geographical Markets

Export68.1%

Domestic31.9%

Page 8

Balance Sheet HighlightsBalance Sheet Highlights

30 Sep 04 (1HFY05)30 Sep 05 (1HFY06)

157 days

74 days

Rs10.81

2030.8

71.6

489.9

1373.4

Rs’m

151 days

86 days

Rs11.40

2,286.7

53.7

711.0

1,595.2

Rs’m

S$0.41

77.9

2.7

18.8

52.7

S$’m

Debtors Holding

Inventory turnover

S$0.44NTA per share

87.7Shareholders’ equity

2.1Cash & bank balances

27.3Inventories

61.2Trade receivables

S$’m

Conversion based on an average exchange rate of S$1: Rs26.0752 for September 2005

Segmental Financial ReviewSegmental Financial Review

Pigments Division

Page 10

672.5 710.6

0

200

400

600

800

1H05 1H06

Revenue: PigmentsRevenue: Pigments

1H pigment revenue : 78.9% from Export sales and 21.1% from Domestic sales.

Decline in 1 H Export sales by 1.8% due to sales in Europe by Subsidiary.

Significant increase in 1 H Domestic sales by 47.5% - Pigment Panoli Division. This is due to demand for Copper Phthelocynine Crude and Alpha Blue, and an expanded customer base.

396.6 366.8

0

200

400

600

800

2Q05 2Q06

359.1 366.8

0

200

400

600

800

1Q06 2Q06

-7.5%+2.1%

QQ--oo--Q ComparisonQ Comparison

Rs’m Rs’m Rs’m+5.7%

YY--oo--Y ComparisonY Comparison

Page 11

Gross Profit: PigmentsGross Profit: Pigments

Despite increase in cost of raw materials, improved margins from better sales price realisation

22.1

24.5

0 10 20 30

1HFY05

1HFY06

%

148.8174.3

0

100

200

1HFY05 1HFY06

Rs’m

+17.1%

Page 12

0%3000Hysol-P

600

3600

600

7200

1200

Installed Capacity

(MT per annum)

25%

94%

74%

*116%

76%

1HFY06

Pigment Additives and Pigment Blue 60

Beta Blue#

Alpha Blue

CPC Blue

PG 7

Capacity Utilisation: PigmentsCapacity Utilisation: Pigments

*Usage of hysol-P capacity to manufacture the additional CPC blue orders

Segmental Financial ReviewSegmental Financial Review

Agrochemicals Division

Page 14

Revenue: AgrochemicalsRevenue: Agrochemicals

1H Agrochemicals revenue : 57.7% from Export sales & 42.3% from Domestic sales

Significant increase in Export sales by 71.7%

Acephate Technical (USA),

Chlorpyriphos Technical (Belgium, Brazil, Paraguay, USA and Thailand)

Permethrin and Alpha Cypermethrin

Marginal decline in Domestic sales by 7.8%

Delayed domestic season

QQ--oo--Q ComparisonQ ComparisonYY--oo--Y ComparisonY Comparison

874.6

1,100.6

0

400

800

1,200

1H05 1H06

Rs’m

560.7 635.5

0

400

800

1,200

2Q05 2Q06

465.0635.5

0

400

800

1,200

1QFY06 2QFY06

+13.4%

+25.8%

+36.6%

Rs’m Rs’m

Page 15

Gross Profit: AgrochemicalsGross Profit: Agrochemicals

26.4

24.9

0 10 20 30

1HFY05

1HFY06

%

Lower margin was due to increase in raw material prices

231.2273.53

0

100

200

300

1HFY05 1HFY06

Rs’m+18.3%

Page 16

1 January 20061000CMAC*

78%

52%

21%^

121%

177%

97%

86%

1HFY06 Additional Capacity (MT per annum)

Agro II unit : Ankleshwar

Agro I unit : Chharodi

1500#Chlorpyriphos

60Alpha Cypermethrin

1000Permethrin

900Cypermethrin

1200Acephate

750CMAC/CMA*

750 MPB / MPBA*

Date of commercial production

Installed Capacity(MT per annum)

^ Part of production capacity used to manufacture Acephate

# Includes additional capacity of 700MT per annum following completion of trial production in Nov 2004. 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….

Capacity Utilisation: AgrochemicalsCapacity Utilisation: Agrochemicals

Outlook & Business StrategiesOutlook & Business Strategies

Meghmani Organics Limited

Page 18

Industry ProspectsIndustry Prospects

Demand est. to grow at 6.4% paBy 2006

Global pigments market Key markets increasing supply from IndiaIndia’s Ink industry consumption to increaseTrend towards pigments with higher loadings to create brighter coloursOutsourcing opportunities

US$5.5 billion

Continued robust demand expected

Global Agrochem marketOutsourcing opportunitiesLatin America, Asia and Europe seen as key markets

US$32.2 billion

Page 19

Outlook for FY2006Outlook for FY2006

Higher raw materials prices - Crude Oil & Metal

Impact on oil derivatives such as Phathlic, Ortho Nitro Toluene (ONT) and solvents

Copper and Aluminum Prices are all time high

Market prices

Recovering sales price of certain pigments & agro products

Measures to protect profit margins

Continuous efforts to pass on increase in raw material costs to customers

Improve management of raw materials

Manage currency exposure to retain benefits of increase in selling prices

Page 20

Growth Strategies: PigmentsGrowth Strategies: Pigments

Continue to expand production capacityShifting from blue crude supplier to a high margin and technology oriented pigments like alpha blue or beta blue

Enhanced focus on Asian Markets especially Indian Ink and Paint companies.

Continue to expand product range Started production of Activated Blue Crude at Hysol-P facility

New production line for Pigment Additives commenced in 1Q FY2006

First High Performance Pigments PB60 and PG36 successfully introduced in the market

Page 21

Growth Strategies: AgrochemicalsGrowth Strategies: Agrochemicals

Continue to expand production capacity

Ankleshwar plant:Increased production capacity of Chlorpyriphos Increased 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 16 registrations for agrochemical products during the 1 H of 2005 in 9 countries including China

Has a total of 44 registrations worldwide and 89 CIB registrations in India till date.

226 registrations are under process at various stages in 55 countries

Continue to expand product range

Develop manufacturing processes for off-patent generic pesticides

Continue building our global sales and distribution network

Thank YouThank You

Question and Answer Session