Meghmani Organics Ltd

Since company operates in three segments ( Dyes , Agro Chemical /Basic Chemical ( Caustic Soda etc) ) , so you will get wide range of competition.

Hi Guys, I was going through AR and noticed following regarding per unit price for purchased and own generated power. When purchased power is cheaper then why are they generating their own power at a higher cost ? Though the amount is much lesser than purchased one, but still its significant.

Any specific reason for the company to do this ?

Must be backup use, methinks! It is much cheaper than the Diesel option, used in previous year. Also, it makes up less than 0.5% of total consumed units.

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Q1 2019 results

c1fa6dc4-c76b-4a34-9f1f-24ac641a9555.pdf (784.1 KB)

80% YoY PAT increase, as expected, flat on QoQ.
Margins improved much.
Overall good results!

Disc: Invested.

Though the results are good but stock price is still moving in negative direction. Would love to know the reason behind it. It has been range bound for long period now and not showing any improvement sign even after the fantastic results.

Q1 FY19 results are flat and below market expectation. During their last concall, they informed that left over billing during Q4FY18 will be billed during Q1 and expected that Q1 result will be better than Q4.FY18. Investor presentation by the company shows segmantal results are tad lower than Q1 FY 18 Fire insurance compensation has given a Other income flip which has boosted the EPS. Overall we have to see if there is any improvement in Q2 and also monitor caustic soda prices .
Dscl: Sold major holding immediately after the announcement of results and want to add around 80 to 85.

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I do not see any difference QoQ, w.r.t exceptional or non-operational gains!
They have stated insurance has been adjusted as a minor loss, of 1.12 Cr, since compensation was lower than the claim.

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How is this true?
Let the numbers speak for themselves!

Q1 Results presentation:

Some highlights from today’s con call:

  1. There was a plant shutdown for routine maintenance and technical upgradation which affected some topline and bottomline. Rest assured there weren’t any issues but just normal technical maintenance. Management affirmed that every chemical company has to go through this shutdown in the year for technical maintenance.
  2. The branded sales for agrochemicals in last full year were ~80 crores while they are at ~40 crores in the first quarter this year. Management expects the total branded sales for current financial year to be around 120 crores.
  3. In the last year the caustic soda prices were tremendously high due to China shutdown and resulting euphoria. In Q4 last year the margins were above 40%. This year the management expects the margin to remain around 35%
  4. The planned capex of 650 crores is underway out of which about 175 crores has already been started. The majority of this 650 crores capex is focused on basic chemicals division. There is further capex planned for other segments. Management is awaiting for environment clearance and it will be announced as soon as they get the due clearance.
  5. Management is fairly optimistic on its target of 1000 crores in revenue from each segment by 2021
  6. After the last year China shutdown, new clients are contracting with Meghmani on differential basis. Some are doing spot-basis while some are doing it just for a quarter and some for 6 months.
  7. Management further affirms that the situation in China won’t improve due to more stringent pollution norms. Other than that the overhead in China has increased and India is going to be the larger hub for chemicals in coming years.
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Thanks Viraj for these updates.

Few more points.

  1. Pigment CU - 75%, Agro - 57%, Basic Chem - 86%
  2. CMS expansion (Dec 18 target) will aid in captively consuming Chlorine.
  3. Cons debt - 385 cr
  4. With current expansion plans - peak debt 700 cr
  5. RM source - only 10-15% from China
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Investor Presentation:

Company announced today the amalgamation scheme between Meghmani F

inechem and Meghmani Agrochemicals.
How this may benifit overall business process? Any thoughts please.

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Here is the link to the conference call for Q1: https://www.youtube.com/watch?v=8xFZludjWJ0

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Still need more details on this. But directionally, looks like a good step. Can comment more, once all details are available.

I was going through the 2017-18 annual report of Meghmani. On page 12, it is mentioned that 4 Independent Directors resigned within a span of seven months from Nov 2017 to May 2018. Does any member know the reason behind this?

Also, in next page, CFO of the company has also resigned in the same period. Does the company gave any reason for the same?

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Hi @jitenp , I wanted to understand the buyout of ~25% stake of IFC in Meghmani Finchem Ltd (MFL) by Meghmani Agrochemicals Pvt Ltd. (MAPL). In the 2018 annual report, they have mentioned that Meghmani Organics Limited (MOL) invested Rs. 221 crores as redeemable preference share into the 100% subsidiary which is MAPL which in turn bought the stake of IFC held in MFL. So now MOL effectively holds 82% in MFL and the balance is held by the promoters directly in their name. Why can’t MOL directly buy rather than routing it through the pvt limited subsidiary? Further, I don’t recall if they have sought shareholder’s approval for this buyout by MOL.

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Promoters bought 43297 shares @ Rs.91 from open market on 27th August,2018.

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Can you please share the source for this info? Couldn’t find it on exchange website.

Its there on BSE website for insider trades section

https://www.bseindia.com/corporates/Insider_Trading_new.aspx?expandable=2

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