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