CRISIL's ratings on the bank facilities of Meghmani Industries Ltd (MIL) continue to reflect MIL's established market position in the agrochemicals business, and its strong financial risk profile, marked by robust net worth, low gearing, and comfortable debt protection metrics. These rating strengths are partially offset by MIL's working-capital-intensive operations, and lack of access to a suite of new products offered by multinational corporations because of its modest research and development capabilities.

• Rs.350 Million Term Loan - CRISIL A+/Stable (Reaffirmed)
• Rs.350 Million Cash Credit (Enhanced from Rs.200.00 Million)- CRISIL A+/Stable (Reaffirmed)
• Rs.140 Million Foreign Exchange Facility - CRISIL A1 (Assigned)
• Rs.200 Million Letter of Credit (Enhanced from Rs.115.00 Million) - CRISIL A1 (Reaffirmed)
• Rs.10 Million Bank Guarantee - CRISIL A1 (Reaffirmed)
• Rs.10 Million Letter of Credit & Bank Guarantee - CRISIL A1 (Reaffirmed)

*Interchangeable with Foreign Bill Purchase and Export Packing Credit of Rs.150 million and Rs.100 million respectively; and Rs.50 million interchangeable with Demand Loan, Foreign Bill Purchase, Export Packing Credit and Purchase of Bills *Fully interchangeable with Letter of Credit

CRISIL believes that MIL will continue to benefit from its established market position in the agrochemicals business. The outlook may be revised to 'Positive' if MIL increases diversification of its product profile and substantially increases its scale of operations, while maintaining profitability. Conversely, the outlook may be revised to 'Negative' if MIL's profitability declines or if its newly set-up facility at Dahej SEZ generates less-than-expected cash accruals, or if the company contracts more-than-expected debt to fund any capital expenditure (capex) or working capital requirements, leading to weakening in its financial risk profile.

The company primarily manufactures agrochemical technicals and formulations, which contributed over 90 per cent to its revenues in 2010-11 (refers to financial year, April 1 to March 31). MIL is primarily present in the herbicide and fungicide segment. The company sells in bulk in the domestic and overseas markets under the Meghmani brand, while its retail sales are made under 20 brands. Exports, which are primarily bulk sales (formulations and technicals), accounted for about 40 per cent of MIL's revenues in 2010-11. The company has two manufacturing facilities in Vatva and Charodi near Ahmedabad, with agrochemical manufacturing capacity of 10,500 tonnes per annum (tpa). The company is in the process of completing the installation of agrochemical, optical brightening agent (OBA) and acid dyes plant at Dahej SEZ in Gujarat. The plant has a 2500-metric-tonne-per-annum agrochemical facility (one-third the current capacity of its existing facility), which became operational in August 2011. The 7000-metric-tonne-per-annum OBA plant in the facility is expected to start commercial production by end of October 2011. The acid dyes facility is expected to start commercial production in March 2012.

MIL reported a profit after tax (PAT) of Rs.252 million on net sales of Rs.1873 million for 2010-11, against a PAT of Rs.202 million on net sales of Rs.1415 million for 2009-10.