Meghmani Organics Ltd. (MOL), amongst the leading diversified chemicals companies with a presence in the pigments and agrochemicals business, has achieved Q3 revenue of Rs. 554 crore and Rs. 1,992 crore for 9M FY23.

EBITDA margins achieved 11% for Q3 and 14% for 9M FY23. The dip in performance in pigments was offset by agrochemicals.

Agrochemicals, constitutes 75% of the overall company’s revenue. During this quarter, the company was able to maintain EBITDA margins of 19.2% (against 17.5% in Q3 FY22) despite adverse global macro challenges. The company is well positioned to benefit from the ‘China plus One’ strategy of global players coupled with capex plans eyeing on new molecules in agrochemicals.

Pigments constitute 25% of the overall company’s revenue. Currently pigment is witnessing slow export demand and contraction in prices due to the challenging global macro environment. During the quarter, pigment performance has been adversely impacted due to liquidation of high-cost inventory. We expect the recovery in the demand in the pigment division in the next few quarters.

The company has estimated total loss of Rs. 44 crore due to fire in finished goods godown in one of the pigment plants at Dahej. The company has adequate insurance cover. During the quarter, the company recognised a loss of Rs. 39.85 crore on account of loss of assets and has also recognised corresponding insurance claim. Balance Rs 4 crore loss has been accounted for during the quarter as per policy provisions.

Commenting on this quarter’s performance, Ankit Patel, CEO, MOL said, “The commercial production of the agrochemicals new Multi Product Plant was commenced in Q3 FY23 and the plant is getting stabilised. It will add meaningful contributions from the next financial year. During the quarter, the company entered into a long term supply contract for 5 years with a reputed multinational customer for its Agro Products. Total value of the contract is approximately Rs. 800 crore. Also, the company shall foray into Nano Urea (Liquid) fertilizer through our wholly owned subsidiary Meghmani Crop Nutrition Ltd (MCNL) for which the company will incur a Capex of Rs. 150 crore for setting up the plant in Gujarat with annual capacity of 5 crore bottles (~500 ml) per year.

"The plant will commence commercial production from Q4 FY24. MNCL aims to achieve a topline of Rs. 1,000 crore on an annualized basis. One of the essential developments is that on the pigment side, the Phase 1 of the Titanium Dioxide plant with 16,500 tons capacity was commissioned on 18th January 2023. The team is working towards stabilizing the plant and the Phase 2 Capex plan of doubling TiO2 capacity to 33,000 tons p.a. along with a captive power plant is expected to be completed in Q3 FY24 at Capex of Rs. 375 crore,” commented Patel.

"We are confident about the long-term goals for both business verticals and our competent human capital is swiftly moving towards materializing the company’s long-term goals. The company continues to delight its esteemed clients with a diversified product portfolio and quality products," added Patel.