Dear Shareholders,
I am pleased to share with you the Annual Report of Meghmani Organics
Limited for the financial year ended March 31, 2024. It is a privilege to address you for
the first time as the Chairman and Managing Director of our Company. In the ever-evolving
chemical sector in India, we have witnessed a decade of rapid growth, facing various
challenges and triumphs along the way. Recent years, particularly since FY23, have
presented a unique set of hurdles for chemical companies across the spectrum. Despite
these challenges, we at Meghmani have navigated through these turbulent times with
agility, continuously adapting and undertaking corrective measures.
Macroeconomic overview
During the reporting period, the industry recorded transient demand
slump due to inventory destocking, rising interest rates and lower product price
realisations across markets. However, we anticipate a gradual recovery in global demand,
followed by price corrections. As we step into FY25, our experience spanning over 35 years
reassures us that the difficult phases are temporary, and companies with strong
fundamentals like ours will regain their growth trajectory. We are confident that once the
overall scenario stabilises, we will have all the necessary enablers to resume our
growth—this confidence stems from our deep expertise and business resilience.
Financial performance
This year, our performance remained subdued. Our Revenue stood at
Rs1,539.9 crore with an EBITDA of Rs 9.5 crore. This shortfall can be attributed to muted
demand and lower price realisations across markets. Further, inventory destocking impacted
profitability by nearly Rs 70 crore during the year under review.
Backed by our robust management, we improved our debt-to-equity ratio
to 0.38x, down from 0.42x the previous year. Our financial risk profile remains strong,
with credit metrics expected to remain stable, supported by a healthy balance sheet,
improving cash generation and scheduled term debt repayments. Our capex programme is
designed to drive future growth and improve EBITDA through appropriate capital allocation
and a robust pipeline of margin-accretive products. These investments position us for
long-term growth and enhanced profitability.
Business performance
Our Crop Protection segment contributed approximately 70% to our
overall revenue in FY24, with production reaching nearly 36,780 metric tonnes and a
capacity utilisation of around 67%. Our crop protection manufacturing facilities are
‘Responsible Care'-accredited with ISO 9001 and 14001 certifications. These
facilities manufacture products across the entire value chain. Our Multi-Purpose Product
plant, a part of our backward integration strategy, will manufacture high-value, new-age
insecticides, capitalising on the emerging ‘China plus One' strategy and
increasing our market share. As the situation stabilises, we are well-positioned to
leverage our state-of-the-art infrastructure and backward integration to drive significant
value creation going forward.
Our Pigments segment accounted for roughly 30% of our overall revenue
in FY24, with our production volumes totalling about 13,721 metric tonnes and a capacity
utilisation of about 41%. Our vertically integrated manufacturing facilities, located in
the chemical belt of Gujarat, make us the third-largest producer of phthalocyanine-based
blue pigment globally.
Our entry into the production of Titanium Dioxide (TiO2) aims to
promote import substitution by contributing to the government's ‘Make in
India' and Atmanirbhar Bharat vision. At present, demand is met about 73% of the TiO2
through imports to India. With this move, we are poised to become one of the leading
manufacturers of TiO2 in India.
We have also ventured into the Crop Nutrition segment, manufacturing
liquid fertilisers through our wholly-owned subsidiary, Meghmani Crop Nutrition Limited.
The launch of Nano Urea, a pioneering liquid fertiliser designed to boost crop growth,
enhance nutrition and protect the environment, underscores our focus on propelling
agricultural advancement. The recent commissioning of our Nano Urea plant at Sanand comes
at a crucial time when India's urea demand stands at 34.2 million metric tonnes (MMT)
annually, with a significant portion of India's fertiliser subsidy going towards urea
imports. The government's ambitious target to eliminate urea imports by 2025 aligns
with our efforts. As nano urea adoption grows among farmers, it will reduce the subsidy
burden on conventional urea. During the year, we engaged with approximately 65,000
farmers, conducting over 3,500 field demonstrations to showcase the efficacy of Meghmani
Nano Urea. Additionally, we have begun exploring export markets in Latin America, Africa
and Asia to expand our international presence for this product.
Integrated operations
Our backward-integrated manufacturing facilities in Gujarat's
chemical belt are supported by in-house R&D efforts. Leveraging our extensive
manufacturing expertise, we have established a strong global presence. Our extensive
distribution network, coupled with the ability to customise products, maintain consistent
quality and adhere to regulations, has resulted in a high client retention rate.
Expansion
Our expansion efforts are aimed at making further inroads into the
domestic market, increasing its contribution to our total revenue base and balancing our
market exposure. In our Crop Nutrition segment, we recently commissioned the Nano Urea
plant in Sanand, Gujarat, with an annual capacity of 5 crore bottles. Additionally, we
have plans to introduce four to five products in the fertiliser, biofertiliser and
biostimulant categories, providing a comprehensive, one-stop solution for farmers to
improve productivity and nutrient use efficiency. In our Pigment segment, we have
commissioned the Co-gen Power Plant at our Titanium Dioxide facility, which will reduce
energy costs—a major cost component in the titanium dioxide manufacturing process. I
would like to reiterate that our recent expansions align with the government's Make
in India and Atmanirbhar Bharat initiatives; thereby further enhancing our capabilities to
serve both domestic and export markets.
Our people
Our personnel are integral to our success, driving innovation and
ensuring exceptional customer experiences. We nurture a diverse talent pool, promoting
inclusivity and offering ample opportunities for professional and personal growth. Our
focus on continuous learning enables our workforce to adapt to an evolving business
ecosystem. In FY24, we introduced several new training programmes, ensuring that our team
members remain at the forefront of industry developments. We also conducted sessions on
safety awareness.
Sustainability
Climate change presents formidable challenges to global agriculture. We
are focused on driving innovation in our product offerings by building resilience to
climate change impacts, improving agricultural productivity while minimising negative
environmental impacts and increasing farmers' earnings at the same time. We undertake
initiatives to reduce emissions, water wastage and biodiversity conservation as part of
our environmental stewardship. Our Responsible Care Accreditation for the Agro Division
and "Committed Badge" by EcoVadis underscores our focus on sustainable and
responsible practices.
Seizing opportunities
As we stand at the threshold of a promising future, we are filled with
optimism and confidence in our collective ability to overcome challenges and seize
opportunities. Arable land is shrinking, necessitating improved crop yields to ensure food
security. Rising pest concerns, a growing population and rapid industrialisation further
fuel demand. Additionally, the global market is shifting its focus towards Indian chemical
manufacturers due to the China Plus One strategy coming into play. These factors are
presenting us with a plethora of opportunities. At Meghmani, we are on track to seize
these opportunities and unlock long-term growth. With expanded infrastructure, versatile
production facilities, a wider product range and a growing geographical reach, we are
well-positioned to drive sustainable progress and achieve profitability. Our objective is
to be a diversified chemical company with a strong manufacturing base in ‘Organic
Chemistry', aiming for a global presence with worldwide product
acceptability—and we are taking significant strides towards this goal. In closing, I
would like to express my heartfelt gratitude for the continued support and trust of all
our stakeholders. Together, we can overcome the challenges of our journey and shape a
better tomorrow for all.
Best regards,
Ankit Patel
Chairman and Managing Director