Meghmani Organics Ltd (MOL) targets at least 15-20% growth rate amid global slowdown. The company is focusing on the Dahej for its expansion projects, since it is a strategic location in view of export markets.
Meghmani Finechem Ltd, a subsidiary of the company, is setting up a 1,10,000 tonne per annum chlor-alkali plant and a 40 MW captive power plant at Dahej under phase I of the expansion plan with a total investment of Rs 555 crore.
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"We have already invested Rs 400 crore in the Dahej unit and expects trial production by March 2009 and commercial production by April 2009," said chairman, MOL, Jayantibhai Patel. "MFL is targeting a turnover of around Rs 250 crore in the first year of operation, starting from April 2009."
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In the phase I, the unit will produce caustic soda, chlorine gas and hydrogen gas, while under phase II, it will focus on downstream chlorine derivatives such as PVC, ECH, mono-chloro acetic acid, cyanuric chloride and aluminium chloride.
"Dahej is a strategic location for the company. Proposed unit at the location will be built on 20% of the total available land of 65 hectare, while rest will be utilized for future expansion. Company is also in talks to acquire further 65-70 hectare land near the current site. We have also acquired 1 lakh square metre at Dahej SEZ for consideration of around Rs 10 crore. The export oriented unit for the derivative products will be located in the SEZ," said MD, MOL, Ashish Soparkar.
Company's R&D department is working on introducing more high performance pigments, developing new pesticides product and improving processes.
The company has initiated several cost cutting measures in order to ride out the recession. "We have reduced credit period for the foreign clients to 60 days from 90-120 days earlier," said MD, Natubhai Patel, MOL. "The company is now sourcing the raw materials on weekly basis to prevent impact of volatility in prices and also working on better inventory management to save cost. Pesticide industry is set to maintain strong growth rate in days to come, since demand in India is on the rise." According to industry estimates, India looses 18% of the crop yield due to pest attacks.
"Printing industry is major consumer for the pigments, which consume around 60% of the total production of the company. Many of the printing ink manufacturers including Japan and China are likely to shift their production units to India for benefit of low cost. Overseas companies likely to increase their sourcing from India," added Patel. The company has recently added red and orange pigments in its current portfolio of green, blue and yellow pigments. It has also initiated trial marketing in Europe and the US
Export contributes around 74% to the sales, while domestic market accounts for 26%. 85% of the company business is repeat business and current order book position is equal to production of 90 days.
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In the first half of the current fiscal, the company has registered sales of Rs 455 crore, with 60% growth from Rs 285 crore in the corresponding period last year. Net profit of the company stood at Rs 29.5 crore from Rs 17.2 crore in the last financial year, indicating 71% growth. Company's share price has fallen to Rs 7.1 from the highs of Rs 53 in January.
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