Indian company Meghmani Organics (Ahmedabad) recorded agrochemical sales of Rs 524.7 ($13.3 million) million in its third quarter ended December 31st 2007. This represents an increase of 1.4% over the same period in the previous year, which is quite meagre in comparison to the strong growth of 28.3% posted by the company in the preceding quarter.
Gross profits, at Rs 78.2 million, dipped by 32.2% compared with the corresponding quarter of the previous year. The gross profit margin dropped from 22.3% to 14.9%. Meghmani attributes the squeeze on profits to reduced exports, as well as pricing pressure and the higher costs of raw materials. Export sales for the quarter were down 2.9%, although domestic sales increased at a healthy 6.6%.
Sales for the first nine months of fiscal 2008 showed an 11% increase, the main part of which was provided by the previous quarter. Domestic sales at Rs 1,076 million provided a strong upward boost of 25.5%, although exports went down 2% to Rs 928.8 million when compared to the same period of the previous year.
Meghmanis agrochemical results (Rs million)
3rd qtr ended Dec 31st 2006 % change 2007
Sales 517.5 + 1.4 524.7
domestic 232.8 + 6.6 248.2
exports 284.7 - 2.9 276.5
Gross profit 115.3 -32.2 78.2
Sales 1,805.4 +11.0 2,004.8
domestic 857.6 +25.5 1,076.0
exports 947.8 - 2.0 928.8
Gross profit 405.2 - 8.3 371.6
Meghmani views the growing demand of organophosphate and synthetic pyrethroid insecticides as key to its future growth. Strong demand for chlorpyrifos (with its plant running at 134% capacity) and cypermethrin (plant running at 133% capacity) fuelled the spurt in domestic sales. Good monsoons in India also played a factor in the growth.
Although the quarter witnessed a dip in exports, the company is optimistic about its prospects in Brazil and Pakistan, where it gained registrations for acephate and pyrethroids last year, and expects to gain new registrations. Meghmani currently has 115 registrations and has 430 new registrations in the pipeline across 60 countries.