Meghmani Organics raises Rs 100 cr via NCD

Meghmani Organics rallies as company raises Rs 100 crore through private placements of Non Convertible Debenture (NCD).

In an interview with CNBC-TV18, Ashish Soparkar, MD, Meghmani Organics sspoke about the latest happenings in his company and sector.

Below is a verbatim transcript of his interview with CNBC-TV18’s Sonia Shenoy and Reema Tendulkar. Also watch the accompanying video.

Q: Give us some technical details - where does the debt of the company currently stand because you have raised Rs 100 crore through the NCD route and what kind of capacity expansion plans do you have?

A: Meghmani Organics Limited so far was always a debt free company. Recently we took a debt of around Rs 60 crore roughly to increase our capacity for agro-chemicals and now we have raised Rs 100 crore more through the NCD that just recently concluded.

Q: Any more in terms of fund raising, maybe via the debt route that you will need and what will you be utilizing this money for?

A: This money has multiple applications and we have many opportunities for us to grow. There are some direct and indirect expansion growth routes available to Meghmani and we are in the process of setting up certain manufacturing operations also.

As opportunities are plenty in numbers I am unable to tell you in what way we are going to expand it. Most of the debt is going to increase our capacity. We are always looking out for some acquisitions in Latin America. So these are general purpose fund needs.

Q: You have a new agro-chemical facility as well and a major chuck of your business comes from there. What kind of an output are you expecting in terms of a volume growth from that agro-chemical facility at Dahej and what kind of revenues will it generate for you in FY11?

A: The Dahej agro-chemical facility when it will be fully operational it will give us around Rs 150 crore to Rs 200 crore turnover with around 10% net-profit. That’s what we are trying to get, provided the market is as good as it is now. Currently the position of Meghmani is all our plants are running to full capacities and our order books are also full.

Our agro-chemical as well as pigments which are the main two business sectors which we are in is fully booked and our orders are maybe for five-six months. We need to increase our capacity. That is why we have taken an Rs 100 crore NCD which will give us organic or inorganic growth.

Q: What about in the pigment segment? What is it that you are looking in terms of a capacity expansion?

A: We are still debating as to how much tonnage we can go for in pigment expansion. First we have to go to our board and of course we have to announce at BSE and NSE.

We believe our pigment needs definite expansion as our order books are fully stretched and probably the delivery period or waiting period is more than three months now. We need to stretch or we need to go for bigger expansion in our pigment segment. The de-bottlenecking which we have been doing since the last couple of years has almost come to an end now. So very shortly we may go for pigment expansion.

Q: Just one final word on what kind of margins are you hoping to clock because so far you have been sitting in about a 15% to 18% margins. With this particular facility coming on stream will this augment your margins in any way and in FY11 are you hoping to go above the 20% figure?

A: Meghmani Organics Limited is an agro chemical and in pigments and both these sectors are not affected by the downturn or meltdown of any economy. As also we are selling in 75 countries right now, exporting to 75 countries in all continents. So we have a very balanced distributed sell all over the world. We are very sure that we will be able to maintain or increase our margin by at least 1-2% with this concentrated effort of going forward.