China chemicals slowdown to benefit biz: Meghmani

In an interview with CNBC-TV18, Natu Patel, MD of Meghmani Organics, discussed the recent slowdown in the Chinese speciality chemicals market and what it means for Indian companies such as his.Below is the verbatim transcript of Natu Patel’s interview with Anuj Singhal and Ekta Batra on CNBC-TV18.Ekta: If you could just highlight that if in case it is true that one of the biggest chemical companies in China have been asked to shut operations by the Chinese President, what would that mean for a pigment company such as Meghmani Organics?A: We will get a better opportunity for our shares and already we are getting the opportunity. You must have seen in our last nine month results also where in our pigments, we have increased our volume by 14 percent compared to last year. Anuj: If you could tell us the kind of impact that it is going to have in terms of the products you make and the pricing because last time we had something similar to this, we had seen about a 30-40 percent price increase. Can something similar take place this time and how is it going to impact your revenues and profitability, if you have any numbers to share? A: I can share my nine month result, which we have already declared in month of January. Our profit after tax (PAT) has increased more than 100 percent compared to last year. EBITDA margin, particularly of the product that you are talking about -- pigment -- has increased by 14 percent. Volumes have also increased by 14 percent. So, we are getting more inquiry for the pigments in current year.Ekta: How much have your inquiries increased according to you as compared to say same time last year and hence how much can your order book increase? A: Our order book is full in coming four months time. The capacity, which we have created in last two years by spending capex and building the new plant in SEZ in Dahej. Last year, capacity utilisation was 50 percent and this year we are expecting that we will reach up to 65 percent capacity utilisation of our pigment plant. So, sales in volumes have increased as well as the revenue has also increased.Ekta: How much has it increased in volumes? A: Volume in pigment has increased by 14 percent in first nine months and in the current quarter also, we are bullish -- we see about more than 14 percent increase in the volume compared to the last quarter of last year. (Interview edited by Nazim Khan, transcribed by Priyanka Deshpande)