Expect topline growth of Rs 300 cr in FY17: Meghmani Organics

Meghmani Organics witnessed its margins rise substantially in the fourth quarter of FY16. It was more to do with better plant efficiency and improved capacity utilisation than fall in crude prices, says Deval Soparkar, Promoter, Meghmani Organics.Soparkar expects the company's topline to grow by Rs 300-350 crore in FY17 and an additional Rs 350 crore in FY18. More than half of Meghmani's revenues come from exports. The company primarily exports to North and South America. But it also plans to expand in many emerging economies in Asia by FY17.Below is the verbatim transcript of Deval Soparkar’s interview with CNBC-TV18's Reema Tendulkar and Nigel D'Souza.Nigel: Your margins have seen substantial expansion. How much of this is due to Crude? what are the other reasons for that near 500 bps expansion that we have seen in your margin?A: You have rightly said, margin expansion - crude coming down has obviously played some role into it but largely because of our own efficiency, our plant utilisation which was last year about 50 percent this year our plants have operated at around 60 percent capacity and that is one of the driving force for margin expansion.Reema: Last year your revenues came equally from your three key segments, pigments, agro-chemicals as well as basic chemicals. Going forward do you believe you will continue to have the same revenue share or will it change?A: As of now all the three businesses have done almost similar topline and going forward for coming two years the kind of guideline that we give from the company is that all the three businesses should be in the range of about Rs 600-650 crore and two years down the line the group should be in a range of Rs 1,800-2,000 crore topline wise and yes, the company would focus on all the three segments equally.Nigel: Let us assume that crude hangs around these levels of around USD 45-55/barrel, what kind of growth are we likely to see, on a like-to-like what kind of growth can we seen on the topline come FY17?A: We believe that next year we should do about Rs 300-350 crore addition in the topline and next year down the line another Rs 350 crore topline and taking the group to Rs 1,800 - 2,000 crore in another two years to come.Reema: A little more than half of your revenues come in from exports. Which are the geographies which are key for you? And do you intend to expand your footprints across to consolidate the markets that your are present in?A: We are already exporting to all the continents in the world and we are exporting to 70 countries in the world. Our major market is North America and Latin America. Latin America for agro chemicals and North America for our pigment market. We would like to consolidate in North America and we would like to focus on those two markets. The logical reason being that both these markets are growing for our respective businesses. Having said that we would also like to focus on Asian countries because that is posting double digit growth. So, if you look at Thailand, Indonesia, Malaysia also India they all are growing at double digit and we would like to take care of that growing economies also. So, fairly balanced strategies but North America and Latin America for export market for sure.Nigel: What is your current utilization levels, also what is your capital expenditure (capex) plans going ahead?A: For two years we are not planning to make any capex, except the maintenance capex which is targeted at around Rs 30 crore for all three business per year. Whatever capex we have done in the past in the tune of about Rs 500 crore we would like to do asset sweating, we want to utilise our assets and we would like to make utilisation which is currently at around 60-63 percent to 90 percent at the optimal level and till then we would not like to talk about any further capex.