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Current price on the date of suggestion – Rs 84.

Meghmani Organics Limited is a 34 years old company engaged in the business of manufacturing and selling of pigment, agrochemicals products and basic chemical products. Meghmani is a leading diversified chemical company poised for growth across its three (Pigment, Agro Chemicals and Chlor- Alkali & Derivatives) high potential business. The Company operates 7 facilities in Gujarat, including 3 major facilities for Pigments, Agro Chemicals and Chlor- Alkali & Derivatives in Dahej, the chemicals zone of Gujarat. 

It was in 1986, when Gujarat Industries was established as a partnership firm in Gujarat, India to manufacture pigments. High productivity and profitability transformed Gujarat Industries to a joint stock company, under the name of Meghmani Organics Limited, by 1995. Since then Meghmani Organics Limited has diversified its business interests to include a range of pesticides and other pigment products as well. Today, Meghmani Organics Limited is a leading manufacturer of pigment and pesticide products in the country and is the recipient of several prestigious awards in recognition of its outstanding business performance.

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The Company has five subsidiaries, Meghmani Organics USA INC. (USA), P T Meghmani Organics Indonesia (Indonesia), Meghmani Overseas FZE-Sharjah-Dubai, Meghmani Finechem Limited and Meghmani Agrochemicals Private Limited as on 31 March 2019. 

The Company has built an extensive pan-India and global footprint with presence in more than 75 countries and a portfolio of over 400 clients. 

More than 80% of its pigment products and over 50% of its pesticides products are exported all over the world. The company has four multifunctional production facilities in Gujarat (India) of which three are ISO 9001-2000. Its production facilities are strategically located with high accessibility and close proximity to source of raw material.

As per the Company -:

  • Meghmani Organics is one of the largest producers of pigment blue in the world
  • Meghmani Organics is one of the leading producers of pigment green
  • Meghmani Organics is one of the largest producers of pesticides in India

Business Segments-:

Strategically business of the company is diversified across two key segments. Pigments and AgroChemicals.

Pigment Products and its uses

Organics Pigments 

Phthalocyanine -: Phthalocyanine is the most produced organic pigment type in India 

Azo Pigments -: Azo Pigments is mainly used as industry colorant in plastics, building paints and inks 

HPPs -: High Performance Pigments (HPPs) is generally used in automotives, plastics and ink-jet printing 

Inorganics Pigments 

Dyestuff and pigment manufacturers operating within India have started to incorporate the use of natural substance including natural dyes and organic pigments owing to environmentally friendly nature and safe usage of the product 

  • Titanium Oxide 
  • Iron Oxide Pigments 
  • Chrome Oxide Pigments 
  • Others 

Meghmani Organics is amongst the top 3 global pigment manufacturers of Phthalocyanine-based Pigments with 14% global market share. The Company has vertically integrated facilities manufacturing CPC Blue (an upstream product sold to other Pigments manufacturers) and end products — Pigment Green and Pigment Blue. These Pigments products are used in multiple applications, including paints, plastics and printing inks. 

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The Company’s Pigments business enjoys a strong global presence with exports accounting for 77% of net sales. The Company has forged a deep relationship with its clients resulting in 90% business from its repeat customers. The Company has a global presence in more than 70 countries with a subsidiary in the US which helps in maintaining a front-end presence along with the ability to work closely with end-user customers. 

Chlor-Alkali and its Derivatives 

Meghmani Organics Ltd is 4th largest and one of the most efficient manufacturers of Chloro-Alkali & its Derivatives with forward integrated facilities. Meghmani Organic’s Caustic soda, Caustic Potash, CMS (Chloromethane) capacity stands at 294000 TPA, 21,000 TPA and 50,000 TPA, respectively and expanding its integrated captive power plant capacity from 60MW to 96MW in Q1 FY21. The power cost consists of 60% of the total raw material cost in Caustic Soda production. The Company’s captive power plant lowers the power cost thereby resulting in a higher margin. The Chlor-Alkali facility is strategically located at Dahej with proximity to the port (importing coal) and customers (Caustic Soda & Chlorine supplied via pipeline), leading to lower logistics costs. 

Meghmani Organics deploys the latest fourth generation ‘Membrane Cell Technology’ sourced from Asahi Kasei Chemical Corp, Japan, (one of the most established technology providers of Chlor Alkali products). 

Agrochemical Business 

Meghmani Organics has established itself as one of India’s leading vertically integrated Agro Chemicals player with the presence in the entire value chain — Intermediate, Technical grade and Formulations (bulk and branded). The Company effectively manages its raw material costs and ensures a constant supply of consistent quality due to its integrated vertical business integration. 

Meghmani Organics enjoys a competitive advantage via presence in the entire value chain (less dependent on raw material) in the highly regulated Agrochemicals industry. The Company has a strong portfolio of 297 export registrations, 356 CIB registrations. Meghmani Organics diverse global client base accounts 79% of its Agro Chemical export sales. The Company exports Technical as well as Formulation (bulk and branded) products to Africa, Brazil, LATAM, US and European countries. 

Meghmani Organics major products include 2,4D, Cypermethrin, Bifenthrin, Permethrin, Chlorpyrifos and Profenophos. In branded formulations, the Company has established a strong pan India presence with about 3000 channel partners. Megastar, Megacyper, Megaban, Synergy, Courage, Correct and Mega Claim are its key agrochemical brands. 

Diversified Customer Base

Company’s Pigments customers are mainly MNCs from a wide range of industries such as printing inks, plastics, paints, textiles and leather, paper and rubber. It has more than 200 Pigment products customers from various countries in North America, Europe, Central and Latin America, and Asia-Pacific.

Company has more than 90 Agrochemical customers, which include leading pesticides manufacturers from countries in North America, Europe, Latin America and Asia, as well as end users in the domestic Indian market.

Company has a distribution network of 20 overseas distributors catering to our international markets for our Pigments and Agrochemical products, and a chain of over 1,000 stockists, agents, distributors and dealers covering the domestic market in India.

Some of the key Customers of the company include.

  • Sun Chemicals
  • CIBA
  • Flint Ink
  • Micro Flo
  • Flint Ink
  • Valent
  • Micro Flo
  • FMC Agricultural Products
  • BASF The chemical Company
  • Meghmani Agrodyne Limited
  • Sudarshan Chemicals

Established brand names

Company’s brands, “Megastar’, ‘Megacyper’ (Pesticide Formulations) and ‘Meghafast’ (Pigments) are recognized names among consumers in India, Europe, USA and Latin America. It has more than 36 brands of various pesticides formulations which cater to the needs of Indian farmers.

Covid Impact

Impact on Demand -: Demand for Agro Chemicals is not likely to be unaffected. In the Pigments international demand will be an area of concern, due to slowness in Pigment end use industries Viz., advertising, print media operations etc

The Company has strong pool of product basket. The product reach and distribution too, are well diversified geographically with presence in almost every continent, empowering consistency in products off take all throughout the year. 

Impact on Finance-: The Company has sufficient credit line available. The Agrochemical being essential Commodities, plants are operating at normal capacity and thereby collections are also normal. As the plants are operating at 30-40% capacity, the management is concentrating on cost reduction to conserve cash and to avoid liquidity crunch till the normalcy is established. 

Assessment on receivables will be carried out in due course, in case collections are inordinately delayed, the new supplies will be made only to those customers whose payments are safe due to long term relationship. All the collections and payment are being made through Digital mode. 

New Products

Company has identified a growing demand for high performance pigments due to fundamental shifts in the printing ink and paint sectors. Company will soon start producing water-based pigments. It will target export markets such as Japan by setting the course for the production of Hysol-P based CPC Blue product.

Company has the capabilities to produce six off-patent pesticides and developing capabilities to manufacture three more whose patents are expiring soon.

Future Expansion Plans

Chlor-Alkali and its Derivatives 

Company has planned a capex of INR 10.35 billion involving multiple projects aligned with its strategic goal of expanding its Chloro-Alkali business. 

Capex of INR 7.6 billion in the Phase-1, includes the following projects:

  •  Chloromethane project of 50,000 TPA for producing MDC, Chloroform and Carbon Tetra Chloride. The project was commissioned in Q1 FY2020. The project enables in-house accessibility of Chlorine encouraging cost optimization and higher profitability. 
  • Hydrogen Peroxide project of 60,000 TPA. Hydrogen Peroxide is widely used in Pharma and Agrochemicals industry. The project is likely to be commissioned in Q2 FY2021. 
  • Caustic Soda capacity expansion from 1,66,600 TPA to 2,94,000 TPA and increase the Captive Power Plant capacity from 60 MW to 96MW by Q1 FY2021. 
  • Company plans a new capex of INR 2.75 billion for setting up India’s first Epichlorohydrin (ECH) project of 50000 TPA capacity. It will be 1st largest plant in India based on 100% renewable resources and expected to be operational by Q4 FY2022. 
  • Company has also announced a new 30,000 TPA capacity CPVC Resin project which will be operational by Q3 FY 2023. 
  • Company is continuously increasing the basket of products and after the completion of the above projects, share of value- added products in Chloro-Alkali division will be more than 50% by FY 2024. 


  • Company envisage favourable business conditions and market dynamics for Agro Chemicals and has expansion plans for Agro division to capture these opportunities: 
  • Double its 2,4D (Herbicides) capacity by adding 10,800 TPA by incurring a capex of INR 1.27 billion. 
  • New formulation unit by incurring a capex of INR 0.25 billion to expand its share of value-added products (Branded products).

These projects are expected to be operational by Q3 FY21. 

  • Company is also planning a new multipurpose plant with backward integration at Dahej with capex of INR 3 billion which will be spent within next 2 years. 


Meghmani Organics plans to increase the basket of products in Pigment division with addition of new pigments in the coming years. Company has regulatory approvals and infrastructure in place for expansion in Pigment Division at Dahej. 

Financials -:

For the year Ended March 2020

  • Company exhibited financial performance with the consolidated growth of 5% Year-on-Year (YoY) to INR 21,912 million in FY2020. 
  • Meghmani Organics top-line was impacted by 3-4% due to COVID-19.
  • EBIDTA remained at INR4,341million during the year. 
  • PAT for the year was INR 2,401 million. 
  • Company continued to deliver a strong return ratio, with Return on Equity of 23% and Return on Capital Employed of 17% in FY 2020. 
  • Company has Profit CAGR of 35% and 39% over 5 and 3 year period.
  • Company has Solid OPM of above 20%.


Meghmani Organics’ Agrochemical segment exhibited a strong performance in FY 2020 with a 23% YoY increase in net sales to INR 9,734 million. Exports accounted for 79% of sales during FY 2020. EBITDA during the year INR 1,738 million and EBITDA margin for the period was 17.9%. 


  • Meghmani Organics’ Pigment segment recorded a 6% YoY increase in net sales to INR 6,406 million in FY 2020. Exports accounted for 77% of sales during the year. 
  • EBITDA during the year surged by 12% YoY to INR 915 million due to favourable market conditions and better price realisations and operational efficiencies.
  • EBITDA margin for the period grew by 80 bps YoY to 14.5%. 

Chlor Alkali and its Derivatives 

  • Meghmani Organics’ Chlor Alkali segment recorded netsales INR6,098 million in FY2020 lower by 14%.
  • EBITDA during the year INR 1,976 million lower by 36% and EBITDA margin for the period at 32.4% compared to 43.9% in Previous Year (PY). 

For the 2nd Quarter Ended Sept 2020.

  • Net Sales at Rs 625.63 crore in September 2020 up 17.51% from Rs. 532.41 crore in September 2019.
  • Quarterly Net Profit at Rs. 81.15 crore in September 2020 down 16.77% from Rs. 97.49 crore in September 2019.
  • EBITDA stands at Rs. 174.04 crore in September 2020 up 35.82% from Rs. 128.14 crore in September 2019.
  • Meghmani Organi EPS has decreased to Rs. 3.19 from Rs. 3.31 in September 2019.

Conclusion -:

Meghmani organics has consistently high operating profit margins with adequate levels of debt which has decreased by about 100 crore as compared to 2019. Additionally company’s products have a reputation of one of the best products and that is not just in India but all over the world. Company has well established presence not just in India but spread over many countries across the globe. Recently over past several quarters promoters holdings have also increased significantly and that coupled with strong expansion plans by the management shows that the management is highly confident of the future growth prospects and thus this is what makes it worth exploring for long term.

Please note that above expressed are our own views. Users are requested to take their own decision regarding investments. No member of DARKHORSESTOCKS would be responsible for any loss.


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