Meghmani’s ongoing project is on course

Ahmedabad: Meghmani Organics (MOL), a leading manufacturer of agro-chemicals (pesticides) and pigments, said its ongoing project to produce chlor-alkali, with an investment of Rs 555 crore, is right on course, even as the company has undertaken a five-pronged programme to combat the current scenario.

The company’s special purpose vehicle (SPV), Meghmani Finechem Ltd, has already invested Rs 400 crore in the Dahej-based project in Bharuch district of Gujarat in 65 hectares of land.

Production of chlor-alkali is scheduled to commence on April 1, 2009, Mr Jayanti Patel, Chairman, and Mr Ashish Soparkar, Managing Director, told a press conference here.

International Finance Corporation (IFC) had taken 25 per cent equity in this venture and the company had achieved financial closure. The participating banks and financial institutions, including SBI, have already disbursed the finances, they said.

Sixty-five per cent of MOL’s revenue comes from pesticides and the rest from pigments. Asked about the company’s business with multi-national companies in the backdrop of the meltdown, they said MOL has not seen any delayed payments so far.

The company has also undertaken a vigorous cost-cutting exercise to bring down manufacturing costs and ensure that its growth story is sustained. It has resorted to cutting costs at all levels including inventory management, raw materials procurement, revamping logistics operation, renegotiation of freights consequent to the softening of crude oil prices and reducing packaging costs.

“While the cost-cutting would get reflected in the operations of the third quarter, MOS’ business is so structured that it would come out unscathed from the impact of any recessionary trends or economic downturn anywhere.”

Meanwhile, the company has already achieved a turnover of Rs 455 crore in the first half of 2008-09 as against Rs 593 crore for the entire 2007-08. Its net sales in first half of the current fiscal have jumped by 60 per cent from Rs 285 crore in 2007-08 to Rs 455 now. MOL’s net profit has also increased by 71 per cent from Rs 17.2 crore in the first half of 2007-08 to Rs 29.5 crore now.