Manali Petrochemicals Limited

Ashwin Muthiah

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Muthukrishnan Ravi

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Muthukrishnan Ravi

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Muthukrishnan Ravi

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Muthukrishnan Ravi

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Muthukrishnan Ravi

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Ashwin Muthiah

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Pranay Jhaveri

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Ashwin Muthiah

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Jayant Mamania

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So, I think it is a bit, how do you say, uncertain times now and I think until the war ends and things clear up there is till now no clear indication how this situation will improve, but as of now raw material input cost and increase in imports is leading to a situation where it is not the same situation as last year.

— Muthukrishnan Ravi

Q

Thank you very much. Good morning to all of you who have tuned into to participate in this conference of Manali Petrochemicals Limited. I am very happy that all of you could find some time to listen to us. So, I just want to open this meeting with a few comments from my side on the vision for the company. So, at Manali Petrochemicals our focus is to create a company with sustainable performance. The things which are important for us to note is that - to maintain a sustainable performance – we need to basically have good operational efficiencies, focus on capturing opportunities for enhancing o

Muthukrishnan Ravi

Thank you Chairman. Good morning to everybody. So, Manali Petrochemicals Limited is in the business of polyurethane. We manufacture polyurethane which go into a wide range of applications and additional product range that we have is propylene glycol which primarily goes into pharma and then put in fragrances. This company has been in existence for over 40 years now and our main focus today, as the Chairman mentioned is on operation efficiency and growth. In the case of Manali Petrochemicals one of the key areas and key differentiating factors for us is that we are the only company in India whi

Q

My question is for the chairman Mr. Muthiah. Number one - thank you so much for doing this call and would this be a recurring thing, ongoing thing in terms of reaching out to investors? Basically what I want to understand is the groups philosophy at a broad level in terms of investor relations in the other two companies. Would you do conference call there as well and if you can talk a little bit about the group in general? I actually have quite a few questions given that this is the first conference call, but it is more at a broader level to understand how the group would treat minority shareh

Ashwin Muthiah

Let me answer your questions. First of all this is a call relating to Manali Petrochemicals and I would be happy to say that we would try to, we would endeavor to make this an event that can happen frequently so that is something that I would very much like to do and we would keep the investors informed of the frequency of these meetings. Now this call has not been organized to discuss group related matters. So, I would like to keep that to a separate event so that is what I would like to say. I just wanted to know - like would you do similar events in other companies like Tamil Naidu Petro or

Q

In which of the areas are we increasing the capacity and which are the other areas where we are going to enter in coming years due to high cash in our balance sheet and also are we planning to enter into polypropylene, resin, IPA segment and solvent segment due to our forward integration capabilities?

Muthukrishnan Ravi

So, the focus areas are actually in Propylene Glycol today. As you might have noticed we have announced an expansion of the Propylene Glycol facility and the approvals are in progress and once the approval come through we will start implementing the project. In the case of solvents and in forward and backward integration, backward integration for a company of our capacity and size is not something that we can look at because the backward integration takes straight into something like a refinery or a petrochemical facility. Forward integration is definitely something that we can consider. Of co

Q

What is the Polyol and PG domestic industry side and how much is imported? Can you please elaborate on the prices of PG and Polyol currently and the year back? Which of the raw material is imported and what is the pricing and supply chain scenario?

Muthukrishnan Ravi

So, I will try to attempt one by one. The PG capacity is around 100,000 tons in India and the Polyol capacity is roughly around 100,000 tons per month. So, today, we being the only producer of PG and Polyols in India the balance of the demand is being met through supply from international players who are importing the products in India and supplying the domestic market. Of the three raw materials that I mentioned, we use lime which is imported today from many different sources and these sources could widely vary from Malaysia, Vietnam to the Middle East. Of these three products, lime is the on

Q

Sir basically since this is the first call and first interaction with the management if you can just throw some light..just going through next say between 2012 and 2020; in the 9 - 10 years we were stuck in the range of Rs. 500 crore to Rs. 700 crore top line and EBITDA in the range of 10% - 11% and later on in the two years i.e. March 21 and March 22, the EBITDA shot up to 31% and 56% respectively. So what has actually changed and can you just give a broader picture whether that is a structural change or something one off as that will be really very helpful?

Ashwin Muthiah

Thank you for appreciating this system of meeting with stakeholders. I will just give you some very broad comments and then I will let Mr. Ravi tell you exactly what has happened. Broadly speaking as I told you our focus has been always to improve the efficiency of our operation, to focus on optimization of the balance sheet in terms of the debt and in terms of cash availability. So, we have been focusing quite a bit on operational efficiency and balance sheet optimization and that has given us a good base to basically take the company from what it was earlier to a level where it is today. Now

Q

Thank you for the opportunity. Can you give us a breakup of revenue growth in terms of volume and pricing? Secondly can you give us split of the margins in the commodity and specialty verticals?

Anis Hyderi

In terms of our total volumes we did a total 60,000 tons approximately last year so it is 2021 and the volumes grew to about 68,000 tons so that can be approximately about 8%. I think the majority of the growth has come from the price increase which we have seen both across our two major products PG and polyol. PG contributing the most followed by SS. Margins in the range of the gross contribution has been about 49%; again that is an average for the company for 21-22, but PG still lead at a high of 54% approximately followed by SS which is close to 40%.

Q

Actually you have said that again import at the level of pre COVID levels again the price erosion has started and to what extent our margins will be impacted?

Muthukrishnan Ravi

We are not able to place the number on the margins erosion or growth because we do not know how the situation will change in a future, but I think the imports have started coming in. I would not say that they are at the level of pre COVID, but they are growing so that is the situation now, this geopolitical situation with the war in Ukraine and the high crude oil prices. So, I think it is a bit, how do you say, uncertain times now and I think until the war ends and things clear up there is till now no clear indication how this situation will improve, but as of now raw material input cost and i

Q

So my first question is regarding the CAPEX plan what we have which was we are talking on September 2020, could you please update on what is the CAPEX cost and what is the capacity we are planning for PG expansion?

Muthukrishnan Ravi

There are two phases of this project this PG expansion project. The first phase is expansion which is a low cost expansion because the Brownfield expansion which will give us about 20,000 tons of PG and that will come at about Rs.65 crore and the second expansion will be a similar capacity and that will come at about Rs. 160 crore. The next point I have if I look at the financial we have clocked much higher revenue as compared to last Q4, but our EBITDA is much lower, could you please elaborate why the EBITDA is lower in this quarter as compared to last Q4 - which are the major driving factors

Q

Polyol accounts for more than 50% of the revenue; still capacity utilization is at 60% ; could you please share the reason for it - are we not seeing enough demand?

Muthukrishnan Ravi

I think we answered that already because of frequent changes to the train - maybe there is a need for more rigor operation.

Q

Can you please give us broad outlook on resumption of import of finished goods what are the possible circumstances when the suppliers will resume supplying to India?

Muthukrishnan Ravi

Like we mentioned the supply chain has eased already and we are seeing imports significantly gone and I think in the current financial year they should go back the pre pandemic level. Ashwin Muthiah: But the focus will be to compete and secure the market for us. I think that is what we will have to be constantly working on. So, import can come in, as long as they find that there is a competitive environment for them, but our focus and our job at Manali Petrochemicals is that we constantly keep our efficiencies high and our cost as optimum as possible so that we can face off the competition and

Q

Thank you Chairman Sir for giving us the opportunity to take part in this session. The last two years growth is very good; whether this may continue to future? Second, what steps has company taken to maintain the EBITDA level in future also?

Ashwin Muthiah

I think we have touched upon this earlier. As I said the last year especially has been a very special year for the company and this has been basically because of the surprises. The market has eased due to the lockdowns and the pandemic. However, it is our endeavor to put in operating parameters that will sustain our business over a longer period of time. So, as we have discussed, our focus will be on improving efficiencies, our focus will be on managing the raw material supply, our focus will be on managing our financial parameters, our focus will be on our balance sheet health. Also as we hav

Q

I had a follow up question what is the current pricing environment for your product and how will it affect both going forward since you mentioned bulk of your revenue growth for this year is coming from pricing power, so could you just elaborate on that?

Muthukrishnan Ravi

I think compared to last year the prices have definitely softened a bit; the raw material prices have gone up as well so that is the immediate situation, but like I said this is an evolving scenario so we need to wait and see how the margins will change over this year.

Q

We thank the participants for having joined for this very first analyst investor call that company have organized. As mentioned by the Chairman we will try to make this a more frequent event. I hope we have addressed concerns and questions that the investors had in call today. So, thank you very much ladies and gentlemen and we hope to connect with you soon going forward.

Ashwin Muthiah

I would also like to convey my thanks to everybody who has participated in today’s call and it is also a great source of motivation for us to continue to have this engagement with the stakeholders and as I have said our focus is on creating a solid foundation in the company to provide good governance, commitment and the sustainable performance. My special thanks to the organizers for organizing this very nice and opening analyst meet for the company. Thank you.