Mangalam Organics Ltd Management Discussions.


Despite instability in the global economy, the Indian economy continued to be the fastest growing major economy. In the World Banks Ease of Doing Business 2019 Report, Indias ranking improved by 23 positions to 77th rank in 2018. Though some pressure persisted during the second half of the fiscal year 2018-19, Indias GDP grew by 6.8%, slightly lower than 7.2% in FY 2017-18. This deceleration was led by a slowdown in agriculture, weak consumer spending and investments, and slowdown in the manufacturing sector. According to the International Monetary Funds World Economic Outlook (October-2018), Indias economy is expected to reach US$ 2,958 billion in 2019, overtaking France and United Kingdom, to become the 5th largest economy in the world.

The amendments being brought about in the GST rates are expected to further encourage a smooth shift from informal to formal sector. The economy also stands to benefit from the direct cash transfer programme for farmers and tax relief measures announced for the middle-class. In addition, capital infusions to public sector banks and application of the Prompt Corrective Action (PCA) framework in conjunction with the Insolvency and Bankruptcy Code are expected to improve asset quality.

The International Monetary Fund (IMF) projects Indias economy to pick up to 7.3% in calendar year 2019 and further to 7.5% in 2020. This will be largely led by lower oil prices and accommodative stance of monetary policy, low inflationary pressures and robust tax collections. However, certain challenges continue to persist, including subdued rural income growth and slow manufacturing sector growth.(Source: Central Statistics Offices provisional estimates, IMF)


1. Pine Chemicals

Pine chemicals is a family of renewable, naturally occurring materials derived from the pine tree (genus Pinus). These chemicals are derived through the distillation of oleoresin or carbonization of wood. A majority of distilled products are made from gum, stumps, logs, and sulfate pulp byproducts. The global pine-derived chemicals market was valued at US$ 5,170.1 million in 2017 and is anticipated to expand at a CAGR of 4.3% from 2018 to 2026, according to a research report titled Pine-derived Chemicals Market: Global Industry Analysis, Size, Share, Growth, Trends, and Forecast, 2018-2026, published by Transparency Market Research (TMR). Increase in demand for pine- derived chemicals in the construction sector is projected to augment the global pine-derived chemicals market during the forecast period.

2. Terpenes

Terpenes are a large and diverse class of organic compounds with strong odour, produced by a variety of plants, particularly conifers.

In recent years, with an increasing demand, the consumption of Terpenes increased at a stable speed. During 2012-2016, the global sales growth rate has been greater than 5% every year. Now, investors are still optimistic about the Terpenes industry. Over the next few years, more and more enterprises will enter this industry and sales growth rate is forecasted to be about 5.63% year on year.

The worldwide market for Terpenes is expected to grow at a CAGR of roughly 6.3% over the next five years and will reach US$ 730 million in 2024, from US$ 510 million in 2019, according to a new GIR (Global Info Research) study.

3. Synthetic Resins

Synthetic Resins are materials with properties similar to natural plant resins. They are viscous liquids capable of hardening permanently. Chemically, they are very different from resinous compounds secreted by plants. Synthetic Resins are of several classes.

Synthetic Resin is typically manufactured using a chemical polymerization process. This process then results in the creation of polymers that are more stable and homogeneous than the naturally occurring resin. Since they are more stable and cheaper, various forms of Synthetic Resins are used in a variety of products such as plastics, paints, varnishes, and textiles. The applications of Synthetic Resins are seen in some important industries like paints, adhesives, printing ink, textiles, leather, floor polish, paper, and agricultural industry, among others.

Hence, the Synthetic Resins industry is experiencing high demand globally from several end-user industries such as packaging, paints and coatings, aerospace, and automotive sectors. Also, the growing demand for green products and substances that are less toxic for the environment has increased R&D efforts by suppliers to innovate and develop specialized product formulations that can cater to these requirements.

4. Aroma Chemicals

Flavour & Fragrance market in India is dominated by the fragrance market, which is majorly controlled by the organized segment. There is a growing demand for different flavours and fragrances by personal care, home and food industries. The market has flourished in recent times with new formulations and as active supply chain management. It is dominated by global manufacturers lured by bright growth prospects of food, home and personal care industries in India. The surfacing of global players into the market has provided buoyancy to the supply chain of the flavour & fragrance industry in India.


• India, with its population of 1.36 billion, is a young country with almost 65% of the population below the age of 35 years. As population grows, more Indians will be burning camphor for religious purposes.

• The medicinal properties of camphor have led to high demand for manufacturing different types of medicines for pains and diseases based on camphor.


• Volatility in foreign exchange

• Pricing and availability of raw materials

• Socio-geographic issues

• Research and development

• Taxation

• Competition from domestic and global players


The operations of the Company are under one segment only, i.e., Chemical Manufacturing.


Mangalam Organics Limited (henceforth referred to as MOL or Company) is a leading pine chemicals manufacturer in the sub-segments of Terpenes and Synthetics Resins which is a single segment as chemicals. It is engaged in the manufacture and selling of Camphor and by-products and various Synthetic Resins. Contrary to popular perception, these products are from natural origins and are derived from the Pine tree. They are not linked to crude oil and are unaffected by its volatility.

Our products have application in important industries such as pious market, pharmaceuticals, rubber & tyre chemicals, paints and varnishes. We cater to both domestic and the international market. We have competition from both local and international producers.

Further, we have a strong domestic and a growing global footprint as our products serve a wide variety of industrial applications.

We are also extensively reaching out to the Indian retail market with our branded offerings. Our operations are led by an experienced management team equipped with five decades of domain expertise. The Company has a strong footprint in the pine chemicals industry, with its customers spread across Europe, Africa, USA and Middle East.

Our Products and Segments

Business Segments Terpenes Synthetic Resins
Products Camphor, Dipentene, Sodium Acetate Terpene Phenolic Resin, Alkyl Phenolic Resin, Rosin Esters
Product Applications Camphor: Religious use, healthcare products, hygiene products Dipentene: Paints, cleaning and decreasing agents Sodium Acetate: Textile and dyes industry, leather tanning Adhesives, tyres, rubber, chewing gum, printing ink
Retail Brands Mangalam: Camphor tablets for pious purposes CamPure: Camphor-based home care products
Revenue Contribution 95% 5%

Manufacturing Capabilities

The Companys manufacturing operations are driven by a modern facility spread across 25 acres (101,200 Sq. Meters) of land at Kumbhivali village, Savroli Kharpada Road, Taluka Khalapur, Khopoli, District Raigad, Maharashtra. A high level of automation enabled by the use of latest equipment gives the facility a technical edge. The site also enjoys a locational advantage as it is situated on the Mumbai-Pune expressway, facilitating faster and easy pan-India connectivity and greater road safety.

Product Portfolio


The Company manufactures a wide range of products under this sub-segment. It is increasing ethunuis in production of camphor and related products, exploring opportunities in intermediate products and their derivatives (fragrance and flavour industry). The Company is also working to improve its quality to be able to compete in the international market and is further exploring the retail opportunity.


Camphor is the primary product of the Company which contributes 80% of total sales in Terpenes. Due to its ability to impart a sense of complete purity to the religious devotee, it finds the widest application in religious use in the domestic market. This is a naturally derived product that completely burns off with no residue. Camphor was earlier sold as a commodity. However, as it presents a large retail opportunity, it enables the Company to forward integrate and diversify into the FMCG space by retailing the products through Modern Trade, General Trade and E-Commerce.

The Company continues to leverage the growing retail opportunity and is confident of continuing growth in the years ahead. It continues to grow capacities and grades offered from the same unit to capture a larger market share in the domestic and export markets. It has the following registered brands.

Mangalams Brand Portfolio

Mangalam Camphor tablets for religious purposes
CamPure Home care products based on camphor such as Camphor Cone, Camphor Sticks, Camphor Air Purifiers


Dipentene is a by-product in camphor manufacturing and is used as a solvent in the paints industry. The Company offers various grades of this material. Dipentene is a ready substitute in formulations of cleaning and degreasing agents, as Limonene faces supply shortages. It is also witnessing demand in the export market as a substitute for Limonene.

Sodium Acetate

Sodium Acetate is used as a dye intermediate by textile and dye manufacturers. It also finds application in leather tanning industry and is exported to Europe.


The Company manufactures three broad types of synthetic resins, with each of them having a large domestic and export market. We are confident of all the categories in this segment and are continuing our efforts to enhance margins and build higher volumes in each of them.

Terpene Phenolic Resin

Terpene Phenolic Resin finds application in the adhesive, tyre and rubber industries as a tackifier. The Company has entered into a strategic alliance with Les Derives Resinques & Terpeniques (DRT) to manufacture products under its guidance, while the latter will market and distribute the products by leveraging its global network. The Company foresees an increase in volumes, revenue and profitability over the years ahead.

Alkyl Phenolic Resin

Alkyl Phenolic Resin finds application in Neoprene and Chloroprene rubber-based adhesives. The Company is introducing several new products to be able to provide a one-stop solution to customers.

Rosin Esters

Rosin Esters finds application in pressure sensitive adhesives. The Company is working with consultants to improve its quality of products as per global standards and leverage the growing export opportunities.


During the year under review, sales of the Company have shown a considerate increase due to operational efficiency brought about through better and optimum utilization of resources and proper implementation of business policies, plans and strategies.

Revenues from operations earned during the year stood at 424.62 crore, growing by 73.86% compared to 244.23 crore in FY 2017-18.

Increase in revenue further accelerated increase in the shareholders net worth.


1. Interest Coverage Ratio

FY 2018-19 FY 2017-18
28.89x 8.18x

As compared to FY 2017-18, the above change in Interest coverage ratio was due to increase in profitability.

2. Current Ratio

FY 2018-19 FY 2017-18
2.25x 1.41x

As compared to FY 2017-18, the above change in Current Ratio was due to increase in profitability which affected current assets of the Company.

3. Debt Equity Ratio

FY 2018-19 FY 2017-18
0.57x 1.07x

The Company achieved better Debt Equity ratio on account of increase in shareholders networth due to higher profitability.

4. Operating profit margin

FY 2018-19 FY 2017-18
24.73% 8.58%

Increase in Operating Profit margin as compared to previous year was due to stable Camphor prices in FY 2018-19.

5. Net profit margin

FY 2018-19 FY 2017-18
17.05% 5.86%

The Company achieved higher Net Profit margin on account of stable Camphor prices in FY 2018-19.

6. Details of any change in Return on Net Worth, compared to the previous financial year

FY 2018-19 FY 2017-18
59.66% 23.40%

The Company achieved higher Net Worth of 58.33% as compared to previous year at 22.45%. This was on account of higher profitability which further resulted in an increase in shareholders net worth.


The economic and business environment is fast evolving. The global market is complex and demands a very efficient and complex supply chain configuration. Further, any market share losses for the company to the major global and domestic players will adversely impact the financials of the company. Any slowdown in macro-economic growth of the country will lead to a slowdown in FMCG sector on account of sluggish consumption led demand. Consequently, this would adversely affect Indian Chemical industry leading to lower capacity utilizations for the company and impact the financials of the company.

One of the key risks faced by the Company in todays scenario is fluctuation in the price of raw materials. Shortage in the supply of raw materials used by the Company poses a direct threat to its revenue and competitive position. Dependency on a few large clients could pose a risk to revenue.

The Company monitors and analyses all relevant parameters for the manufacturing site to minimize risk associated with protection of environment, safety of operations and health of people at work with reference to statutory regulations and guidelines defined. The Company fulfils its legal requirements concerning emission, waste water and waste disposal. Improving work place safety continued to be top priority at the manufacturing sites.


For the year 2019-20, our focus will continue to be on sustainable growth by taking measures for:

a) increasing our market share of existing products further; and,

b) improving efficiency of our present production capacity

Increased competition from global and domestic players is putting pressure on sales prices. Increase in prices of certain raw materials also puts pressure on contribution. However, with global growth of chemicals focused more on Asia, it is expected that there will be further growth in the chemical industry.

During the year 2019-20, we expect our investments in various projects to add to our top and bottom-line.

We will continue our efforts to improve our bottom line by further increasing efficiency in our existing production capacity, while re-looking at business strategies and models, wherever necessary. With our continuous efforts on improving efficiencies and margins, barring unforeseen circumstances, we expect to achieve better results for the year 2019-20.

Registration, Evaluation, Authorization and Restriction of Chemicals (REACH):

Your Company has successfully registered for REACH to export its products to the European Market and also has been awarded an Indian Pharmacopeia certification as it prepares to apply for GMP certification. This will provide an advantage to the Company over its competitors for sale in Europe.


The Company has a well-established system of internal control and internal audit, commensurate with its size and complexity of the business, with regards to efficiency of operations, financial reporting, compliance with applicable laws and regulations. The Company continually upgrades internal control systems by adding better process control, various audit trails and use of external management assurance services, whenever required. The internal control system is supplemented by extensive internal audits, conducted internally by the finance and account department. The findings of Audit Team are discussed internally as well as in audit committee meetings. The Audit Committee of the Board of Directors reviews the adequacy and effectiveness of internal control systems and suggests improvement for strengthening them.


In the current age of dynamic, challenging and changing business environment, the Company believes that its People i.e. Human Capital are its important and vital assets. Skills acquired by the employees through training are assets for the Company. Thus, training and development strategy aims to build coherent workforce capabilities, skills or competencies required to ensure sustainable and successful organization. The Company always strives on maintaining healthy and strong employee relations by devising strategies that ensure high productivity and employees satisfaction. A positive atmosphere of trust has been created. The headcount as on March 31, 2019 was 276 employees on the payrolls of the Company.


This document contains some statements about expected future events, financial and operating results of Mangalam Organics Limited, which are forward-looking. By their nature, forward-looking statements require the Company to make assumptions and are subject to inherent risks and uncertainties. There is significant risk that the assumptions, predictions and other forward-looking statements will not prove to be accurate. Readers are cautioned not to place undue reliance on forward-looking statements as a number of factors could cause assumptions, actual future results and events to differ materially from those expressed in the forward-looking statements.