Meghmani Organics Ltd Management Discussions

An Economic Overview

Global Economy: The global economy in 2024 navigated a complex landscape characterised by resilience alongside persistent challenges. Although concerns regarding a sharp downturn largely subsided, growth remained steady albeit slow, distinguished by significant regional divergences.

Global growth projections suggest a continuation of moderation, with the International Monetary Fund (IMF) in its April 2025 World Economic Outlook, forecasted an approximate growth rate of 2.8% for the year. This moderation, however, conceals underlying vulnerabilities, including ongoing inflationary pressures, geopolitical uncertainties, and the disparate effects of monetary policy across various nations.

Following a period of uncertainty, central banks worldwide have maintained a cautious approach by judiciously adjusting interest rates to equilibrate inflation control with economic growth. While inflationary pressures have diminished in numerous advanced economies, emerging markets encountered challenges related to currency fluctuations and debt management. The resilience of global supply chains, fortified through diversification and digital transformation, was instrumental in stabilising trade and investment flows.

Outlook:

The global economy is anticipated to encounter ongoing pressure in 2025, with a projected GDP growth of 2.8%. This moderated growth projection accounts for rising trade barriers, geopolitical tensions, and persistent economic uncertainties that continue to challenge global markets.

Inflation within OECD nations is forecasted to decrease from 5.4% in 2024 to 3.8% in 2025, facilitated by the ongoing implementation of restrictive monetary policies. Robust nominal wage growth, in conjunction with declining inflation, is expected to enhance real household incomes.

Notwithstanding these encouraging indicators, substantial challenges remain. Geopolitical tensions, high public debt ratios, protectionist trade policies and limited medium-term growth prospects present persistent risks. Structural reforms aimed at improving education, enhancing skills development, and alleviating constraints on business investment are imperative to strengthen productivity and mitigate labour shortages. Such initiatives are vital for establishing a foundation for more robust, sustainable growth in the forthcoming years.

Indian Economy:

Indias economy continued to demonstrate resilience in 2024-25, consolidating its position as one of the fastest-growing major economies globally. Real GDP was estimated to grow at 6.5% in 2024-25 on top of a 9.2% growth rate in the previous year. The financial year saw strong macroeconomic fundamentals, sustained domestic demand, and government-led infrastructure investments contributing to the momentum.

Indias retail inflation, as measured by the Consumer Price Index (CPI), which reflects the cost of everyday goods and services, fell to a remarkable 4.6% in the fiscal year 2024-25, the lowest since 2018-19. This milestone highlights the effectiveness of the Reserve Bank of Indias pro-growth monetary policy, which has successfully balanced economic expansion with price stability. Retail inflations steady downward path over the past three financial years has helped ease cost-of-living pressures and fostered a more stable environment for economic growth.

Employment indicators improved moderately, with job creation observed in the manufacturing, logistics, and services sectors. The government continued its reform momentum, focusing on the ease of doing business, digital public infrastructure (DPI), and production-linked incentive (PLI) schemes.

Sources h t t p s : / / w w w. t h e h i n d u. c o m / b u s i n e s s / E c o n o my / i n d i a s - g d p - grow s - 6 2 - i n - q 3 -economy-to-expand-at-65-in-fy25-govt-data/ article69274816.ece https://www.business-standard.com/markets/ capital-market-news/india-s-retail-inflation-drops-to-4-6-in-fy2024-25-lowest-in-six-years-125041700227_1.html https://economictimes.indiatimes.com/news/ economy/policy/rbi-mpc-meeting-gdp-forecast-reserve-bank-of-india-cuts-indias-growth-forecast-amid-trump-tariff-tensions/ articleshow/120113991.cms?from=mdr

Outlook:

India enters the fiscal year 2025–26 with robust economic momentum, bolstered by resilient domestic demand, sustained public investment, and a favourable demographic profile. With global growth anticipated to remain moderate, India is expected to uphold its status as a pivotal driver of global economic expansion.

According to estimates from the Reserve Bank of India (RBI), Indias real Gross Domestic Product (GDP) is projected to grow at a range of 6.3% to 6.7% in FY 2025–26.

Inflation is anticipated to further moderate in FY 2026, with headline Consumer Price Index (CPI) inflation forecasted to remain within the RBIs target range of 4% ?2%. Supply-side measures, improved monsoon prospects, and diminished global commodity price volatility are expected to stabilise prices.

Enhancing rural demand, rising disposable incomes, and alleviating inflationary pressures are forecasted to stimulate consumption-led growth throughout the year. Furthermore, the "Viksit Bharat 2047" vision and the implementation of next-generation logistics, artificial intelligence innovation, and strategies for climate resilience are expected to significantly influence the countrys long-term development trajectory.

While the domestic outlook remains favourable, various risks, including geopolitical uncertainties (particularly in Europe and West Asia), dynamics of global trade and interest rates, and challenges related to climate change, persist.

The Agrochemical Industry

Global Agrochemical Industry:

The agrochemical industry is a cornerstone of modern agriculture, playing a vital role in boosting crop productivity and supporting global food security.

The global agrochemicals market size was valued at US$ 297.7 billion in 2024. IMARC Group estimates the market to reach US$ 394.8 billion by 2033, exhibiting a CAGR of 3.2% from 2025 to 2033.

Several key factors are driving this growth. Chief among them is the increasing global population, which necessitates greater agricultural output. In parallel, technological advancements are improving the efficiency and precision of agrochemical usage.

Environmental concerns are also influencing the industry. A growing push is toward developing and using bio-based and eco-friendly agrochemical alternatives. These solutions aim to reduce the environmental footprint of traditional chemical applications.

Emerging trends point to a shift towards sustainable and precision agriculture. Adopting advanced technologies, such as GPS, drones, and artificial intelligence (AI), is revolutionising how agrochemicals are applied. These tools enable more accurate and efficient use, helping to conserve resources and reduce waste.

Precision farming, in particular, ensures that agrochemicals are used only where necessary. This targeted approach enhances crop protection and minimises environmental impact, aligning with the global push for sustainable agricultural practices.

Indian Agrochemical Industry:

India is on the cusp of an agrochemical revolution, and theres plenty to be excited about! As the 2nd largest exporter of agrochemicals in the world and a top player in crop protection production, Indias agrochemical sector is set for remarkable growth. With domestic innovation picking up pace and a strong focus on manufacturing competitive post-

DEFINING TRENDS IN THE AGROCHEMICAL MARKET

Increasing Concerns About Food Security

Food security is a crucial global priority, necessitated by population growth and the reduction of arable land. The agrochemical market plays an indispensable role in ensuring a stable food supply while facilitating sustainable agricultural practices.

Rise in Adoption of High-Yielding Crop Varieties

As global agricultural demands increase, farmers are exploring methods to enhance their yields. The requirement for agrochemicals is anticipated to escalate in tandem with the adoption of high-yield crop varieties, which are intended to improve production and profitability to effectively address global food security.

Growing Need for Sustainable Farming Practices

Sustainability is an essential goal for global agriculture, and advances in agrochemical solutions support such a shift. As global agriculture grapples with the challenges of climate change, resource scarcity, and the need to feed a growing population, innovative and eco-friendly approaches are reshaping the industry.

patent products, the market is expected to expand at a healthy rate, yielding a bountiful harvest of opportunities in the agrochemical sector.

Agrochemicals might sound like a complicated term, but its really all about two main things: fertilizers (nutrients for crops) and pesticides (medicines for the crop). Expanding agrochemical use is crucial with a rising population and increasing focus on nutrition. Reducing arable land further amplifies the importance of agrochemicals in optimising crop yields. In India, where agriculture is the backbone of the economy, this dynamic ensures a sustained and escalating demand for agrochemical solutions. Government policies and support have significantly influenced the expansion of the agrochemical market. Various initiatives, including subsidies for fertilisers and the promotion of contract farming, encourage the utilisation of agrochemicals to enhance agricultural yields. Yet, India uses only 600 g/hectare of agrochemicals as compared to the global average of 2.4 kg/hectare.

Performance:

In FY2024, the industry faced stress due to inventory destocking, supply pressures from China, and depressed prices.

However, YTD FY2025 has seen a rebound in profitability, driven by healthy volume growth as global channel inventories normalise and gradual recovery in agrochemical prices. Indias exports to major markets like the US and Brazil witnessed healthy volume growth in the first half of FY2025. This was primarily due to earlier inventory destocking and stable pricing.

The Pigment Industry

Global Pigment Industry:

Pigments play a critical role in preventing a world devoid of colour. Their unique property of not dissolving allows them to become the foundation for the rich spectrum of colour that defines our visual world. These insoluble particles are meticulously incorporated into paints, inks, plastics, papers, cosmetics, and construction materials like concrete and tiles.

The pigment industry is distinguished by its division into organic and inorganic pigment markets. Inorganic pigments offer stability, durability, and a spectrum of colours, and they are utilised across

On the domestic front, FY2025 saw an extended monsoon and lower pest infestations, leading to missed sprays and muted volume growth in first half of FY2025.

Outlook:

The India Agrochemicals Market is estimated to be valued at US$ 8.53 billion in 2025 and is projected to reach US$ 10.38 billion by 2030, growing at a CAGR of 4% during the forecast period (2025–2030).

This growth is being driven by multiple factors, including a rising population, increasing affluence, and evolving consumption patterns. As the demand for food rises, there is an urgent need to increase agricultural productivity to ensure both food and nutritional security.

Challenge:

The imposition of additional reciprocal tariff by the US on Chinese pesticide imports is expected to intensify global competition, leading to pricing pressure in other markets. Consequently, volume growth in the Indian agrochemical sector will likely remain in the mid-single digits.

Recognising the strategic value of the sector, the Indian government has identified agrochemicals as one of the top 12 industries with the potential for global leadership.

INDIAS AGROCHEMICAL INDUSTRY – LEAGUES AHEAD

• The Indian agrochemical industry has established advanced world-class manufacturing facilities to cater to the domestic and global demands.

• The regulatory requirements for agrochemicals approval in India are far more stringent than those in countries with high regulatory standards. Also, the environment clearance norms in India are one of the most stringent norms globally.

• The majority of the agrochemical companies in India have developed a robust R&D ecosystem, enabling the creation of innovative, cost-e_ective formulations and active ingredients, enhancing their competitive edge in the global market.

Consequently, India is the second-largest exporter of agrochemicals globally, with over 50% of its exports directed towards the United States and Brazil. Considering the potential and opportunities that lie ahead, India is strategically poised to assume a leadership role in agrochemicals global manufacturing and exports multiple industries, including automotive, packaging, and construction. Titanium dioxide (TiO2), carbon black, and iron oxides rank among the most frequently employed inorganic pigments. Conversely, organic pigments primarily find applications in the automotive and plastics sectors.

The rising consumer awareness regarding the various benefits offered by these compounds, including ultraviolet (UV) radiation, blowing sand, acid rain, protection against high temperature, corrosive materials, etc., is one of the key factors propelling the market. Moreover, the increasing construction activities also act as significant growth-inducing factors.

The global pigments industry is transforming significantly, fuelled by technological innovations and evolving consumer demands across multiple end-use sectors. A key trend shaping the market is the increasing emphasis on sustainability, with manufacturers actively adopting environmentally friendly production methods and investing in green technologies.

The growing preference for organic and eco-friendly high-performance pigments

(HPP),owingtotheelevatingenvironmental consciousness, is stimulating the market. Besides this, extensive investments in R&D activities to produce digital inks further positively influence the global market.

Asia Pacific exhibits a clear dominance in the market, owing to the inflating levels of industrialisation. Additionally, the widespread adoption of high-performance pigments in the packaging and textile industries will continue to fuel the regional market.

Performance:

The global pigments industry in 2024 witnessed substantial growth, driven by increased demand across various sectors such as paints and coatings, plastics, printing inks, and cosmetics.

Outlook:

The Pigments Market is projected to be valued at US$ 31.08 billion in 2025 and is expected to grow to US$ 35.68 billion by 2030, registering a CAGR of over 2.8% during the forecast period (2025–2030).

Indian Pigment Industry:

The Indian pigments market occupies a pivotal position within the nations industrial landscape, serving as a crucial component in diverse sectors. Pigments are integral to various industries in India, prominently featuring in the formulation of paints, coatings, plastics, printing inks, and light-emitting sources. Additionally, the dynamic applications of pigments contribute significantly to the aesthetic and functional properties of end products in these sectors.

Performance and prospects: In 2024, the Indian pigments market was valued at approximately US$ 3.0 billion. Projections indicate that the market will reach US$ 5.8 billion by 2033, reflecting a CAGR of 7.1% during the period from 2025 to 2033.

Several factors contribute to this anticipated growth:

The textile sectors evolution, including trends like functional textiles and fast fashion, is increasing the demand for innovative pigments and dyes

The paints and coatings industry continues to be the largest consumer of pigments, driven by robust growth in the construction, automotive, and industrial sectors. This demand is further amplified by aggressive capital investments by major paint manufacturers in India, aiming to expand production capacities and enhance product offerings.

Improving living standards and evolving lifestyles are driving the demand for cosmetic products, which in turn fuels the need for pigments. While the outlook is positive, the industry faces environmental regulations, raw material price volatility and global competition. https://www.imarcgroup.com/india-pigments-market?utm

Company Overview

Founded in 1986 and headquartered in Gujarat, India, Meghmani Organics Ltd. (MOL), is a diversified and fully integrated chemical company with a robust presence in Crop Protection, Crop Nutrition, and Pigments.

MOL is ranked among the top three global producers of Phthalocyanine-based pigments, holding an 8% market share, and stands as a preeminent pesticide manufacturer in India, possessing a comprehensive value chain.

The company offers over 40 pesticide brands in the domestic market, caters to more than 400 customers across various sectors, supported by a network of more than 3,500 distributors and dealers within India, and maintains a global presence in over 75 countries.

Business overview and performance

MOL takes pride in its diverse portfolio across crop protection, crop nutrition and pigments. These segments showcase our commitment to pioneering solutions, enhancing efficiency, and meeting global needs with cutting-edge innovation.

Crop Protection Segment

Supported by a robust infrastructure of four manufacturing facilities with "Responsible Care" accreditation and 19 warehouses across India, MOL is a recognised crop protection manufacturer supplying multinational corporations (MNCs) and significant companies in over 75 countries. The companys comprehensive product portfolio includes insecticides, herbicides, and intermediates, used in diverse sectors such as crop protection, veterinary health, household pest control, and public health initiatives.

Product Range

INSECTICIDES

Acetamiprid Alphacypermethrin Bifenthrin Betacyfluthrin Cyfluthrin Cypermethrin Deltamethrin Dinotefuran Ethiprole

Fipronil Flonicamid Flubendiamide Lambdacyhalothrin Permethrin Profenofos Pymetrozine Pyriproxyfen Spiromesifen

HERBICIDES

2,4 D Acid, Amine, Esters Triclopyr

INTERMEDIATES

Cypermethric Acid Chloride Lambdacyhalothric Acid (TFP Acid) Pyrazole High Cis/Trans CMAC

Meta Phenoxy Benzaldehyde Spiromesifen Acid

Crop Nutrition Segment

Meghmani Crop Nutrition Ltd. (MCNL), a wholly owned subsidiary of MOL, operates in crop nutrition segment, providing innovative solutions to enhance farm productivity and sustainability.

MCNL has entered into a strategic technology agreement with the Indian Farmers Fertiliser Cooperative Limited (IFFCO) for the production of nano urea by leveraging IFFCOs cutting-edge nano technology. Nano urea is a revolutionary product designed to address the inefficiencies of conventional urea.

In addition to nano urea, MCNL has also launched eight new products in the fertilizers, biostimulant and micronutrient category, offering a comprehensive one-stop solution to farmers. This diverse portfolio is designed to meet the specific nutrient needs of various crops, ensuring balanced and optimized plant nutrition.

Pigment Segment

MOL is a prominent global player in the pigment industry, specializing in the production of phthalocyanine-based pigments. With an 8% share of the global market, MOL stands as a key supplier to various industries. The company operates three manufacturing facilities and has developed a broad distribution network and serves over 75 countries worldwide. MOLs pigment range encompasses copper phthalocyanine (CPC) based green and blue which find applications in Printing inks, Paints, Plastics industry.

Kilburn Chemicals Limited (KCL), a wholly owned subsidiary of MOL, is primarily engaged in the business of manufacturing of Titanium Dioxide (TiO2), a widely recognised white pigment, is valued for its brightness and UV absorption properties and is used across various sectors to enhance whiteness and opacity in paints, coatings, plastics, papers, inks, foods, pharmaceuticals, and toothpastes. This inert, thermally stable, non-flammable, and non-toxic pigment is primarily available in Rutile and Anatase forms and its production relies on key raw materials like ilmenite ore (largely sourced from beach sand mineral concentrations) and sulphuric acid. MOLs entry into the TiO2 segment aligns with its long-term vision of expanding its pigment business.

RATIO	31ST MARCH 2025	31ST MARCH 2024	% CHANGE	REASON FOR VARIANCE ABOVE 25% YEAR ON YEAR
Debt-Equity Ratio	0.35	0.38	(8.26%)	No major variance.
Debt Service Coverage Ratio	0.36	0.14	161.44%	There is an increase in Debt service coverage ratio due to increase in profitability.
Return on Equity Ratio	4.16%	(3.51%)	218.29%	There is an increase in return on equity ratio on account of increase in Net profit for the year.
Inventory Turnover Ratio	3.86	2.80	37.82%	There is an increase in inventory turnover ratio due to increase in operation.
Trade Receivables Turnover Ratio	4.17	3.16	31.91%	There is an increase in Trade Receivables Turnover ratio due to increase in revenue.
Trade Payables Turnover Ratio	2.87	2.06	39.19%	There is an increase in Trade Payables Turnover ratio due to increase in purchase and trade payable balances.
Net Capital Turnover Ratio	14.93	13.39	11.49%	No major variance.
Return on Capital Employed	5.19%	(1.80%)	388.55%	There is an increase in return on capital employed on account of increase in Net profit for the year.
Return on Investment	1.21%	2.51%	(51.93%)	There is decrease in the return on investment on account of decrease in interest/Dividend income and Net gain on Investment in Mutual Funds.

 

PARTICULARS	FY 2024-25	FY 2023-24	YoY
	(Rs in Crore)	(Rs in Crore)	(in %)
Net Sales	2,004	1,540	30%
EBITDA	180.3	9.5	1,807%
PBT	84.9	(74.2)	N.A.
PAT	66.4	(56.6)	N.A.

Internal control system

The company has implemented a comprehensive and appropriate internal control system, aligned with its operational scale and nature, to guarantee the protection of its assets against unauthorised actions, ensure the integrity of financial reporting, maintain regulatory compliance, and enforce business policies. The Audit Committee of the Board oversees this system by reviewing internal audit reports.

Outlook

Companys core business segments have regained their growth momentum, and the Crop Nutrition segment has achieved self-sustainability. The recent imposition of antidumping duty on TiO2 imports from China is expected to further strengthen the companys market position. Considering these favourable factors, the company is confident in regaining its historic double-digit growth trajectory, supported by its state-of-the-art infrastructure, plant compatibility, wider product range, and extensive geographical reach.

Human Capital

The Company regards its employees as its most invaluable asset and the principal catalyst for all operations. It fosters a robust and competitive atmosphere to enable them to excel and attain new benchmarks of quality, productivity, efficiency, and customer satisfaction. Additionally, the Company is steadfast in its commitment to upholding a diverse workforce, with its HR policies meticulously crafted to attract and retain exceptional talent. Comprehensive details concerning the number of employees as of March 31, 2025, are accessible in the Business Responsibility and Sustainability Report.

Risk Management

Meghmani Organics Limited (MOL), a prominent player in the crop protection, crop nutrition and pigment sectors, navigates a complex landscape of operational, financial, and environmental challenges. Below is an overview of key risks faced by the company and the measures implemented to mitigate them:

SUPPLY CHAIN DISRUPTION

Global events and geopolitical tensions have led to supply chain disruptions, affecting raw material availability and pricing.

Mitigation Measures: MOL has adopted backward integration strategies to produce essential raw materials in-house, reducing dependency on external suppliers.

FINANCIAL RISK

MOLs operations are subject to financial risks, including credit, liquidity, and market risks, which can impact cash flows and profitability.

Mitigation Measures: The company has established a comprehensive risk management framework overseen by the Board of Directors to monitor and control financial risks including foreign exchange risk against currency fluctuations.

ENVIRONMENTAL AND REGULATORY COMPLIANCE

Stringent environmental regulations and the need for sustainable practices pose compliance challenges and potential operational constraints.

Mitigation Measures: MOL has adopted the Responsible Care Management System, emphasising leadership commitment, process safety, and environmental stewardship.

COMPETITION RISK

The highly competitive nature of the industry, dominated by organised domestic and international entities, presents a constant challenge that can disrupt MOLs operations, severely impact its profitability, and obstruct its long-term growth ambitions.

Mitigation Measures: To maintain its market standing domestically and internationally, MOL utilises a diversified business approach and reduces dependence on individual organisations through its varied geographical presence.

CAUTIONARY STATEMENT

The Companys plans, beliefs, and expectations for the future, as well as other forward-looking statements based on managements current expectations or beliefs, may be expressed in part in the Management Discussion and Analysis. A number of assumptions regarding the Companys operations, external factors, and third-party sources are taken into account. Both known and unknown risks and uncertainties are included, which could result in actual results that are materially different from those anticipated by the relevant forward-looking statements. It is important to remember that any forward looking comments in the Management Discussion and Analysis about previous patterns or actions do not imply that they will persist in the future. Any forward-looking statements made, whether in response to new information, anticipated events, or otherwise, are not subject to correction or revision. It is not advisable to overly depend on forward-looking statements, as they are only indicative as of the Annual Reports publication date.