Meghmani Organics Limited - Chemistry of Success at Work

Corporate Profile Company Overview Sound fundamentals, outstanding export performance, strong presence in the domestic market and a focused management team has seen Meghmani Organics Limited grow at a compounded annual growth rate (CAGR) of 17% and profits 10% over the past 3 years The Rs 6000 million Rupees Meghmani Organics Limited is: One of the largest producers of pigment blue in the world One of the leading producers of pigment green One of the largest producers of pesticides in India More than 80% of our pigment products and over 50% of our pesticides products are exported the world over. We have four multifunctional production facilities in Gujarat (India) of which three are ISO 9001-2000. Our production facilities are strategically located with high accessibility and close proximity to source of raw material. The landmarks in our journey 1986: Began operations to produce Phthalocynine Green 7, popularly known as Pigment Green 7 at Vatva Plant. 1995: Diversified into manufacture of Agrochemicals at Chharodi Plant. 1996: Expansion of pigments business. Panoli Plant was established to manufacture CPC Blue. CPC Blue is a key raw material used for the manufacture of our Pigment Blue (15) and Pigment Green (7) Products. 2003: Ankleshwar Plant was acquired to expand our range of Agrochemical Products. Competitive Strengths Experienced and Qualified Management Team and Technical Personnel They have a proven management team led by founders who have over 100 years of collective experience in the pigments and pesticides industry.  The production operations at each of the plants are managed by a team of skilled technical engineers with the requisite technical know-how to carry out the production processes. It is through their consistent research and development efforts in improving the production processes that they have developed an extensive range of products suitable for use in a multitude of applications. Their technical staff is highly qualified and trained, and many have had working experience with MNCs and other reputed large Indian companies. They have a workforce of over 900 employees. It is the expertise and dedication of the people that provide us the leverage to respond quickly to changing market trends and demands in the pigments and agrochemicals industry. Diversified Customer Base The Pigments customers are mainly MNCs from a wide range of industries such as printing inks, plastics, paints, textiles and leather, paper and rubber. We have more than 200 Pigment products customers from various countries in North America, Europe, Central and Latin America, and Asia-Pacific. They have 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. They have 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. Cost Advantage Vertical integration of production processes yields some upstream products that are used as raw materials for our pigment and agrochemical products. This allows for effective management of costs and ensures regular supply of raw material of the desired quality. Multi functional design of our agrochemical production facilities provides flexibility to meet changing demand requirements. Strategic location of our production facilities at close proximity to sources of raw materials lowers procurement costs. Collectively, these features provide a distinct cost advantage to the Company. 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. We have more than 36 brands of various pesticides formulations which cater to the needs of Indian farmers. Locations Production Facilities Pigment Plants Vatva, 14 km from Ahmedabad city, Gujarat State, Western India Panoli, 200 km south of Ahmedabad city, Gujarat State, Western India Agrochemical Plants Chharodi, 40 km Ahmedabad city, Gujarat State, Western India Ankleshwar, near Panoli, Gujarat State, Western India

Shipping Corporation of India

The Shipping Corporation of India was established on October 2nd, 1961, by the amalgamation of Eastern Shipping Corporation and Western Shipping Corporation.
 
Starting out as a marginal Liner shipping Company with just 19 vessels, the SCI has today evolved into the largest Indian shipping Company. The SCI also has substantial interests in various segments of the shipping trade. SCI’s owned fleet includes Bulk carriers, Crude oil tankers, Product tankers, Container vessels, Passenger-cum-Cargo vessels, Phosphoric Acid / Chemical carriers, LPG / Ammonia carriers and Offshore Supply Vessels. Sailing through for nearly five decades, the SCI today has a significant presence on the global maritime map.

 
As the country’s premier shipping line, the SCI owns and operates around one-third of the Indian tonnage, and has operating interests in practically all areas of the shipping business; servicing both national and international trades.
 
In view of the demand from Indian trade, the SCI has diversified into a large number of areas. The SCI is today the only Indian shipping Company operating: break-bulk services, international container services, liquid/dry bulk services, offshore services, passenger services. In addition, the SCI mans and manages a large number of vessels on behalf of various government departments and organizations.

Highest Dividend Yield Likely

Shipping Corpn of India

1) Equity.                 465Cr

2) NetWorth.           7083Cr

3) PAT FY16.            377Cr

4)OneTime Exp.       135Cr

    In FY16

5)CASH IN HAND        1250Cr

6) Equity with GOI.      65%

7) Equity with MF.        20%

8) FII.                           3%

9) Public.                      12%

10) Baltic freight Index up from 290 to 800

11) New MD from Pvt sector

12) As per DPE guidelines, Co should declare Dividend 5% of Network or 30% of NP whichever is Higher. It means SCI will have to pay Dividend of Rs 7 per share for FY17

At CMP, Div yield 10%

Interim Div of Rs 2 likely with Q2 

52week high Rs 100

In last Month, shipping stock like Essar have risen 50%.

Can give good upmove

J B M AUTO LIMITED - Milestones are Touchstones

J B M Auto Limited is an India-based company. The Company is engaged in the manufacturing of tools, dies and moulds. The Company operates in three segments: Sheet Metal Division (for manufacturing sheet metal components, assemblies, sub-assemblies), Tool Room Division (for manufacturing tools, dies and moulds) and Special Purpose Vehicle (SPV) division (for development and assembly of SPV).

The Companys products include parcel shelf, bonnet for tractor, rear assembly for tractor, stiff assembly, panel C pillar, marcopolo Fr assy, shelf center rear assy and Tunnel Assy.

JBM Auto Ltd. was set up in 1990, mainly to manufacture Tools, Dies and Moulds at Faridabad. The Company also established a Press Shop for manufacturing Sheet Metal Components and Welded Sub-assemblies to meet the growing stringent quality requirements of automobile industry. The company shares were listed in Bombay Stock Exchange (BSE) and National Stock Exchange (NSE).

In April, 2009, the Company acquired a 73.89% interest from Thyssenkrupp Tallent Limited (TKTL) in the ThyssenKrupp JBM (P) Ltd., a joint venture between JBM and TKTL, known as JBM Auto System Private Limited (JBMASL). After this acquisition, JBMASL has become subsidiary of the Company.

Game changing event

In July 2016, the Company has entered into a Joint Venture Agreement with Solaris Bus & Coach S.A., Poland for the purpose of manufacturing of Electric and Hybrid Buses.

(Delhi-based auto parts maker JBM Auto Ltd on Wednesday said that it has formed a joint venture with Polish firm Solaris Bus & Coach S.A. to manufacture electric buses in the country.

Both the companies together will invest Rs.300 crore in engineering, design and development, manufacturing and supply chain development in the project.

“This JV aims at introducing globally proven European technology for electric vehicles, which is sustainable and affordable, first time in India. The key focus will be towards locally developing indigenous sources for all key aggregates, systems & components catering to domestic & global requirements,” the company said in a statement.

Solaris will bring its domain strength in electric buses, while JBM Auto will provide engineering and design expertise, market know how along with manufacturing facilities and infrastructure. Production of the buses—branded as ECOLIFE— will start in the March quarter of 2016-17 in Kosi, Uttar Pradesh. Initially, the joint venture will produce two types of buses—9 and 12 metres in length.

Andreas Strecker, chief executive officer, Solaris Bus & Coach, said that his company has supplied mass transportation solutions to more than 30 countries all over the world. “This joint venture is a very important step for Solaris Bus and will ensure introduction of our proven technology in electric vehicles. JBM and Solaris together are set to revolutionize public transportation in India,” he said.

ECOLIFE is powered with lithium batteries, which can run up to 200 km on single charge.

“This JV between JBM Auto and Solaris Bus perfectly aligns with the government’s vision to make India a 100% electric vehicle nation by 2030,” said Nishant Arya, executive director, JBM Auto.)

Improvement in margins

Company has reported persistent growth in results.

Mar-2016, company reported 6.78 cr net profit against 143.65 cr revenue. cash eps stood at 2.64 with OPM of 13.28% and net margin 4.72%

In June-2016, net profit rose from 6.78 cr to 13.61 cr. cash eps was 4.70,OPM 15.74%, and net profit margin at 7.75% which shows significant increase compared to qoq and yoy basis.

Nishant Arya, Executive Director, JBM Group, is very upbeat on the 20 percent topline growth at around Rs 1800 crore in FY17 for JBM Auto. The growth would come on back of plant additions that have started operating to full capacity now. For the last fiscal the topline growth stood at Rs 1500 crore.

Arya is also optimistic of maintaining margins around 12-13 percent or upping them slightly in FY17.

The company has started manufacturing buses and is seeing good demand for them going forward. The bus division will meaningfully start contributing to the topline this fiscal onwards, says Arya in an interview to CNBC-TV18.

The company recently entered into a joint venture (JV) with Polish firm Solaris to manufacture electric and hybrid buses. The JV named JBM Solaris will invest Rs 300 crore towards electric mobility in India and will develop India’s first 100 percent electric bus ECOLIFE.

By FY18, Arya expects the bus division to contribute around Rs 400 crore to the total revenues. 

Below is the transcript of Nishant Arya’s interview to Nigel D’souza and Sumaira Abidi on CNBC-TV18.

Sumaira: Is there any sort of corporate development that is in the offing? Anything that the market is probably working ahead of?

A: As we shared during our results a few weeks back that now the buses have started churning in the kind of revenues we were looking for and the first quarter of this financial year has been evidence of that. And in the upcoming quarters, we will see many more products being sold. And also, what we have seen is that the few plants which were set up in the last two years has started running at the optimal capacity for few months in the last quarter. Then starting from these quarters, they will be adding that revenue in topline and significantly in the bottomline as well.

Similarly, the tooling division also will start to perform well and since the sales are cyclical in the tooling division. And what we have also done is that we have brought in a lot of high end technology in the tooling division where we have reduced time to market. And we have started to produce high end tools with which components which are very intricate in nature can also be manufactured and that is all being designed in house. So such kind of capabilities have been developed where we were working on in the last few years. So, all those results are coming on at this moment. So, the market is realising the potential which we have got and they are reacting to it.

Nigel: You were telling us that the market is sensing something. It is sensing an opportunity over there, so just wanted a couple of details from you. You were talking about a lot of capacities that are coming stream. The best is yet to come. Last year, you did a revenue of around Rs 1,500 crore, approximately. This year, with all these new facilities coming on stream and everything looking quite good, what kind of topline can you do? Going ahead, do you expect margins to go back to around that 14-15 percent mark?

A: Yes, because if you would see that in the first 5-6 weeks of the previous quarter, the customer volumes were not as committed. So, therefore we got compensation with respect to that which is shown in the extraordinary income. Otherwise, that would have come in the profitability. So, we have got compensated for the same. On the second front, the tooling division as it was the cyclical business and every quarter the customers do not buy tools. so that was something which was not there in this quarter and we will be seeing the same in the upcoming quarters.

And the first few buses have been sold which had been manufactured by us and now the customers will be lifting the buses constantly on a quarterly basis. And talking about the new facilities, since the new facilities, when they start off, at that point, the efficiency levels are not at the optimum level. So, first quarter or first few months, we do take that time for them to settle down. And since they have become operational, some of them from the beginning of this financial year, from the beginning of this calendar year, so they settle down, the kind of volumes which were anticipated earlier in the last year it did not come in and here we are seeing that with the good monsoon and the good demands from the customers so they will be picking up well.

Nigel: I wanted to get that topline number. I missed that. Rs 1,500 crore is what you did last year. This year, what can we look like? In the first quarter, what you said, your revenues have grown by 18 percent. For the entire year, can we see a 20 percent growth on the topline at least?

A: Minimum, yes.

Nigel: So, we will be at around Rs 1,800 crore for this fiscal?

A: Yes.

Nigel: And margins are at around 12-13 percent?

A: Yes. We will maintain our margins or further enhance them in this case.

Nigel: So, we will do around Rs 210 crore of operating profit then?

A: Yes. Last year, we did about Rs 190 crore. So, we will be enhancing that significantly, but definitely, Rs 210 crore should be coming in that scenario.

Sumaira: This bus division that you were talking about, when is it going to meaningfully start contributing to your topline and what are you expecting by way of a contribution there?

A: It will meaningfully start contributing from this year itself. And now, since we have had a new joint venture, which is one of its kind with the largest European manufacturer of electric buses and hybrid buses which is Solaris. And they are considered among the leading players globally in the city buses also. They have supplied about 14,000 buses across 30 countries. So, we have tried to reduce thetime to market. Normally, any player which is coming into this segment of electric buses does take a few years. But, we have turned around within a year’s span itself. We had showcased this product earlier this year. And by the end of this financial year, we will be putting it on the road. 

Already we have been participating in multiple tenders with different customers and we will be seeing those results by the end of this year. Similarly, for the city buses, we see that a lot of different municipal corporations and state government undertakings, are really seeing the potential of our product and they recognise the same. That is where we see good pipeline being created for this in the coming months.

Nigel: What kind of a number can we work with? It is going to start at the end of this. So, for FY18, what kind of revenues we can see from this bus division? Could you tell us very quickly?

A: In FY18, the bus division definitely would contribute up to easily Rs 400 crore or so.