Manali Petrochemicals Ltd.

Manali Petrochemicals Ltd.BackgroundMPL was promoted by SPIC in 1986. SPIC has transferred its 38.28% stake to SIDD Life Sciences Pvt. Ltd. –another group company ‐ due to its financial difficulties. In 1995 Company took over UB Petro which wasjointly set up by UB group and Tamilnadu Industrial Dev. Corp. (TIDCO) and merged it with itself in 2000. TIDCOnow holds 6.5% stake in MPL.It is engaged in the manufacture of Propylene Oxide (PO), Propylene Glycol (PG) and Polyols (PY), whichare used as industrial raw materials. It is the sole domestic manufacturer of PG & PY.Company entered into an agreement with TECHNIP France who provided the technology of ATO CHEM ofFrance for the manufacture of PO and PG and that of ARCO Chemical Co. of USA for the manufacture of PY. Press Industriaprovided the technology of Montedeppe for PO and PG Plants and their own technology for PY for UB petro plant.MPL has two manufacturing plants at Manali near Chennai. Its product portfolio includes intermediatesand commodity and specialty products with a range of applications. PG is mainly used in Pharmaceuticalsformulations, unsaturated polyester resins, food flavours, fragrances etc.Polyols are used along with isocyanate (MDI or TDI depending on the application) in the manufactureof polyurethane, which is an engineering plastic requiring considerable amount of technical services. Flexibleand moulded polyols is used in automobile seats, furniture, garments and mattresses etc. The rigid grade isused for industrial insulation & refrigeration and thermoware. Rigid polyols is marketed with specific grades.The Company imports the necessary MDI from Japan and China and markets it with polyols and pre polymersproduced at its plants.During FY ’11, the Company de‐bottlenecked its PG plants and retrofitted its PO plants, besidescommissioning a new PY plant train of capacity of 17,000 Tonnes p.a. in Feb. ’11. Company now has productioncapacity of 36,000 Tonnes of PO, 20,000 Tonnes of PG and 50,000 Tonnes of PY.Manali Petrochemicals Ltd. is also available on www.balance-equity.co.in

Manali Petrochemicals Ltd.Commentsu The Company would have to operate with thin margins to ward off the competition. Protective actionsare contemplated to overcome the situation through better value addition and new products.u Availability of PO for the derivative plants at a reasonable cost could be a major risk, as the Companyhas facilities to produce only 36,000 TPA of PO with limited scope for expansion. However, with storage facilityof imported PO in bulk, becoming operational, Company would be in a position to meet its requirement of PO,without much difficulty and at a reasonable cost.u Considering the past few years performance, cheap valuations, high dividend yield and continuouslyimproving return ratios, we feel the share is a good buy at present price for the next 6 months to 1 year.Financial ResultsPeriod Ended (` Crs) FY '10 FY '11 FY '12 June '12 Sept. '12Revenues 389.49 452.82 573.96 154.84 137.37(Inc.)/Dec in stock ‐0.4 ‐2.79 ‐13.81 ‐4.29 13.33Raw Material 254.89 311.62 394.32 110.75 84.63Stock in trade 14 13.53 13.65 5.32 3.7Employees 13.65 14.81 24.84 4.61 4.83Power & Fuel 36.26 40.18 47.7 11.71 9.89Other Expenses 39.47 38.54 47.4 11.96 8.07Total Expenses 357.87 415.89 514.1 140.06 124.45EBITDA 31.62 36.93 59.86 14.78 12.92EBITDA Margin (%) 8.1 8.2 10.4 9.5 9.4Depreciation 4.04 4.91 5.88 1.55 1.59Interest 1.5 1.54 1.92 0.8 0.57Tax 8.94 9.04 15.21 3.54 3.49Other Income 3.92 3.83 6.83 1.21 2.66Non RecurringExp. 0.34 -0.45 0.62 0 0Net Profit 21.4 24.82 44.3 10.1 9.93Net Profit Margin (%) 5.5 5.5 7.7 6.5 7.2Equity Capital 86.03 86.03 86.03 86.03 86.03Equity Shares(in Crs.) 17.206 17.206 17.206 17.206 17.206Reserves 41.37 56.65 88.34EPS(`) 1.24 1.44 2.57 0.59 0.58Book Value (`) 7.40 8.29 10.13ROE (%) 16.8 17.4 25.4Manali Petrochemicals Ltd. is also available on www.balance-equity.co.in

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