💰 Financial Performance

Revenue Growth by Segment

The Paint industry remains the largest segment contributing approximately 48% of total revenue. While specific growth percentages for other segments like plastics or construction chemicals were not detailed, the consolidated revenue for Q2 FY26 stood at INR 230.78 Cr. Historical consolidated revenue grew at a CAGR of ~8.0% from FY2021 to FY2025.

Geographic Revenue Split

Domestic operations are supported by 9 plants and 13 warehouses across India. Exports contribute approximately 16.67% (one-sixth) of the total turnover, with operations extending to Malaysia through 20 Microns (Malaysia) Sdn. Bhd. and Vietnam via 20 Microns Vietnam Company Limited.

Profitability Margins

Operating margins have remained stable in the range of 12% to 14% over the last 5-6 years. Net Profit After Tax (PAT) for FY25 was INR 62.5 Cr, up from INR 56.0 Cr in FY24, representing an 11.6% increase. Q1 FY26 PAT was reported at INR 17.1 Cr.

EBITDA Margin

EBITDA improved in Q2 FY26 despite revenue pressures due to a 7.7% sequential and 5% year-on-year decline in operating expenses. Core profitability is driven by a shift toward value-added products and cost-efficiency measures in manufacturing.

Capital Expenditure

The company is investing in capacity enhancement and modernization initiatives, reflected in an increase in depreciation to INR 10.45 Cr in H1 FY26 from INR 8.57 Cr in H1 FY25. Specific total planned CAPEX in INR Cr for the full year was not disclosed.

Credit Rating & Borrowing

The company maintains a healthy credit profile with a gearing of 0.34 times and an interest coverage ratio of 6.5 times as of March 31, 2025. Bank limit utilization averaged 70% through June 2025. Specific interest rate percentages were not disclosed.

⚙️ Operational Drivers

Raw Materials

Specific minerals including high-purity minerals for extraction and processing, and micronized minerals. These minerals serve as functional fillers, additives, and extenders, though the exact percentage of total cost for each specific mineral was not disclosed.

Import Sources

Raw materials are sourced from captive mines in India and through international subsidiaries, specifically Malaysia (via 20 Microns (Malaysia) Sdn. Bhd.) for high-purity mineral extraction.

Key Suppliers

Not disclosed in available documents; however, the company utilizes diversified sources and captive mining to mitigate procurement risks.

Capacity Expansion

The company operates 9 manufacturing plants and 13 warehouses across India. Recent investments in modernization and capacity enhancement are intended to support growth as demand revives in H2 FY26.

Raw Material Costs

Raw material costs are managed through alternative sourcing and manufacturing discipline. Operating expenses, which include material costs, were reduced by 5% YoY in Q2 FY26 to protect margins during a revenue-constrained environment.

Manufacturing Efficiency

Efficiency is driven by 'China plus one' positioning and structural margin focus. Operating expenses declined 7.7% sequentially in Q2 FY26, demonstrating tight control over manufacturing overheads.

Logistics & Distribution

Distribution is handled through a network of 13 warehouses. Logistics costs are optimized by maintaining a wide geographical reach to save on delivery time and costs.

📈 Strategic Growth

Expected Growth Rate

8%

Growth Strategy

Growth will be achieved by increasing share in value-added and specialized products (20ML Nano), expanding the Malaysian subsidiary to 100% ownership to streamline mineral sourcing, and capitalizing on the 'China plus one' strategy. The company expects a demand recovery in H2 FY26 driven by the festive and wedding seasons.

Products & Services

Ultrafine industrial minerals, specialty chemicals, functional fillers, additives, and extenders used in paints, plastics, construction chemicals, rubber, and paper.

Brand Portfolio

20 Microns, 20 Microns Nano Minerals, 20 MCC, Dorfner-20 Microns.

New Products/Services

Focus on specialized micronized mineral-based chemicals through the 20 Microns Nano Minerals subsidiary. Expected revenue contribution percentage for new launches was not specifically disclosed.

Market Expansion

The company is increasing its stake in 20 Microns (Malaysia) Sdn. Bhd. from 99.9987% to 100% to consolidate international operations and mineral extraction capabilities.

Market Share & Ranking

The company is one of the largest and most prominent players in the micronized mineral industry in India with access to captive mines.

Strategic Alliances

Joint ventures and associations include Dorfner-20 Microns Private Limited, 20 MCC Private Limited, and Eriez Industries Private Limited.

🌍 External Factors

Industry Trends

The industry is shifting toward specialized, high-purity minerals and 'Nano' minerals. Current trends show a temporary slowdown in the paint sector due to weather, but a long-term growth trajectory of ~8% CAGR in the mineral processing sector.

Competitive Landscape

The company competes with both domestic and international mineral processors, maintaining its edge through value-added products and a diversified sourcing model.

Competitive Moat

Moat is built on access to captive mines, a wide distribution network (13 warehouses), and long-standing relationships with large organized players in the paint and construction industries. These advantages are sustainable due to the high capital intensity and regulatory complexity of mining.

Macro Economic Sensitivity

Highly sensitive to the performance of the Paint and Plastic industries. Q2 FY26 revenue was pressured by an extended monsoon and a delayed festive season, which deferred consumer spending on home improvement.

Consumer Behavior

Demand is seasonal, with significant upticks expected during the Indian festive and wedding seasons (H2) for paint and decorative products.

Geopolitical Risks

The company positions itself as a beneficiary of the 'China plus one' strategy, aiming to be a reliable global alternative for industrial minerals.

⚖️ Regulatory & Governance

Industry Regulations

Vulnerable to changes in mining policies, environmental norms, and changes in royalties. Operations are subject to statutory requirements under both Indian and Malaysian law (for the 20ML Malaysia subsidiary).

Environmental Compliance

The company must comply with stringent government norms regarding dust production during mineral grinding. ESG principles are integrated into leadership strategies.

Taxation Policy Impact

Not disclosed in available documents; however, H1 FY26 Net Profit before Tax was INR 46.60 Cr.

⚠️ Risk Analysis

Key Uncertainties

Regulatory risks in mining and environmental compliance could impact operations by up to 100% in specific sites if bans are implemented. Revenue is highly sensitive to economic cycles affecting the paint and plastic sectors.

Geographic Concentration Risk

Heavy reliance on the Indian market, although 16.67% of revenue is derived from exports.

Third Party Dependencies

While it has captive mines, the company still relies on diversified sources for specific raw materials. High dependency on the top 5 customers (50% of revenue) is a significant counterparty risk.

Technology Obsolescence Risk

The company is mitigating technology risks through modernization and investment in 'Nano' mineral technology to stay ahead of commoditization.

Credit & Counterparty Risk

Receivables quality is generally supported by dealings with large, organized players in the paint and chemical industries. Liquidity is rated as adequate with INR 80 Cr+ expected annual cash accruals.