MANALIPETC - Manali Petrochem

📊 NSE: MANALIPETC 🏢 Petrochemicals 📅 Last Updated: 12/14/2025 9:31

💰 Financial Performance

Revenue Growth by Segment

Consolidated revenue declined 13.18% YoY to INR 921.63 Cr in FY25. Standalone revenue fell 18.58% to INR 669.27 Cr. The Propylene Glycol (PG) segment maintained stable demand in pharma and food sectors, but Slabstock Polyol witnessed a notable decline in volume and value due to intensified price competition from low-cost imports.

Geographic Revenue Split

The company has expanded its presence in Europe through the acquisition of Penn-White Limited (UK). Subsidiaries now contribute a major portion of consolidated profits, with investments in subsidiaries forming approximately 40% of the tangible net worth. Strategic focus is on Nordics, mainland Europe, and MENA regions.

Profitability Margins

Consolidated Profit After Tax (PAT) margin improved to 3.18% (INR 29.31 Cr) in FY25 from 1.81% (INR 19.21 Cr) in FY24. Standalone operations are at breakeven margins, with a PAT loss of INR 8.74 Cr in FY25. CARE Ratings notes that operating margins remaining below 8% on a consistent basis is a negative rating factor.

EBITDA Margin

Consolidated EBITDA for Q1 FY25 included INR 10.6 Cr from standalone operations and INR 5.7 Cr from Penn-White. Standalone EBITDA margin was approximately 6% in Q1 FY25, while Penn-White achieved a significantly higher margin of 24.7% on its INR 23 Cr turnover.

Capital Expenditure

Total additions to fixed assets in FY25 amounted to INR 15.99 Cr. Planned capital expenditure includes a West India greenfield project with a modeled IRR of 30%, PG capacity expansion (20.7% IRR), and Polyester Polyol expansion (23% IRR).

Credit Rating & Borrowing

CARE Ratings assigned 'CARE A+; Stable' for long-term bank facilities and 'CARE A1+' for short-term facilities. The company maintains a low level of long-term debt with a comfortable interest coverage ratio of 5.10x in FY24 and >2x in Q1 FY25.

⚙️ Operational Drivers

Raw Materials

Primary raw materials include Propylene and Propylene Oxide (PO). Propylene is the base feedstock, with global capacity increasing by 11 MTA in 2023, primarily in China.

Import Sources

The company faces significant pressure from low-cost imports and dumping from China and Thailand, particularly in the industrial and fragrance grades of Propylene Glycol.

Capacity Expansion

Penn-White production capacity is 6,000 MTPA. Standalone capacity utilization was low at 15.39% for the 12 months ended August 2024, while subsidiaries operate at 50-60% capacity.

Raw Material Costs

Raw material prices are volatile and restrict profit margins. Brent Crude oil prices above $76/barrel impact the cost of propylene-based feedstocks. The company is focusing on alternate vendor management to balance production costs.

Manufacturing Efficiency

Average capacity utilization remained low at 15.39% as of August 2024. The company is shifting focus toward strategic project management and energy optimization to improve efficiency.

📈 Strategic Growth

Expected Growth Rate

2.30%

Growth Strategy

Growth will be achieved through a proactive strategic shift toward differentiation and specialty chemicals (currently 37% of portfolio). Key projects include the West India greenfield expansion (30% IRR) and the Econic MoU (signed 2021) to produce CO2-based polyols, turning waste CO2 into economic potential.

Products & Services

Propylene Glycol (Pharma, Food, Fragrance, Industrial grades), Polyols (Slabstock), Specialty Polyols, Foam Control Agents, Release Agents, and Specialty Cast Polyurethanes.

Brand Portfolio

Manali Petrochemicals, Penn-White, and Notedome (Note: Notedome is being divested to strengthen liquidity).

New Products/Services

New product launches include CO2-based polyols through the Econic partnership and specialty cast polyurethanes for subsea, automotive, and defense applications.

Market Expansion

Targeting expansion in the Nordics, mainland Europe, and MENA regions through strategic distribution agreements and the Penn-White acquisition.

Strategic Alliances

Signed a Memorandum of Understanding (MoU) in 2021 with Econic for a two-phase project to produce sustainable polyols using captured CO2.

🌍 External Factors

Industry Trends

The industry is currently at the bottom of the cycle due to increased Chinese capacity and softening downstream demand. Future direction involves a shift toward sustainability and eco-efficiency (CO2-based polyols).

Competitive Landscape

Dominated by global integrated players who enjoy benefits of scale. Manali competes by focusing on the premium end of the market and specialty chemicals.

Competitive Moat

Durable advantages include a 5-year product guarantee (USP) and being the first responder to quality queries from drug control authorities. Technical service intimacy and a large portfolio of tailored specialty products create high switching costs.

Macro Economic Sensitivity

Highly sensitive to global propylene capacity (11 MTA increase in 2023) and Brent Crude oil prices (>$76), which dictate the bottom-of-the-cycle trajectory for earnings.

Consumer Behavior

Softening demand in downstream sectors like Slabstock Polyol has been observed, while demand remains stable in pharma and personal care segments.

Geopolitical Risks

Trade barriers and the potential for government intervention via Anti-Dumping Duties (ADD) on Chinese and Thai imports are critical for protecting domestic market share.

⚖️ Regulatory & Governance

Industry Regulations

Operations are governed by SEBI Listing Regulations 2015 and the Companies Act 2013. The company relies on government support for Anti-Dumping Duties (ADD) to counter unfair import competition.

Environmental Compliance

The company is investing in energy optimization and CO2 capture technology to turn waste into economic potential, aligning with ESG standards.

Taxation Policy Impact

The consolidated tax rate for FY25 was approximately 30.3% (INR 12.74 Cr provision on INR 42.05 Cr PBT).

Legal Contingencies

The company has complied with provisions relating to the Internal Complaints Committee under the Sexual Harassment of Women at Workplace Act. No specific pending court case values were disclosed.

⚠️ Risk Analysis

Key Uncertainties

Aggressive dumping practices from China and Thailand pose a significant risk to margins, with potential impacts on profitability if Anti-Dumping Duties are not maintained.

Geographic Concentration Risk

Significant profit contribution from UK-based subsidiaries (Penn-White and Notedome), with investments in these entities representing 40% of tangible net worth.