Ashish Soparkar, Managing Director, Meghmani Organics in an interview with ET Now talks about the expected turnover and profit for the company in the year ahead as well as possible partnerships with MNCs.

These deals such as these have had a bit of an impact on the entire sector what international paper did with AP Paper that had a bit of an impact on the entire paper sector, you obviously looked at the deal has it been done as a one off or is this indicative of the kind of strength that is returning to the chemical space?

Chemical industry is on a growth mode and caustic and chlorine are the basic building blocks, chemical building blocks, so I believe caustic chlorine industry looks good for coming couple of years. So this is what is happening because of general happening in the chemical industry.

Just wondering the deal valuations Rs 830 crore which is around close to Rs 7 crore per tonne, is this valuation or is this proper valuation or is this a premium that has been paid to Kanoria Chemicals and is the premium justified if at all?

This is more than a proper valuation, if this plant would have been on the western coast the price would have been even higher because the markets is more on the west side. Because this deal also includes 50 MW power plant and around 350 to 400 tonne per day capacity so looking at this it takes set up, this is a proper valuation.

What kind of revenues does your caustic soda business generate as a percentage of overall revenues and what is the kind of installed capacity that you have for the business at this point?

Our current capacity is around 310,000 tonnes per year which we are building up to 155,000 tonnes per year.

What kind of revenues does this contribute to the overall book?

We believe this revenue structure will be around 20% to 25% of our total revenue. If we look at Meghmani Organics Ltd. a Rs 1000 crore company, Rs 200 crore came last year from roughly Meghmani Finechem Ltd. which is our caustic chlorine unit. With Rs 200 cr, will go to Rs 350 cr or around 350 crore this year but we also expect Meghmani Organics Ltd to grow on it own also.

So then we come to our next question which is essentially what is the future looking like for this business given this deal and the kind of valuation that Kanoria Chemicals has got for the business, do you have similar plans, have you been approached by anybody, are you looking at selling off the business, is there something on the annual what is the future looking like, what is the blueprint for this business?

See Meghmani Organic Ltd. took lot of pain to develop Meghmani Finechem Ltd. with the partnership of World Bank and now the time is getting brighter. We are of course open for partnership from multinationals but we are not interested in selling our unit. We are ready to have valuable partner because International Finance Corporation has already made it very clear that they are here for financing the project at appropriate time if the partner is right they will always get out and give our factory into second gear or second stage of progress. So we are already looking for..

Are you in talks with anybody?

Yes, there are couple of talks going on right now which I am not able to share as of now but we are, of course there are always offers from multinationals to be partner with us.

But would you sell any kind of or even a small equity stake or would this purely be a partnership that you would do which will share revenues as in a form of a joint venture what would it be?

We are not interested in selling our caustic chlorine unit because we believe the proper time has come now that our time has started now but of course we are willing to take a respected partners who can take us further in value added downstream projects.

So you are looking at a strategic stake not a financial one?

No, we do not need any financial partners. We are always looking for technical collaboration either technical joint venture or technical collaboration with the downstream projects which can take us to the next level of development.

Just one word before I ask you even what would you do in terms of revenues, people that you are talking to currently this involves setting up a new entity as a joint venture or could there be a possibility a remote one that if the joint venture partner wants it, so you would sell a small stake may be 2% or 3% or 5% into the business that you are willing to partner in to that management as well?

International Finance Corporation has around 25% stake in the company and at appropriate level, appropriate time they have always shown willingness to part that share to any multinational or even Indian partner who is willing to take this company forward either through technical collaboration or downstream product collaboration and we are open for that type of partnership where we will not be diluting ourselves but IFC will dilute their stake.

You mentioned an appropriate level, what would the appropriate level be ballpark estimates?

That is quite difficult to define because the equation change depending up on the value addition of the product and product application whether it is in the chemical field or it is in another field. What level of multinational partner, what is his willingness to be partner with us so this is a quite a fluid situation and we are closely watching all invitation to us for partnership.

Just one final word what is it that you would do in terms of revenues and profitability in FY11 and the kind of growth that you would see in FY12 as well?

The sells will definitely grow by 20% to 25% that is what it has been growing every year and we believe that bottom line should also follow that level.