AARTI Industries Ltd · NSE:AARTIIND
AARTI Industries — Investor Day (September 2016)
59 slides from AARTI Industries's investor day presentation, Sep 26, 2016
Slide 1: Aarti Industries Limited Investor & Analyst Meet
Aarti Industries Limited Investor & Analyst Meet – September 26, 2016
Slide 2: Disclaimer
Disclaimer AARTI INDUSTRIES LIMITED may, from time to time, make additional written and oral forward looking statements, including statements contained in the company's filings with Bombay Stock Exchange and National Stock Exchange, and our reports to shareholders. The company does not undertake to
Slide 3: Mr. Rajendra Gogri, Chairman & Managing Director
Mr. Rajendra Gogri Chairman & Managing Director 3
Slide 4: Vision
Vision To emerge as a ‘Global Partner of Choice’ to leading consumers across the globe of Speciality Chemicals and Intermediates for Pharmaceuticals, Agro Chemicals, Polymers, Pigments, Printing Inks, Dyes, Fuel additives, Aromatics, Surfactants and various other speciality chemicals 4
Slide 5: Profile
Profile Aarti is one of Globally ranks Promoters are First Generation Highly integrated operations Present in niche the most at 1st – 4th Technocrats • Cost-efficient processes chemistry competitive position for 75% • 5 of 6 Promoter Directors are engineers. • Extensively integrated spaces. Multi- b
Slide 6: Transformation Journey
Transformation Journey Hitting right milestones at right time • Merged Salvigor Labs, producers of DMS and Sulphuric Acid and Set up additional their downstream unit at Vapi to Set up Alchemie Merged products into Aarti. Aarti manufacture (Europe) Ltd. a Alchemie Organics Pvt NCB with • Change of na
Slide 7: Transformation Journey
Transformation Journey • Custom Synthesis • Scaled NCB capacity from 57,000 division (Vapi) received • Merged TPA to 75,000 TPA USFDA approval. manufacturing division of Anushakti • Expanded caffeine capacity • Upgraded Chemicals and Merged promoter’s investment hydrogenation unit • Drugs Ltd. into
Slide 8: What differentiates us
What differentiates us Our product mix comprises more Most chemical companies focus than 125 research-led products on a handful of products We have focused on the manufacture Most chemical companies focus on a of integrated derivatives fragmented standalone product mix We have global capacities & ar
Slide 9: Global Partner of Choice
Global Partner of Choice Aarti Industries is a rare instance of a global speciality chemicals company that combines process chemistry competence (recipe focus) with scale-up engineering competence (asset utilization) Vendor servicing to Make-to-stock to Partner of Choice Transformed robust Make-to-o
Slide 10: People Connect
People Connect Though we are a B2B Company, our products touch people in various ways in their everyday lives Speciality Chemicals Polymer and additives: Our products are used in aircrafts, automobiles, cruise Liners, electro-static precipitators, bullet- proof jackets, electronic gadgets and variou
Slide 11: People Connect
People Connect Though we are a B2B Company, our products touch people in various ways in their everyday lives Pharmaceuticals Active Pharmaceutical Ingredients: Intermediates for innovators and generic companies | Our products are used in anticancer, anti-asthma and anti- hypertensive drugs as well
Slide 12: Global presence – Exports by geography
Global presence – Exports by geography 50% of revenue coming from global markets, and the number is expected to increase Europe America 25% China 28% 16% Japan 10% Rest of the World 21% Aarti’s esteemed Customer list includes Leading Multinationals and Global Giants Aarti’s has a marketing & distrib
Slide 13: Speciality Chemicals – Major Customers
Speciality Chemicals – Major Customers • Diversified customer base – 150+ export customers & 500+ domestic customers • Customers spread across the globe in 60 countries with major presence in USA, Europe, Japan & India Agro Intermediates & Fertiliser 20-25% of revenues Polymer & Additives 15-20% of
Slide 14: Speciality Chemicals – Major Customers
Speciality Chemicals – Major Customers Pigments, Paints, Printing Inks, Dyes 15-20% of revenues Pharmaceuticals & Other Speciality Chemicals 15-20% of revenues Other Speciality Chemicals include fuel additives, Oil extraction, Rubber chemicals, Optical brighteners, UV absorbers and FMCG 14
Slide 15: Industry Accreditation for Exports
Industry Accreditation for Exports CHEMEXCIL presented the Company ‘Trishul Award’ for outstanding export performance for FY14-15 and ‘Award of Excellency’ for the consistency in export performance for FY13-14 15
Slide 16: Knowledge, Process, Innovation Superiority
Knowledge, Process, Innovation Superiority • Benchmark R & D Program – Introduced pioneering technology and manufacturing processes in India – DSIR (Department of Scientific and Industrial Research) approved Facilities – Dedicated pool of over 100 engineers & scientists – GMP approved pharmaceutical
Slide 17: Pioneering innovation landscape
Knowledge, Process, Innovation Superiority • Directly utilize HCL gas, byproduct of Benzene chlorination, for Chloro Sulphonic Acid (CSA) manufacturing Pioneering • Produce 100% Export grade Calcium Chloride Granules innovation from diluted HCL landscape – • Scrub NOx in Sulphuric Acid from MDCB pla
Slide 18: Industry Accreditation for Innovation
Industry Accreditation for Innovation In recognition of outstanding achievements, the CHEMTECH Foundation accorded Aarti Industries Indian Institute of Chemical Engineers bestowed with the ‘Outstanding Achievement for Innovation’ the prestigious Lala Shriram National Award for award for the company’
Slide 19: Manufacturing Facilities
Manufacturing Facilities INDIA 16 manufacturing units Bhachau, Kutch Madhya Pradesh Gujarat Jhagadia Pithampur Dahej Sarigam Vapi Silvassa Tarapur Dombivali HEAD OFFICE - MUMBAI Mumbai Maharashtra PRODUCTION SITES 19
Slide 20: Manufacturing Facilities
Manufacturing Facilities PDA Facility, Jhagadia R&D Centre Zero Discharge Setup, Jhagadia Section of Jhagadia Unit 20
Slide 21: Pharma Units
Pharma Units USFDA Unit, Tarapur Section of USFDA Plant, Tarapur Section of USFDA Plant, Tarapur 21
Slide 22: Management Profile
Management Profile Driving a transformational enterprise - hitting the right milestones at the right juncture Nurtured into a globally leading company in core products Established track record of execution where returns have improved with growing capex Pushing innovation agenda – introducing high va
Slide 23: Management Profile
Management Profile Mr. Shantilal Shah – Vice Chairman Mrs. Hetal Gogri Gala – Director Founder Director Electronics Engineer and MDP from IIM – Ahmedabad Commerce Graduate Portfolio: Pharma, HR & Admin Portfolio: Financial Management Mr. Parimal Desai – Director Mr. Kirit Mehta – Director Founder Di
Slide 24: Mr. Chetan Gandhi, Chief Financial Officer
Mr. Chetan Gandhi Chief Financial Officer 24
Slide 25: Financial Highlights – (Consolidated)
Financial Highlights – (Consolidated) Operating revenues have Revenue Export Deep engagement with grown on the back of CAGR: 13.5% global customers in 4,000 strong volume growth in Speciality chemicals and 2,908 2,780 3000 key business segments 3,000 2,632 pharma. In addition, part and better produc
Slide 26: Financial Highlights – (Consolidated)
Financial Highlights – (Consolidated) Gross Profit (Rs. Cr.) & Gross margin EBITDA & Net Profit (Rs. Cr.) 45.3% 800 257 300 1500 38.8% 50% 36.0% 37.0% 206 34.5% 250 40% 600 162 1000 134 200 30% 103 400 150 20% 100 500 200 1076 1258 249 361 401 466 572 10% 577 813 947 50 0 0% 0 0 FY12 FY13 FY14 FY15
Slide 27: Financial Highlights – (Consolidated)
Financial Highlights – (Consolidated) 20.1% 21.1% 20.0% 21.2% 23.8% 3,000 25.0% 1,200 24.1% 30.0% 21.8% 2,500 20.0% 1,000 18.8% 20.0% 20.0% 25.0% 2,000 800 20.0% 15.0% 1,500 600 15.0% 10.0% 1,000 400 10.0% 1,237 1,710 2,006 2,193 2,400 1,016 1,114 590 756 871 500 5.0% 200 5.0% 0 0.0% 0 0.0% FY12 FY1
Slide 28: Q1 FY17 P&L
Q1 FY17 P&L • Gross Profit expanded by 14.7% yoy in Q1 Particulars Y-o-Y Q1FY17 Q1FY16 from Rs. 279.40 to Rs. 320.65 crore based (Rs. Crore) Growth (%) on 8% volume growth in speciality chemicals Income from Operations 682.87 676.03 1.0% • Finance costs declined by 10.9% yoy as the Exports 340.68 32
Slide 29: Q1 FY17 – Segmental Performance
Q1 FY17 – Segmental Performance (Rs. Crore) Speciality Chemicals Pharmaceuticals Revenue Home & Personal Care Revenue 91 95 Revenue 551 551 34 37 Q1FY16 Q1FY17 Q1FY16 Q1FY17 Q1FY16 Q1FY17 Speciality Chemicals EBIT Pharmaceuticals EBIT Home & Personal Care 133 EBIT 118 12 1.1 6 0.1 Q1FY16 Q1FY17 Q1FY
Slide 30: Shareholding Pattern
Shareholding Pattern Increasing Institutional Ownership …. 30.95% 27.70% 31.46% 29.75% 1.37% 1.94% 0.02% 12.37% Promoters 8.17% 13.08% 13.74% 15.45% Individuals Mutual Funds Foreign Institutional Investors 60.88% 59.22% Others 54.80% 54.80% Financial Institutions/ 29.50% Banks 54.80% Mar-14 Mar-15 M
Slide 31: Stock Performance
Stock Performance 1000 900 800 700 600 500 400 300 200 100 0 Sep-13 Mar-14 Sep-14 Mar-15 Sep-15 Mar-16 Sep-16 Aarti Inds. BSE 500 BSE Sensex Returns since Sep 2013 - Aarti Industries: 815% | BSE Sensex: 52% | BSE 500: 76% Aarti Industries is included in: MSCI | CNX 500 | BSE 500 | BSE SMALL CAP 31
Slide 32: CSR Initiatives
CSR Initiatives Research & Water Development for social Aarti Industries is a Conservation and uplift responsible Environment Promoters of the corporate citizen company have set Cluster and engaged in Rural aside Development community welfare Eradication of Hunger and approximately 40 through Povert
Slide 33: CSR Initiatives
CSR Initiatives Involved in various CSR initiatives with specific focus on Health, Education & Women Empowerment. 33
Slide 34: Mr. Rashesh Gogri, Vice Chairman & Managing Director
Mr. Rashesh Gogri Vice Chairman & Managing Director 34
Slide 35: Segmental overview
Segmental overview Speciality Home & Personal Pharmaceuticals Chemicals Care Polymer & additives Active Pharmaceutical Agrochemicals & intermediates Non-ionic Surfactants Ingredients (APIs) Dyes, Pigments, Paints & Printing Inks Pharma Intermediates Fuel Additives, Rubber Intermediates for Innovator
Slide 36: Segmental overview
Segmental overview Speciality Home & Personal Pharmaceuticals Chemicals Care Polymer & additives Active Pharmaceutical Agrochemicals & intermediates Non-ionic Surfactants Ingredients (APIs) Dyes, Pigments, Paints & Printing Inks Pharma Intermediates Fuel Additives, Rubber Intermediates for Innovator
Slide 37: Chemical Industry Overview
Chemical Industry Overview Indian Chemicals Industry Future Indian Speciality Chemicals Outlook (USD bn) Industry Future Outlook (USD bn) 214 CAGR 15% 44 CAGR 11% 139 25 Source: FICCI, Tata Strategic FY14 FY19E FY14 FY19E Growth for Indian speciality chemicals is driven by both domestic consumption
Slide 38: Speciality Chemicals Overview
Speciality Chemicals Overview Key Parameters for Global Success Current Narrative in India • SME sector contributes 60% of output Knowledge, Processes, Innovation • Low cost, local market suppliers • Manufacturing Intermediates High Impact on User Industries • Limited Process, Quality, Customer Enga
Slide 39: Opportunities for Indian Chemical Companies
Opportunities for Indian Chemical Companies One of the major challenges in the Chemicals Business is the Compliance of Environmental These compliance requires Norms. Over a period of time, the additional investments into regulating agencies have became ETP setup, which more stringent in ensuring the
Slide 40: Speciality Chemicals – Financial Highlights
Speciality Chemicals – Financial Highlights Revenue CAGR: 13.8% 2,398 2,265 • Our performance over the last several 2,217 1,758 years has been stronger than industry 1,350 average • Operating revenues have grown on the back of strong volume growth enabled by FY12 FY13 FY14 FY15 FY16 deep engagement
Slide 41: Benzene Based Value Chain
Benzene Based Value Chain (NCB) Value Chain Chloro Benzene Value Chain PDA Value Chain Chlorination (Ranked amongst top 3 globally) Nitration (Ranked amongst top 4 globally) Ammonolysis (Ranked amongst top 2 globally) Hydrogenation(Ranked amongst top 2 globally) Others Fluro compounds - Halex chemis
Slide 42: Other Chemicals
Other Chemicals • Sulphuric Acid and Derivatives Sulphuric Acid OLEUM 23% % 65% SULPHUR 1000 OC SO2 SO3 Chloro Sulphonic Acid Di Methyl Sulphate Global leader Steam Co Gen Di Ethyl Sulphate Power Plant (6MW) • Single Super Phosphate (Fertilizer) • Export Grade Calcium Chloride Granules (for Oil Expl
Slide 43: Speciality Chemicals – Business Model
Speciality Chemicals – Business Model Strategic Supplier/Partner of Choice for major Global and Domestic Customer • Create differentiated process • Cost Competitiveness & Economies of Large • High value products Scale • Customization • Ability to cater to large global customers • Participate in Grow
Slide 44: Speciality Chemicals – Business Model
Speciality Chemicals – Business Model EBITDA captures value EBIT captures addition value delivered by AIL. EBIT EBIT Margin addition delivered by of: Expansion is the result 22.2% 600 25% AIL. 1) Expansion strong is the contribution 500 18.1% 17.0% result of: 1) strong from higher value 16.1% 15.0%
Slide 45: Strategy for Long Term Growth
Strategy for Long Term Growth Increase Market Share and participate in demand growth for existing products and adding products in current value chain • Capacity expansion of Chlorobenzenes and various downstreams in from FY16 to FY18 • Developing value added products for NT and Downstream Value Chai
Slide 46: Growth Projects - New
Growth Projects - New • Nitro Chloro Benzene (NCB) Value Chain – Expanded NCB Capacity of 75,000 tpa from earlier 57,000 tpa, commissioned in Nov 2015 FY13 FY14 FY15 FY16 Production (in tons) 48,072 54,230 53,400 59,500 • Chloro Benzene Value Chain – Commissioned New Calcium Chloride Unit at Jhagadi
Slide 47: Growth Projects - New
Growth Projects - New New Toluene Value Chain • Nitration Unit at Jhagadia (Nitro Toulene & Downstreams) – New Capacity of 30000 tpa expected to be commissioned in H2FY17 • Ethylation Facility at Dahej – Commenced in Sept 2016 – Capacity to manufacture about 8,000 – 10,000 tpa of Ethylene derivative
Slide 48: Introduction of New Products: Toluene Based Value Chain
Introduction of New Products: Toluene Based Value Chain 48
Slide 49: Growth Projects - New
Growth Projects - New New Projects over aFY17 & FY18 Details Jhagadia Chlorination & Speciality Chemical Complex Jhagadia, Kutch and Vapi Co-generation Power Plant Vapi Acid Reconcentration Plant API and Pharma Intermediate Vapi & Tarapur de-bottlenecking and expansions Total Outlay in plant & machi
Slide 50: Segmental overview
Segmental overview Speciality Home & Personal Pharmaceuticals Chemicals Care Polymer & additives Active Pharmaceutical Agrochemicals & intermediates Non-ionic Surfactants Ingredients (APIs) Dyes, Pigments, Paints & Printing Inks Pharma Intermediates Fuel Additives, Rubber Intermediates for Innovator
Slide 51: Pharmaceuticals
Pharmaceuticals Facilities • In all four Manufacturing units of which - two are USFDA approved facilities & other two are WHO GMP approved facilities End User Industry • Global Generic Pharmaceutical Companies, Innovator and Large Pharmaceuticals MNCs, Branded Generic Indian Pharma Companies. Salien
Slide 52: Pharmaceuticals – Financial Highlights
Pharmaceuticals – Financial Highlights Revenue • We have been consistently increasing our CAGR: 23.5% share of operations and engagement with 383 various customers in regulated market 303 249 space. 165 187 • The above along with successful closure of FY12 FY13 FY14 FY15 FY16 USFDA Inspection, has r
Slide 53: Pharmaceuticals – Growth Drivers
Pharmaceuticals – Growth Drivers • 48 commercial APIs with 33 EDMF, 28 • CRAMs activity focused on • Doubled capacities to cater to demand USDMF and 16 CEP (1 under intermediates for Cola / Energy Drinks approval) • Dedicated 50 scientist working in manufacturers. • 12 new APIs under development. se
Slide 54: Segmental overview
Segmental overview Speciality Home & Personal Pharmaceuticals Chemicals Care Polymer & additives Active Pharmaceutical Agrochemicals & intermediates Non-ionic Surfactants Ingredients (APIs) Dyes, Pigments, Paints & Printing Inks Pharma Intermediates Fuel Additives, Rubber Intermediates for Innovator
Slide 55: Home & Personal Care Chemicals
Home & Personal Care Chemicals Facilities One unit each at Pithampur (Madhya Pradesh) & at Silvassa End User Industry FMCGs – Shampoos, Anti-Dandruff Shampoos, Disinfectants, Hand & Body wash, Dish Wash, Detergents Bars & Powders, Soaps, Tooth Powders & Paste etc. Salient Features • Relatively low m
Slide 56: Key Investment Theme
Key Investment Theme Clear Path to Value Creation Economies of Scale and Operational Efficiency: Global Partner of Leadership excellence – De-risked portfolio • Highly Backward Integrated Choice Increasing focus established – multiple and gainful usage of by- engagements with on high margin record o
Slide 57: Chairman’s Message
Chairman’s Message “Over the last decade this singular evolution – from an Indian company servicing global markets to what is fundamentally a global company selecting to manufacture out of India – has been responsible for our consistent growth. Aarti Industries is at the cusp of robust sustainable g
Slide 58: Contact Us
Contact Us For further information please log on to www.aartigroup.com or contact: Mr. Chetan Gandhi / Mrs. Mona Patel Aarti Industries Limited Tel: +91 22 6797 6666 Email: [email protected] Shiv Muttoo / Vikram Rajput CDR India Tel: +91 22 6645 1207/1223 Email: [email protected] vikramr@cdr-indi
Slide 59: Thank You
Thank You 59