Aarti Drugs has already procured land for further expanding its existing Metformin capacity to 3,000 TPM in a brownfield expansion. 

 

The brownfield expansion would be a 2 phase expansion program. The company will start the Phase I expansion project to 2,000 TPM in FY20-21 and additional capex is being done for introducing new products in anti-diabetic category towards the end of FY20-21.

 

In the September 2020 quarter, the company recorded consolidated quarterly revenue of Rs. 578.11 crore with year-on-year increase of 21.07%. API segment contributed approximately 88% and formulation around 12% of the total consolidated revenues. Domestic sales of the API segment grew by approximately 20.79% and exports by 8.58%. Around 55% of the Y-o-Y growth in the API segment was due to volume growth. Formulation segment revenues grew by around 48.38% on a year-on-year basis on the account of high export growth.

 

Consolidated EBITDA for the quarter ended September 2020 is Rs. 116.73 crore, up by 70.41% and consolidated profit after tax for the quarter ended September 2020 is Rs. 75.27 crore, up by 132.96% on a year-on-year basis. Consolidated EBITDA margin improved to 21.20%. Despite the challenging conditions, the company was able to maintain good operational efficiency which along with good realization in selling prices led to increased gross margins. 

 

Debt/Equity ratio of the company reduced further down to 0.47 as of September 2020 on a consolidated basis due to strong internal accruals.

 

In the near future, recently scaled up anti-diabetic and anti-inflammatory capacities will give impetus to revenue growth in FY20-21 and FY21-22. This would be further supported by good growth in formulation exports. As the COVID-19 situation improves the project work should pick up pace in coming quarters. 

 

The company will soon announce its capex plan of multiple projects which will include Active Pharmaceutical Ingredients, specialty chemicals and intermediates. The company is actively doing further backward integration of its products to reduce Imports dependency.