In the current year, we have spent Rs. 557 crore in the first six months and overall annually around Rs. 1,000 - 1,200 crore will be the Capex, says Rajendra Gogri, Chairman and Managing Director, Aarti Industries Limited during Q2 FY23 Earnings Conference Call.
Talking about projects, Rajendra Gogri said, "Projects linked to the 1st long term contract are scaling up as expected, and we anticipate high utilisation levels of about 70% by next financial year. The recently commissioned facility that houses the 2nd long term contract is getting utilised in a phased manner and we expect to generate the EBITDA as guided by the contract terms and shared earlier. Construction and other plant-related activities associated with the 3rd long term contract at Jhagadia is progressing well and we expect commissioning towards the end of this quarter. Several other projects including brownfield expansion of NCB facility at Vapi are underway and will start getting operationalised progressively in next four quarters and thus will be contributing meaningfully from next financial year."
"In respect for our Ethylation capacity at Dahej SEZ, which is operating nearly at 90% now, is being tripled with an investment of around Rs. 200 crore and is expected to come onstream in H1 FY25. We are also planning for further debottlenecking of our Nitro Toluene Capacities. The products will enable us to cater to few high growth Agrochemical molecules/applications," commented Gogri.
"The collective Capex for FY 24 and FY25 is expected to be around Rs. 3,000 crore and will steer our momentum in the forthcoming period. Through this, we plan to create newer chemical value-chains and also introduce high-potential products that will expand our addressable market opportunity and will also cater to increased demand from key end use customers," said Gogri.
"We have built a very strong R&D team with 250+ engineers and scientists working on several high potential projects across segments including some of the sunrise sectors. Our expertise in wide-ranging chemistries with focus on technological expertise is driving gains in a sustained manner. Currently, we have 50+ products in the R&D pipeline of chemicals at various stages, and this will help accelerate our performance trajectory. Our utilisation levels across plants are being ramped up based on steady demand. We have created a strong foundation through an integrated and well-diversified business model with relentless focus on R&D and chemistry capabilities. Our deep connections with key customers will drive sustained growth and profitability going forward as well," commented Gogri.
"The roadmap looks encouraging, and we will continue to capitalise the opportunities created through rapid shifts in global chemical supply chains. Focus on R&D led product offerings together with incremental gains from existing value - chains will propel our value proposition," added Gogri.
Talking about Q2 FY23 performance, Rajendra Gogri said, "We have reported a resilient performance during the period under review which has come on the backdrop of continued inflation in key input costs both on raw materials and utilities, some slowdown in end-user industries linked to dyes & pigments, extreme foreign exchange volatility as well as uncertainties prevailing in the global market. Our performance was a culmination of solid expertise attained in managing multiple chemistry processes with superior execution track record. We adhered to our delivery commitments thereby winning customers trust and further deepening our relationships with them. Our knowledge and capabilities demonstrated in several product value-chains linked to Benzene and Toluene are best-in-class and we are replicating the same to create a strong foundation across other adjacent chemistry value-chains."
"In a significant development, we received NCLT approval to demerge our Pharma business into a separate company named Aarti Pharmalabs Limited. This will extensively enhance value for our stakeholders and also help us achieve operational efficiencies. Mainly, this will help both the companies to take appropriate strategic decisions in view of the growth opportunities available. We have been expeditiously working to conclude this and expect the listing of Aarti Pharmalabs Limited to take place sometime in December 2022," added Gogri.