Aether Industries recently opened a state-of-the-art R&D center in Surat with an investment of Rs. 33 crore. Aman Desai, Director, Aether Industries shares his perspective on company’s performance and growth plan as well as growth opportunities that Indian chemical industry offers. Excerpts from interview:

You have recently opened a new R&D facility in Surat? Can you please tell us about this?

We have opened a world class R&D Centre, which is modern and cutting edge and equivalent to any global R&D centre in the chemical industry. It consists of seven synthesis labs with 55 modern fume hoods. All seven labs are closed, air conditioned and controlled labs with modern state of art analytical technology to analyse and interpret the reactions. So it represents the triple expansion of R&D infrastructure.

We are also expanding our R&D manpower as well in terms of the scientists holding PhD and Masters degrees. It will cater to all our business models of large scale manufacturing where we pick our own molecules which are primarily import substitutes being made for the first time in India. This also caters to the contact research and contract manufacturing services business model where we work with the innovators of the industry with their pipeline launch molecules, patented molecules and participate in the entire life cycle from paper to R&D to production. R&D is the growth driver and the engine of our company. The fundamental founding vision of the company is to be an R&D driven organization and this basically triples our capability to do the same R&D at the same place.

 Can you tell us about the kind of headcount and resources?

 As of June 2022, we had 180 scientists, engineers and technicians in the R&D centre. There are about 75 to 80 scientists with the master’s degree and we are looking at making this 80 go up to 130 and making 180 into 250 over the next six months, by the end of this fiscal year.

What sort of growth opportunities do you foresee for the Indian chemical industry, considering the energy crisis in Europe and other global factors?

 The growth opportunities are tremendous. Even before the Europe crisis was happening, India was and remains the preferred destination for partnership in R&D and scale up of all global and western companies across the industry spectrum, be it pharmaceuticals, agrochemicals, material sciences, oil and gas. All innovators and the major players and companies in Europe and USA, in Japan and the Middle East are looking at India as the preferred destination for partnership.

From all the problems that China has had in the last 10 years, all companies have burnt their fingers tremendously and multiple times over in the China basket and now if Indian companies can deliver in terms of the pricing and the cost and the competitiveness and the quality and the execution and the intellectual property protection, India is the preferred destination and the preferred partner for the chemical industry.

I think this represents a golden period for the Indian chemical industry in the last five years and for the next ten years. For the chemical companies which are differentiated in their competences, capabilities, infrastructure, team, and in their approach, there is an ocean of opportunities. It has been much more aggravated and intensified by the current European crisis. 

Any policy push that you believe is needed from the government for the industry?

The PLI 1 scheme was well executed but was more catered towards the larger companies of India, and therefore the companies like us have really not gained any benefit from the scheme. Now there is talk about PLI 2 scheme which could be beneficial but it is still not yet materialized. So it would be absolutely welcome to have some kind of policy push from the government in terms of infrastructure, duty structures and other benefits that the government could provide together to accelerate this growth.

There are tremendous opportunities in India right now in the chemical space and it will be very nice to have some help from elsewhere. Its fine if it doesn’t come as we are doing well, but if it comes its very welcome.

What are the latest developments on your site 3 facilities in GIDC, Surat?

That’s a new greenfield manufacturing site and its almost ready. It is on track, on its own schedule and will be launched by the end of this year, December 2022, so in three months from now. And we are launching 5 new products there which are all five advanced intermediates for pharmaceutical industry which we are making for the first time in India.

Please update us on the Panoli site as well?

The Panoli site or site 5 is 1,26,000 square metres or 31 acres. It is 12 times the size of our current production site which is 90% of Rs 600 crore revenue coming from production site and that is Rs. 540 crore of revenue coming from that production site in the last fiscal year.

The Panoli site is 12 times the size of that site and even if you consider say eight or nine times the kind of revenues from this side and that site that itself is the large numbers we are talking about. We are currently planning for that site and currently going for the approvals of that site and the goal which has changed in the last couple of months is that we would now wish to be starting that site as soon as possible.

It will take a longer time, but the goal is to start it off as well because once you establish the first plant in that site, the next plants will represent Brownfield expansions in the same site which will be faster and easier.

How has the performance been for you so far this year for different business verticals like CRAMS, agro-chemicals, etc?

The large scale manufacturing model which is 60% pharmaceutically driven has seen softening in the first two quarters. The CRAMS business has seen an increase because as we rightfully predicted last year that in a post pandemic era after Covid ends you will see a tremendous opportunities and we are seeing that and to give you an example in the last fiscal year the CRAMS which is just 12% of the revenues which is purely R&D based was Rs. 48 crore total in the last fiscal year in the first quarter of this fiscal year it was Rs.. 20 crore itself already.

So, we are seeing tremendous influx and opportunities and increase in the CRAMS space. In the pharmaceutical space, there is all softening but it was really seen globally everywhere in all companies which will rectify itself in the next two quarters.

Where do you see the company by 2030 in terms of manufacturing capacity, expansion and market cap?

We see ourselves to be a global leader in the Indian petchem industry, specialty chemicals and fine chemical industry, concentrating on products across the business, across the industry applications or pharma, agro, material sciences, oil and gas equally.

We are looking at having equal domestic and equal export and having equal distribution of business revenues in the various segments that we have in large scale manufacturing, and contract research manufacturing. We see us becoming a global leader and the fundamental pieces of becoming that have already been put into place today in terms of infrastructure in R&D and pilot plant, in production, in terms of the team that is already set, in terms of the global advisory and the business development in technology team that we have in place. In terms of market cap, I will leave that to the analysts for working out the numbers but sky is the limit.