Question: Aarti Industries Is A Leading Indian Manufacturer Of Speciality Chemicals And Pharmaceuticals With A Global Footprint. Chemicals Manufactured By Aarti Are Used In The Downstream Manufacture Of Pharmaceuticals, Agrochemicals, Polymers, Additives, Surfactants, Pigments, Dyes, Etc. The Chemicals Division Remains The Cornerstone Of Aarti Industries. Using …

Question: Aarti Industries Is A Leading Indian Manufacturer Of Speciality Chemicals And Pharmaceuticals With A Global Footprint. Chemicals Manufactured By Aarti Are Used In The Downstream Manufacture Of Pharmaceuticals, Agrochemicals, Polymers, Additives, Surfactants, Pigments, Dyes, Etc. The Chemicals Division Remains The Cornerstone Of Aarti Industries. Using …

Aarti Industries is a leading Indian manufacturer of SpecialityChemicals and Pharmaceuticals with a global footprint. Chemicalsmanufactured by Aarti are used in the downstream manufacture ofpharmaceuticals, agrochemicals, polymers, additives, surfactants,pigments, dyes, etc. The Chemicals Division remains the cornerstoneof Aarti Industries. Using feed-stock materials, primarily ofBenzene and Toluene, Aarti has created highly integrated valuechains. Aarti Industries has 17 manufacturing units, at Vapi,Tarapur, Jhagadia, Dahej, Bhachau, Pithampur, Silvasa, Dombivali,Sarigam, 2 USFDA units and its HO is at Mumbai. Most of itsfactories are zero waste. It has over 4600 employees, 200+products, 400+ global customers and 600+ domestic customers. 45% ofrevenue comes from global markets, of which US accounts for 26% andEU 25%. China and Japan, account for 10% each.

It is the only domestic player to have products until the sixthlevel derivative of benzene chemistry. It also expects to leverageits existing clientele to promote its toluene and otherderivatives. Most

contracts are long term cost+ contracts that offer bettercontrol on the overall cost structure. Aarti Industries Limitedreported a 15.1% y-o-y (up 25.1% q-o-q) increase in itsconsolidated revenue to Rs. 1,173 crore. Revenues from specialitychemicals segment grew by 32.5% y-o-y to Rs. 1,109 crore and thatfrom Pharmaceuticals segment increased by 21.8% y-o-y to 222crores. The company has recognized $5 million in its revenues ascompensation of cancellation of a long-term contract. Gross marginimproved by 181 bps y-o-y to 50.7%, However, OPM at 21.7% (down 185bps y-o-y) due to higher than expected operating cost (up 32%y-o-y). EBIT margin for speciality chemicals segment declined by678 bps y-o-y to 17.1% EBIT margin for pharma segment remainedstrong rising by 702 bps y-o-y to 25.5% led by higher contributionfrom regulated markets and value-added products.

The company expects an improvement in speciality chemical marginas domestic demand in respect of discretionary end-use sectors islikely to reach to pre-COVID-19 level in Q3FY2021 and exportsmarkets are expected to progressively improve over next 2-3quarters. Aarti Industries would be a key beneficiary of theChinese substitution factor along with rising domestic demand forspeciality chemicals. Owing to strong order book visibility, Aartiis in an aggressive expansion mode. Going ahead, Aarti is likely tospend at least | 1000-1200 crore per annum in the next three tofour years to complete existing pipeline, expansion in value-added,pharma segments in the backdrop of strong demand visibility todrive long-term growth Particulars

FY19

FY20

FY21E

FY22E

FY23E

Net Sales (Rs. Crs)

4168

4186

4506

5528

6932

OPM (%)

23.2

23.3

23.2

24.0

24.1

Adjusted PAT

492

536

525

703

958

y-o-y growth (%)

47.7

9.1

(2.2)

34.0

36.3

Adjusted EPS (Rs.)

28.4

30.8

30.1

40.3

55.0

EV/EBITDA (x)

20.2

20.3

19.4

15.3

12.0

RoCE (%)

17.8

14.7

13.3

15.1

18.1

RoE (%)

23.4

19.1

16.3

18.6

21.0

  1. The data warehouse can be implemented to answer Board questionsand operational level questions (i.e., strategic as well astactical queries). Draw an appropriate and clear data warehouseschema like (star/snowflake/constellation schema) to address thesequestions for the above scenario.