Aarti Industries conducted an analyst meet to discuss the results for the quarter and year ended March 2012 and way forward. Mr. Chandrakant Gogri, Chairman and Mr. Rajendra Gogri, Vice Chairman and Managing Director of the company addressed the meet.

Highlights of the meet

• Aarti Industries is a leading manufacturer of Speciality Chemicals & Pharmaceuticals with diversified end-uses in Pharmaceuticals, Agrochemicals, Polymer, Additives, Surfactants, Pigments, Dyes, etc with manufacturing units situated in the State of Gujarat, Maharashtra, Madhya Pradesh and U.T. of Silvassa

• On a consolidated basis Net sales of the company grew 15% to Rs 1673.31 crore in FY'12 compared to FY'11 with improvement in operating margins from 13.6% to 14.9% leading a 26% growth in EBITDA to Rs 197.89 crore. PBT rose 31% to Rs 96.04 crore while PAT rose 27% to Rs 81.49 crore.

• On a segmental basis performance chemicals formed 58% of total sales with 50% as export and an EBIT margin of 14.7% while Agrochemicals formed 23% of total sales with 37% as export and an EBIT margin of 14.7%, Pharma formed 10% of total sales with 37% as export and an EBIT margin of 2.6% and Home and personal care formed 9% of total sales with 12% as export and an EBIT margin of 3.1%.

• The company expects demand for high performance polymers to grow with increase in demand for fuel efficient modes of transportations, robust demand from sunrise industries - electronics, mobile communication technologies etc. and is developing new products & expanding capacities in high performance engineering polymers space

• The company is also setting up additional hydrogenation capacities at Jhagadia (to be ready by Q3 FY13) to cater to the growing demand of these chemicals globally.

• The company expects the demand for pigments; paints, etc are steadily growing globally and would generally continue to grow in proportion to the GDP. A major Japanese company is discontinuing the production due to unfavorable currency adjustment, resulting in an opportunity to grow at a faster pace than normal growth

• The company is expanding hydrogenation capacities for key Pigment intermediate at Vapi (to be ready by Q3 FY13) to capitalize on the demand-supply gap in global markets

• The company has increased its operative production capacities for its Speciality/Agrochemicals segment to 1500 TPM in FY'12 from 700 TPM.

• Operative production of Speciality/Agrochemicals segment stood at 1200 TPM in FY'12 compared to 800 TPM and expects production of 1600 TPM in FY'13 and 2500 in FY'14

• In India, the annual consumption of SSP is about 30 lakh tonne. Aarti Industries sales for FY'12 were 63264 MT. The company is in process of expanding the capacity and targets to increase the volumes to about 1,00,000 MT from FY'14 onwards.

• Aarti Industries sales for nutrients (Di Calcium Phosphate, a broadly used cattle-feed) in FY'12 were 4,771 MT. The company is in process of expanding the capacity to increase its presence in this segment by debottlenecking and expects to do production 7000 tonne in next 1-2 years

• Home & Personal Care Chemicals business is relatively low margin business. The company is trying to boost exports to improve margins

• Pharmaceuticals segment achieved break even in FY'12 and the company expects this segment is better placed for faster growth going forward

• FY'09 sales and PAT growth were aberration mainly due to closure of chemical plants in China leading to improved realisations.

• The company is planning a capex of Rs 70-80 crore in FY'13

• The company has set a revenue growth target of 15-20% and 20% plus growth in PAT in FY'13