Rajendra Gogri, Chairman and CEO, Aarti Industries Limited, talks about Q4FY21 numbers, CapEx plan for the next three years, PAT revenue and forecast for FY22, export market and fundraising plan, between others in a frank conversation with Swati Khandelwal, Zee Business. Edited excerpts:
Q: The numbers for T4FY21 were good and the margins have improved a lot. Going forward, do you think that’s a sustainable margin?
A: This year, due to COVID, in the top row there was growth of over 9% and the result was almost flat. Next year, we are targeting 25-35% growth in revenue, EBITDA and PAT.
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Q: How will you summarize the numbers and where the volume growth has been good? If we are talking about the pharmaceutical and specialty chemicals segment, what are you focusing on and how do you see the volume and price growth in these segments in FY 22?
A: This year, pharma has performed very well and the specialty chemicals segment has been impacted due to COVID in terms of demand and production shutdown in the first quarter. Both segments will experience good growth in FY22, ie 25% plus volume growth in pharma as well as in specialty chemicals. Next year will be mainly driven by volume growth in terms of revenue and EBITDA.
Q: Tell us about the CapEx plans for FY22 and what are your spending outlook for the next 3-4 years? And how will you finance the CapEx that will be aligned?
A: Currently, the CapEx of our existing contracts is underway and the restoration and expansion of existing products is underway. So over the next two years there is a CapEx of Rs 1,500 crore in those. In addition, for the new product line, chlorotoluene and chemical and pharmaceutical specialties, we are taking a Greenfield site. So it will require an investment of around Rs 3,000-3500 crore. So in the next three years we have a CapEx plan of around Rs 4,500 to 5,000 crore. We have also passed a resolution to raise Rs 1,500 crore in debt or equity and we are studying it.
Q: What will PAT’s revenue forecast and forecast be for FY22 and beyond as well?
A: There will be about 25-30% growth in FY22 compared to FY21 and in FY24 we plan to almost double it from FY21.
Q: Your performance has been good in the export market and it also helps your overall business to reduce the risk in case of demand contraction in the domestic market. So what are your prospects for the export market and what kind of contribution it will have? Also, are you anxiously awaiting new markets to enter, if so what will be the strategy for the same?
A: Our export remains around 40-50%, while the national level is 50-60%. And, there is continued growth in exports. Overall, various chemical companies are very keen to source more from India. In the future, our growth will remain in the order of 40 to 50% in exports.
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Q: The council has approved the fundraising plan of Rs 1,500 crore. Tell us how it will be used? Also comment on the dividend of Rs 3 per share and a bonus of 1: 1, which was appreciated by the market?
A: Yes, we declared a dividend of Rs 3 as an ex-bonus, so that comes down to a 15% payout. In addition, we will have internal regularizations. The funds that will be raised will be used as working capital as well as debt repayment and CapEx. So there will be a composite use of the fund that will be raised.
Q: What types of organic and inorganic growth opportunities do you see? Especially in the area of mergers and acquisitions, do you think there are any particular opportunities in India or outside that you can acquire to broaden and broaden your portfolio?
A: Currently, we are focused on organic growth for Greenfield. It’s a new set and we have established a new R&D center in New Bombay. In addition, several additional products further add value to the current product chain. So the main focus is on organic growth, but if we have an acquisition opportunity in India or overseas, we are looking at those opportunities as well. But organic growth also offers substantial opportunities.