Aarti Drugs Limited · NSE:AARTIDRUGS
Aarti Drugs — H1 FY24 Earnings Presentation
47 slides from Aarti Drugs's earnings presentation, Oct 19, 2023
Slide 1: Cover letter to stock exchanges
Ref: ADL/SE/2023-24/83 October 19, 2023 To, To, Listing/ Compliance Department Listing/ Compliance Department BSE Limited National Stock Exchange of India Limited, Phiroze Jeejeebhoy Towers, “Exchange Plaza”, Plot No. C/1, Dalal Street, G Block Bandra - Kurla Complex, Mumbai – 400 001 Bandra (East),
Slide 2: Aarti Drugs Limited Q2 & H1 FY24 Investor Presentation
AARTI DRUGS LIMITED Q2 & H1 FY24 Investor Presentation
Slide 3: Safe Harbour
Safe Harbour This presentation and the accompanying slides (the “Presentation”), which have been prepared by Aarti Drugs Limited (the “Company”), have been prepared solely for information purposes and do not constitute any offer, recommendation or invitation to purchase or subscribe for any securiti
Slide 4: Table of Contents
Table of Contents • Company Overview ………………………………………………………………………….04-18 • Industry Overview ……………………………………………………………………………19-22 • Aarti 2.0: Sustainable Growth & Long-term Value Creation ……………..23-32 • Financial Highlights ……………………………………………………………………….…33-36 • Historical Performance at a Glance ………………
Slide 5: Company Overview
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Slide 6: Vision & Mission
Vision & Mission Vision Mission We shall become the first-choice vendor of Bulk Drugs and achieve a leadership position by: • Seek global market leadership • Assuring consistent quality and timely delivery at competitive price • Focus on growth and development of the product • Providing customized s
Slide 7: Management team
Management team Experienced management with deep understanding of pharmaceutical sector Mr. Prakash M. Patil Mr. Rashesh C. Gogri Mr. Harshit M. Savla Mr. Harit P. Shah Mr. Adhish P. Patil Chairman, MD & CEO Managing Director Joint Managing Director Whole Time Director Chief Financial Officer Shri P
Slide 8: Key Milestones
Key Milestones 2023 Consolidated Revenue Rs. 2,700+ Cr 2017 Pinnacle Life Science Pvt. Ltd. crossed Rs. 100 crores turnover 2020 Crossed Rs. 2,000 Cr 2003 Consolidated Turnover & Rs. 1996 Listed On National Stock 200 Cr Formulations Turnover Amalgamation of Rupal Chemical Exchange of India Limited I
Slide 9: Key Facts & Figures
Key Facts & Figures Largest producer of Nimesulide in the world. 12 4,261 Manufacturing MT/Monthly Facilities Capacity Largest producer of Metronidazole in Largest producer of India Ketoconazole in the world 80+ 1,10,330 Finished Products Sq.m Plant Area Leadership in API One of the leading Manufact
Slide 10: Diversified presence across segments
Diversified presence across segments Presence Across API, Formulation, Specialty Chemicals, Intermediates Segments Active Pharmaceuticals Ingredients Formulation Specialty Chemicals, (API) Intermediates & Others ▪ Leading API producer of 50+ molecules for anti- ▪ Diversified into formulation through
Slide 11: Revenue Break-up
Revenue Break-up Segmental Revenue Therapeutic-wise Revenue 2% 13% 5% 8% 3% 16% 47% 11% 80% 17% API Formulation Anti-biotic Anti-protozol Anti-inflammatory Speciality Chemicals Intermediates & Others Anti-diabetic Anti-fungal Others Focus on growing the contribution from lifestyle & chronic therapeu
Slide 12: State-of-the-art Integrated manufacturing facilities
State-of-the-art Integrated manufacturing facilities Baddi Pinnacle Plant Formulation Plant WHO-GMP Sarigam-1 WHO-GMP Sarigam-2 WHO-GMP/ COFEPRIS/CEP E-22 W-61 ▪ Australian Government – Department of Health and EUGMP & WHO-GMP Ageing - Therapeutic Goods Administration ▪ EUGMP / WHO-GMP / Japanese Ac
Slide 13: Reaction Capabilities
Manufacturing capabilities Noble Metal Hydrogenation (Catalytic Reduction) Carboxylation at various pressures Reaction Capabilities Cyclocondensation Ammonolysis (Amidation) Grignard Reaction Nitration Methoxylation Condensation Dehalohydrogenation Aldol Condensation Reduction Halogenation (Cl, Br,
Slide 14: Strong R&D thrust on continuous innovation
Strong R&D thrust on continuous innovation R&D Center at Tarapur R&D Center at Turbhe, Mumbai ▪ Supports manufacturing facilities at Tarapur and Sarigam on ▪ Supports development of complex generics for in-house 2 API process development formulation business ▪ Pilot plant used for kilo scale manufac
Slide 15: Diversified geographic presence
Diversified geographic presence Presence in 100+ Countries across Top 10 Countries - Exports 6 Continents ensures Brazil Mexico diversification and risk minimization Pakistan Turkey Europe Indonesia UAE 12% 15% Egypt France FY22 FY23 Asia Switzerland Germany North America Market 54% 51% FY22 FY23 13
Slide 16: ESG Initiatives
ESG Initiatives Environmental Social Governance • Converted multiple facilities into to Zero • Woman Empowerment: Free Government • The Board has an optimum combination of Liquid Discharge (ZLD) approved and certified vocational course training Executive and Non-Executive directors and • Dual Fired
Slide 17: Our Esteemed Clientele across segments
Our Esteemed Clientele across segments 16
Slide 18: Awards & Accolades
Awards & Accolades 1991-92 2005-06 2012 2014 2020-2023 CHEMEXCIL AVAYA GLOBAL CONNECT CHEMEXCIL CHEMEXCIL PHARMEXCIL Government of India Outstanding (Ministry of commerce and Industry) Outstanding Outstanding Customer Performance in Export Responsiveness Performance in Latin Performance in Exports A
Slide 19: Corporate Social Responsibility
Corporate Social Responsibility Donation of Inverter, Water filters, Air coolers Steel cupboards, Ambulance for Tree Plantation Programs patient transfer, Sunroof, School Education to Childrens 18
Slide 20: Industry Overview
19 Industry Overview
Slide 21: Indian Pharmaceutical Industry
Indian Pharmaceutical Industry 50% 20% #1 Highest FDA Global Vaccine Of Global approvals generic Supply 25% demand 30% outside USA Of Annual Of medicine UNICEF Active Pharmaceutical Ingredient (API) Market 40% demand in UK 60% demand US$55 ▪ India is the third largest active pharmaceutical ingredien
Slide 22: Indian Pharmaceutical Industry – Key Segments
Indian Pharmaceutical Industry – Key Segments Experienced management with deep understanding of pharmaceutical sector Active Pharmaceutical Ingredients (APIs) CRAMS • Domestic API consumption is expected to reach US$ 18.8 billion by FY22 • Fragmented market with more than 1,000 players • In Apr’19,
Slide 23: Multiple Triggers will lead to high Growth Momentum
Multiple Triggers will lead to high Growth Momentum ▪ Rising domestic population ▪ 100% FDI in the pharmaceutical sector under Robust ▪ Higher Insurance Coverage penetration automatic route Increased Domestic Investments Demand ▪ Increased government spending on hospitals and healthcare ▪ Artificial
Slide 24: Aarti 2.0: Sustainable Growth & Long-term Value Creation
Aarti 2.0: Sustainable Growth & Long-term Value Creation 6. Capex to drive the 1. High Entry next leg of Barriers : growth Presence in 5. Robust Highly Balance Specialized API Sheet Segment 2. Unique 4. Diversified Competitive product and Position client mix 3. Poised to overcome industry challenges
Slide 25: High Entry Barriers: Presence in Highly Specialized API Segment
High Entry Barriers : Presence in Highly Specialized API Segment Over a decade, API manufacturing has transitioned towards highly regulated, specialized business How API Manufacturing Has Evolved Impact Regulations ❑ Lower Competitive Intensity: Various small-scale manufacturers ❑ Stringent pharmaco
Slide 26: Unique Competitive Position
Unique Competitive Position Economies of Superior quality International scale presence Long-term relationship; repeat business from Client customers diversification Good purchasing 3+ decades of Less regional power experience dependence Known brand in Process improvement Phase-Wise Capex to API spac
Slide 27: Well poised to overcome industry challenges
Well poised to overcome industry challenges Specialised player in the highly challenging Pharmaceutical Industry Industry’s Unique Challenges Our Core Competencies High R&D costs Demonstrated manufacturing excellence for 3+ decades Long gestation period R&D focused, driven by continuous improvement
Slide 28: Diversified Product and Client mix
Diversified Product and Client mix Presence across Segments, Geographies, API Therapies & Customers to ensure Growth and Risk Minimization ▪ API business contributes ~85% of sales in FY23 ▪ Domestic - Export mix at 62:38% for FY23 Segmental Geographic ▪ Presence across 100+ countries ▪ Focus on incr
Slide 29: Robust Balance Sheet
Robust Balance Sheet Strong cashflows led to robust Balance Sheet giving financial flexibility for Growth Strong net operating cashflow generation Low leverage provides Balance Sheet strength Rs. crores Sep-23 Net Operating Cashflow Net Debt to Equity Equity Net Debt Net Debt 589 251 1,193 1,200 0.9
Slide 30: Capex to drive the next leg of growth
Capex to drive the next leg of growth Capex of Rs. 600 crores underway [starting from FY22 for the next 4-5 years] Capex plans Phase wise capex will lead to distributed investments Majority of the capex to be funded through internal accruals and minimal debt Brownfield expansion and debottlenecking
Slide 31: Product-wise Capex Plans
Product-wise Capex Plans Anti Diabetic Anti - Fungal ▪ CEP renewed by EDQM in 2022 ▪ Further consolidation of its worldwide leading position. ▪ Manufacturing over 1,000 TPM making it one of the largest metformin player ▪ Recently expanded the capacity, further extending the lead. ▪ Coming up with 14
Slide 32: Aarti 2.0: Sustainable Growth & Long-term Value Creation
Aarti 2.0: Sustainable Growth & Long-term Value Creation Growth Drivers Value Creation Drivers Expansion Capex Backward Prudent Capital Sustainable Integration Allocation Increased product Brownfield expansion offering to existing for existing products at Growth Backward integration for Planned cape
Slide 33: Product Pipeline
Product Pipeline As of 31-Mar-23 API Finished Dosages Product Under Development Product Under Development : New Product Under Development: LATAM & Age Molecules For regulated Markets Emerging Markets 3 2 1 1 1 1 1 3 4 1 2 5 1 5 1 1 Anti Fungal Anti Diabetic Anti-Diabetic Anti-Protozol Anti Inflammat
Slide 34: Financial Highlights
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Slide 35: Result Highlights
Result Highlights Rs. crores Revenue EBITDA & EBITDA Margin (%) PAT & PAT Margin (%) 10.8% 12.0% 5.6% 6.2% Q2 Highlights +3.8% +2.2% 688 642 74 77 39 40 Q2 FY23 Q2 FY24 Q2 FY23 Q2 FY24 Q2 FY23 Q2 FY24 Revenue EBITDA & EBITDA Margin (%) PAT & PAT Margin (%) 10.8% 12.4% 5.6% 6.7% H1 Highlights +14.2%
Slide 36: Segmental Break-up
Segmental Break-up Rs. crores Quarterly Half-Year Ended Q2FY24 H1FY24 13% 14% 80% 5% 5% 79% 2% 2% API Formulation API Formulation Speciality Chemicals Intermediates & Others Speciality Chemicals Intermediates & Others Q2FY23 H1FY23 12% 13% 5% 5% 79% 78% 4% 4% API Formulation API Formulation Speciali
Slide 37: Consolidated Profit & Loss Statement
Consolidated Profit & Loss Statement Particulars (Rs. Crores) Q2FY24 Q2FY23 YoY% H1FY24 H1FY23 YoY% Net Revenue from Operations 641.5 687.7 (7)% 1302.6 1309.7 0% Other Income 0.7 0.1 1.3 0.3 Total Revenue 642.2 687.8 1303.9 1310.0 COGS 429.0 481.1 875.4 910.1 Gross Profit 213.2 206.6 3% 428.5 399.9
Slide 38: Consolidated Balance Sheet
Consolidated Balance Sheet Equities & Liabilities (Rs. Crores) Sep-23 Mar-23 Assets (Rs. Crores) Sep-23 Mar-23 Equity Non Current assets Equity Share capital 91.9 92.6 Property, Plant and Equipment 666.4 673.3 Other Equity 1,117.5 1,099.8 Capital work in progress 304.7 210.4 Non Controlling Interest
Slide 39: Consolidated Cash Flow Statement
Consolidated Cash Flow Statement Particulars (Rs. crores) Sep-23 Sep-22 Net Profit before Tax and Extraordinary items 119.8 101.2 Adjustments for: Non Cash Items / Other Investment or Financial Items 41.9 42.4 Operating profit before working capital changes 161.7 143.6 Changes in working capital 86.
Slide 40: Historical Performance At A Glance
39 Historical Performance At A Glance
Slide 41: Strong Financial Performance
Strong Financial Performance Consolidated Revenue (Rs. Crores) EBITDA (Rs. Crores) PAT (Rs. Crores) 2,718 442 280 2,500 2,159 341 308 205 1,808 1,563 263 166 210 141 90 FY19 FY20 FY21 FY22 FY23 FY19 FY20 FY21 FY22 FY23 FY19 FY20 FY21 FY22 FY23 EBITDA Margin (%) PAT Margin (%) 20.5% 13.0% 14.6% 13.7%
Slide 42: Strong Financial Performance
Strong Financial Performance Consolidated EPS* (in Rs.) Net Worth (in Rs. Crores) Leverage (X) 30.1 1,193 0.9 1,036 22.1 913 18.0 0.6 15.4 653 0.5 0.5 544 0.4 9.6 FY19 FY20 FY21 FY22 FY23 FY19 FY20 FY21 FY22 FY23 FY19 FY20 FY21 FY22 FY23 * For EPS, adjusted includes previous year’s figures in propor
Slide 43: Distribution to Shareholders
Distribution to Shareholders (in Rs. Crs) Distribution Policy Distributed ~Rs. 54 Crores as Dividend over last 8 years Distribution: ~21.5% Considering various financial parameters, the Company Distributed ~ Rs. 250 crores in may elect to distribute about form of dividend & buyback of 15% to 30% of
Slide 44: Consolidated Profit & Loss Account Statement
Consolidated Profit & Loss Account Statement Particulars (Rs. crores) FY23 FY22 FY21 FY20 FY19 Net Revenue from Operations 2,716.1 2,488.6 2,154.8 1,806.1 1,560.9 Other Income 2.2 11.3 4.5 1.5 2.4 COGS 1,888.5 1,688.8 1,321.0 1,178.9 1,059.9 Gross Profit 829.7 811.1 838.3 628.7 503.4 Gross Margin (%
Slide 45: Consolidated Balance Sheet Statement
Consolidated Balance Sheet Statement Equities & Liabilities (Rs. crores) FY23 FY22 FY21 FY20 FY19 Assets (Rs. crores) FY23 FY22 FY21 FY20 FY19 Equity Non Current assets Equity Share capital 92.6 92.6 93.2 23.3 23.6 Property, Plant and Equipment 673.2 685.7 659.2 642.3 622.0 Other Equity 1,099.8 943.
Slide 46: Consolidated Cash Flow Statement
Consolidated Cash Flow Statement Particulars (Rs. crores) FY23 FY22 FY21 FY20 FY19 Net Profit before Tax and Extraordinary items 224.2 270.0 369.0 185.3 131.0 Adjustments for: Non Cash Items / Other Investment or Financial 85.2 70.4 68.6 86.8 75.2 Items Operating profit before working capital change
Slide 47: For further information, please contact
For further information, please contact Company: Investor Relations Advisor: CIN: L37060MH1984PLC055433 CIN: U74140MH2010PTC204285 Mr. Rushikesh Deole Mr. Deven Dhruva / Mr. Harsh Shah Email: investorrelations@aartidrugs.com E: deven.dhruva@sgapl.net / harsh.shah@sgapl.net Contact no.: +91 22 240481