Aarti Drugs Limited · NSE:AARTIDRUGS
Aarti Drugs — Q2 FY22 Earnings Presentation
50 slides from Aarti Drugs's earnings presentation, Oct 27, 2021
Slide 1: Exchange filing cover letter
Corporate Office : Mahendra Industrial Est:ace, =- Ground Floor, Plot No. 109-D, Road No. 29 Sion (East), Mumbai - 400 022. (India) ' Tel.: 022-2407 2249 / 2401 9025 (30 Lines) j :_ Aarti Drugs Limited Fax.: 022-2407 3462 / 2407 0144 Email: admin@aartidrugs.com website: www.aartidrugs.com CIN No.:L3
Slide 2: Aarti Drugs Limited Q2FY22 Investor Presentation
AARTI DRUGS LIMITED Q2FY22 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 ………………………………………………………………………….04-19 • Industry Overview ……………………………………………………………………………20-24 • Aarti 2.0: Sustainable Growth & Long-term Value Creation ……………..25-34 • Financial Highlights ……………………………………………………………………….…35-39 • Historical Performance at a Glance ………………
Slide 5: Company Overview
4 Company Overview
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 2020 Crossed Rs. 2000 Cr Consolidated Turnover & Rs. 200 Cr Formulations Turnover 2015 Crossed Rs. 200 Cr Crossed PBT of Rs. 100 consolidated PAT crores 2017 2003 Pinnacle Life Science Pvt. Ltd. crossed Rs. 1996 Listed On National Stock 100 crores turnover Amalgamation of Rupal Chemic
Slide 9: Key Facts & Figures
Key Facts & Figures Largest producer of Nimesulide in the world. 12 3,975 Manufacturing MT/Month API 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 Manufa
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 As of 30-Sep-21 Segmental Revenue Therapeutic-wise Revenue 4% 3% 13% 10% 3% 11% 46% 13% 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 &
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 01 API process development formulation business ▪ Pilot plant used for kilo scale manufa
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 UAE Egypt 13% 12% Bangladesh Indonesia FY20 FY21 Asia Switzerland Russia North America Market 51% 58% FY20 FY21
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 2015-2019 CHEMEXCIL AVAYA GLOBAL CONNECT CHEMEXCIL CHEMEXCIL ABBOTT Outstanding Customer Outstanding Appreciation as Business partner of the Performance in Export Responsiveness Performance in Latin business partner year American Export 2001 2009 2013 201
Slide 19: Corporate Social Responsibility
Corporate Social Responsibility Karunah Society for Development, Partner NGO: Aarti Foundation, Mumbai Donation to Matruvandana – Funds utilised to manufacture face masks Activity – Distribution of ration kits & medical treatment of senior citizens 18
Slide 20: Corporate Social Responsibility
Corporate Social Responsibility TRIBAL INTEGRATED DEVELOPMENT & EDUCATION TRUST (TIDE) - TIDE has projects in +7,000 villages of 16 states. Donation amounts were used for Assam tribal project by TIDE. 19
Slide 21: Industry Overview
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Slide 22: Indian Pharmaceutical Industry
Indian Pharmaceutical Industry 50% 20% #1 Highest FDA Global Vaccine Of Global approvals generic Supply 25% demand 30% outside USA Of medicine Of Annual UNICEF Active Pharmaceutical Ingredient (API) Market 40% demand in UK 60% demand US$55 ▪ India is the third largest active pharmaceutical ingredien
Slide 23: Indian Pharmaceutical Industry – Key Segments
Indian Pharmaceutical Industry – Key Segments Experienced management with deep understanding of pharmaceutical sector Active Pharmaceutical Ingredients (APIs) CRAMS • Domestic API consumption is expected to reach US$ 18.8 billion by FY22 • Fragmented market with more than 1,000 players • In Apr’19,
Slide 24: 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 25: Pharmaceutical Production Linked Incentive (PLI) Scheme
Pharmaceutical Production Linked Incentive (PLI) Scheme The scheme is aimed towards pushing domestic manufacturing of key starting materials (KSMs), drug intermediates and active pharmaceutical ingredients (APIs) to reduce import dependence on such input materials. How Sector Will Benefit How Aarti
Slide 26: Aarti 2.0: Sustainable Growth & Long-term Value Creation
Aarti 2.0: Sustainable Growth & Long-term Value Creation 6. Capex to drive the next leg of growth 1. High Entry Barriers : 5. Robust Presence in Highly Balance Sheet Specialized API Segment 2. Unique 4. Diversified Competitive product and client 3. Poised to Position mix overcome industry challenges
Slide 27: 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 28: 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 29: 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 30: Diversified Product and Client mix
Diversified Product and Client mix Presence across Segments, Geographies, API Therapies & Customers to ensure Growth and Risk Minimization ▪ API segment contributes ~79% of sales in FY21 ▪ Domestic - Export mix at 65%:35% for FY21 Segmental Geographic ▪ Presence across 100+ countries ▪ Focus on incr
Slide 31: Robust Balance Sheet
Robust Balance Sheet Strong cashflows led to robust Balance Sheet giving financial flexibility for Growth Net operating cashflow increased by CAGR ~30% Low leverage provides Balance Sheet strength Rs. crores Sep-21 Net Operating Cashflow Net Debt to Equity Equity Net Debt Net Debt 464.5 +31% 251 1.2
Slide 32: Capex to drive the next leg of growth
Capex to drive the next leg of growth Capex of Rs. 600 crores planned 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 of API facilities Brownfield expansion at Bad
Slide 33: Product-wise Capex Plans
Product-wise Capex Plans Anti Diabetic Anti - Fungal ▪ CEP approval in 2016 which opened up European markets ▪ 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
Slide 34: 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 35: Product Pipeline
Product Pipeline As of 30-Jun-21 API Finished Dosages Product Under Development Product Under Development : New Product Under Development: LATAM & Age Molecules For regulated Markets Emerging Markets 1 3 1 1 3 1 4 1 1 5 1 1 1 1 1 1 Anti-Diabetic Anti Fungal Anti Diabetic Anti-Protozol Anti Hypertens
Slide 36: Financial Highlights
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Slide 37: Key Highlights
Key Highlights Rs. 579.7 Crores Rs. 73.8 Crores Rs. 42.6 Crores Consol. Revenue Consol. EBITDA Consol. PAT Result 9MQ2 Highlights Highlights ~80% ~13% Share of API Business Share of Formulation Business Highlights Rs. 1,161.3 Crores Rs. 155.1 Crores Rs. 91.4 Crores Highlights Consol. Revenue Consol.
Slide 38: Result Highlights
Result Highlights Rs. crores Revenue EBITDA & EBITDA Margin (%) PAT & PAT Margin (%) 20.2% 12.7% 13.0% 7.3% Q2 Highlights 578 580 117 75 74 43 Q2 FY21 Q2 FY22 Q2 FY21 Q2 FY22 Q2 FY21 Q2 FY21 Revenue EBITDA & EBITDA Margin (%) PAT & PAT Margin (%) 22.4% 13.4% 13.0% 7.8% H1 Highlights 1,161 1,124 252
Slide 39: Segmental Break-up
Segmental Break-up Rs. crores Quarterly Half-Year Ended H1FY22 Q2FY22 14% 13% 4% 80% 4% 78% 4% 3% API Formulation API Formulation Speciality Chemicals Intermediates & Others Speciality Chemicals Intermediates & Others Q2FY21 H1FY21 14% 12% 79% 4% 80% 4% 4% 3% API Formulation API Formulation Speciali
Slide 40: Consolidated Profit & Loss Statement
Consolidated Profit & Loss Statement Particulars (Rs. Crores) Q2FY22 Q2FY21 YoY% H1FY22 H1FY21 YoY% Net Revenue from Operations 579.6 578.1 0% 1,159.6 2,154.8 -46% Other Income 0.1 0.3 1.7 4.5 Total Revenue 579.7 578.4 1,161.3 2,159.3 COGS 395.5 358.2 791.8 1,321.0 Gross Profit 184.2 220.2 -16% 369.
Slide 41: Consolidated Balance Sheet
Consolidated Balance Sheet Equities & Liabilities (Rs. Crores) Sep-21 Mar-21 Assets (Rs. Crores) Sep-21 Mar-21 Equity Non Current assets Equity Share capital 92.6 93.2 Property, Plant and Equipment 662.7 659.2 Other Equity 838.7 820.2 Capital work in progress 39.6 19.3 Non Controlling Interest 0.0 0
Slide 42: Consolidated Cash Flow Statement
Consolidated Cash Flow Statement Particulars (Rs. crores) H1FY22 H1FY21 Net Profit before Tax and Extraordinary items 120.8 369.0 Adjustments for: Non Cash Items / Other Investment or Financial Items 33.0 68.6 Operating profit before working capital changes 153.8 437.6 Changes in working capital -69
Slide 43: Historical Performance At A Glance
42 Historical Performance At A Glance
Slide 44: Strong Financial Performance
Strong Financial Performance Consolidated Revenue (Rs. Crores) EBITDA (Rs. Crores) PAT (Rs. Crores) 2,159 442 280 1,808 1,563 1,199 1,245 263 210 141 191 200 82 82 90 FY17 FY18 FY19 FY20 FY21 FY17 FY18 FY19 FY20 FY21 FY17 FY18 FY19 FY20 FY21 EBITDA Margin (%) PAT Margin (%) 20.5% 13.0% 16.0% 16.0% 1
Slide 45: Strong Financial Performance
Strong Financial Performance Consolidated EPS* (in Rs.) Net Worth (in Rs. Crores) Leverage (X) 30.1 913 1.2 1.2 0.9 653 544 15.4 455 0.6 400 8.4 8.6 9.6 0.4 FY17 FY18 FY19 FY20 FY21 FY17 FY18 FY19 FY20 FY21 FY17 FY18 FY19 FY20 FY21 * For EPS, we have adjusted previous year’s figures in proportion to
Slide 46: Distribution to Shareholders
Distribution to Shareholders (in Rs. Crs) Distribution Policy Distributed ~Rs. 59 Crores as Dividend over last 6 years Distribution: ~26% Considering various financial parameters, the Company Distributed ~ Rs. 195 crores in may elect to distribute about form of dividend & buyback of 15% to 30% of sh
Slide 47: Consolidated Profit & Loss Account Statement
Consolidated Profit & Loss Account Statement Particulars (Rs. crores) FY21 FY20 FY19 FY18 FY17 Net Revenue from Operations 2,154.8 1,806.1 1,560.9 1,243.7 1,195.2 Other Income 4.5 1.5 2.4 1.1 4.0 COGS 1321.0 1,178.9 1,059.9 782.7 780.5 Gross Profit 838.3 628.7 503.4 462.1 418.7 Gross Margin (%) 38.9
Slide 48: Consolidated Balance Sheet Statement
Consolidated Balance Sheet Statement Equities & Liabilities (Rs. crores) FY21 FY20 FY19 FY18 FY17 Assets (Rs. crores) FY21 FY20 FY19 FY18 FY17 Equity Non Current assets Equity Share capital 93.2 23.3 23.6 23.6 23.9 Property, Plant and Equipment 659.2 642.3 622.0 597.9 575.0 Other Equity 820.2 629.2
Slide 49: Consolidated Cash Flow Statement
Consolidated Cash Flow Statement Particulars (Rs. crores) FY21 FY20 FY19 FY18 FY17 Net Profit before Tax and Extraordinary items 369.0 185.3 131.0 124.5 116.0 Adjustments for: Non Cash Items / Other Investment or Financial 68.6 86.8 75.2 74.5 72.9 Items Operating profit before working capital change
Slide 50: For further information, please contact
For further information, please contact Company: Investor Relations Advisor: CIN: L37060MH1984PLC055433 CIN: U74140MH2010PTC204285 Mr. Rushikesh Deole Mr. Jigar Kavaiya / Mr. Chinmay Madgulkar Email: investorrelations@aartidrugs.com E: jigar.kavaiya@sgapl.net / chinmay.m@sgapl.net Contact no.: +91 2