Aarti Industries has a CapEx plan of around Rs 4,500-5,000 crore for next three years: Rajendra Gogri, CMD

Rajendra Gogri, Chairman & Managing Director, Aarti Industries Limited, talks about Q4FY21 numbers, CapEx plan for next three years, revenue and PAT guidance for FY22, export market and fundraising plan among others during a candid chat with Swati Khandelwal, Zee Business. Edited Excerpts: 

Q: The Q4FY21 numbers were good and margins have seen a good improvement. Going forward, do you think that it is a sustainable margin?

A: This year due to the COVID, in the top line, there has been a growth of over 9% and the bottom line was almost flat. Next year, we are targeting a growth of 25-35% in terms of turnover, EBITDA and PAT.

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Q: How will you summarize the numbers and where volume growth was good? If we talk about the pharma and specialty chemical segment, where you have focus and how do you see the volume and price growth in these segment in FY22?

A: This year, pharma has done very well and specialty chemical segment was impacted due to the COVID in terms of demand and the production stoppage that happened in the first quarter. Both the segments will grow well in FY22, i.e. 25% plus volume growth in pharma as well as in specialty chemicals. Next year will be mainly driven by volume growth in terms of top-line and EBITDA.

Q: Tell us about the CapEx plans for FY22 and what is your outlook for the next 3-4 years in terms of expenses? And, how will you fund the CapEx that will be lined up?

A: Right now, the CapEx of our existing contracts are running and further restoration and expansion of the existing products are going on. So, in these next two year, there is a CapEx of Rs 1,500 crore in those. Besides, for the new product line, chlorotoluene and specialty chemicals and pharmaceuticals, we are taking a Greenfield site. So, it will need an investment of around Rs 3,000-3500 crore. So in the next three years, we have a CapEx plan of around Rs 4,500-5,000 crore. We have also passed a resolution to raise Rs 1,500 crore by debt or equity and we are studying it.

Q: What will be the revenue guidance and PAT guidance for FY22 and beyond that as well? 

A: There will be a growth of around 25-30% in FY22 over FY21 and in FY24, we are looking at nearly doubling it from FY21.

Q: Your performance has been good in the export market and it also supports your overall business a lot in de-risking in case of contraction in demand in the domestic market. So what is your outlook for the export market and what kind of contribution it will have? Also, are you looking forward to some new markets to enter, if yes, what will be the strategy for the same?

A: Our export remains in the range of 40-50%, while domestic is 50-60%. And, there is a continuous growth in exports. Overall, there is a lot of appetite in various chemical companies to source more from India. Going forward, our growth will remain in the range of 40-50% in export.

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Q: The board has approved the fundraising plan of Rs 1,500 crore. Tell us the way it will be used? Also give your views on the dividend of Rs 3 per share and a bonus of 1:1, which has been appreciated by the market?

A: Yes we have declared a dividend of Rs 3 as ex-bonus, so it turns around a 15% payout. Besides, we will have internal accruals. The fund that will be raised will be used as working capital as well as some debt repayment and CapEx. So, there will be composite use of the fund that will be raised.

Q: Which kind of organic and inorganic growth opportunities are you seeing? Especially in the M&A space, do you think that there are any particular opportunities in India or outside that you can acquire to expand and broaden your portfolio?

A: Currently, we have a focus on Greenfield organic growth. It is a new set and we have established a new R&D centre in New Bombay. Also, several additional products are further adding value to the current product chain. So, the main focus is on organic growth but if we get an opportunity for acquisition in India or abroad, we are also looking at those opportunities, as well. But organic growth also has substantial opportunities.