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Aarti Industries Ltd.

BSE: 524208 Sector: Industrials
NSE: AARTIIND ISIN Code: INE769A01020
BSE 00:00 | 14 May 1710.70 -30.80
(-1.77%)
OPEN

1755.50

HIGH

1765.00

LOW

1701.00

NSE 00:00 | 14 May 1710.00 -30.55
(-1.76%)
OPEN

1758.00

HIGH

1765.00

LOW

1700.00

OPEN 1755.50
PREVIOUS CLOSE 1741.50
VOLUME 29716
52-Week high 1815.35
52-Week low 850.95
P/E 61.25
Mkt Cap.(Rs cr) 29,807
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 1755.50
CLOSE 1741.50
VOLUME 29716
52-Week high 1815.35
52-Week low 850.95
P/E 61.25
Mkt Cap.(Rs cr) 29,807
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Aarti Industries Ltd. (AARTIIND) - Chairman Speech

Company chairman speech

Stepping Up Growing Stronger

Aarti Industries with its integrated value chain and diversified product mix strongtechnical capabilities robust track record and cost-efficient operations forms an idealfit for entities looking for alternate supplier independent of China. Our teams areworking with various existing and prospective Indian and global players on multiple suchopportunities.

Despite the challenges we remain committed to invest in technology and innovation tocreate new chemistry and unearth novel solutions that will contribute to long-termsustainable value creation for all our stakeholders.

Dear Shareholders

My warm greetings to all of you!

These are unprecedented times and the COVID-19 pandemic is impacting everyone aroundthe world and every aspect of our daily lives. Hope all of you and your families are safeand in the best of health.

As a manufacturer and supplier of speciality chemicals and pharmaceuticals AartiIndustries forms a crucial part of the essential services segment. I want to extend mydeepest gratitude to each and every member of the Aarti Industries family for ensuring wekeep our operations running and doing all that we can to respond effectively to theCOVID-19 pandemic. We are determined to work as a team across the industry to harness ourknow-how experience and expertise to combat this evolving crisis.

Despite the challenges we remain committed to invest in technology and innovation tocreate new chemistry and unearth novel solutions that will contribute to long-termsustainable value creation for all our stakeholders.

Exhibiting Resilience

In FY 2019-20 our business was impacted by global economic weakness in few end-usersegments slow demand in some large usage verticals sharp volatility in the prices of keyraw materials and currencies and finally the COVID-19 pandemic. However I am pleased toinform you that despite such exceptional business conditions our PAT was up 9% to Rs536crores though our revenues were marginally lower by 2%. However our resolve remains firmand we continue to march tenaciously towards our vision of becoming ‘the globalpartner of choice' for many more major consumers of speciality chemicals.

Our Speciality Chemicals business witnessed higher margins on account of the increasingshare of value-added and high-margin products from ~70% of revenues in FY 2018-19 toabout 75% this fiscal. Our operating profit grew marginally by 2% to

Rs977 crores and EBIT margin expanded by 80 basis points to 21.1%.

However the raw material prices that are contractually passed on to customersweakened resulting in

3% decline in revenues. Also the shortage of nitric acid which is used largely in themanufacture of speciality chemicals impacted our operations and performance.

In the pharma business revenues increased by 4% while margins expanded by 250 basispoints. EBIT margins saw significant expansion based on higher contribution from regulatedmarkets and value-added products. Expanding business volumes across markets and operatingleverages have helped the segment to sustain the growth momentum.

Seizing opportunities

China which accounts for about

20% of global speciality chemicals revenues has tightened environmental standardsresulting in the closure or shifting of capacities in about 50 chemical manufacturingclusters. The increased labour costs and the COVID-19 pandemic have aggravated thesituation further as companies seek to reduce their dependence on China and sourcealternative suppliers.

Aarti Industries with its integrated value chain and diversified product mix strongtechnical capabilities robust track record and cost-efficient operations forms an idealfit for entities looking for alternate supplier independent of China. Our teams areworking with various existing and prospective Indian and global players on multiple suchopportunities.

Advancing on Innovation

Aarti Industries is a knowledge-driven organisation where we strive towards

For us protecting our planet and preserving resources is not only about managingbusiness risks. It is about helping ensure there is enough for everyone who needs them– today and tomorrow.

converting today's knowledge into tomorrow's chemistry. We are therefore continuouslypushing the boundaries of innovation. At the beginning of the year we had three fullyfunctional state-of-the-art R&D centres – two located in Dombivali and Vapi forpharmaceuticals and another in Vapi for speciality chemicals. These R&D centres havethe latest laboratory rectors equipped to carry out various functions such asphotochemistry and high-pressure reactions; distillation; and process optimisation.

We recently operationalised a 50000 sq ft R&D and innovation complex – theAarti Research and Technology

Centre (ARTC) in Navi Mumbai.

Equipped with modern equipment and avant-garde laboratories focusing on developingstrategic technologies the ARTC will comprise about 250 skilled scientists who will worktowards crafting the future of the speciality chemicals industry.

Creating a Sustainable Tomorrow

Sustainability is an integral part of our success strategy. Over the last

36 years our focused approach to sustainability has helped us lead by example in thespeciality chemicals and pharma industries. Our purpose is ‘Right Chemistry for aBrighter Tomorrow' and we strive to live our purpose every day by developing products fora better society. Enabling us to execute our sustainability strategy effectively is theAarti Management

System (AMS) an integrated management system that attends to the needs of allstakeholders effectively. The AMS primarily focuses on safety environment andcommunities.

Safety

We have formulated a comprehensive

Safety Health and Environment (SHE)

Policy in accordance with our core values of Care Integrity and Excellence.

Ensuring a safe working environment is a mandate at Aarti Industries. Therefore one ofour key priorities is to bring about a transformational change in our people's behaviourtowards workplace safety from being ‘reactive' to ‘proactive'. To achieve thiswe have adopted a shared responsibility approach with increased engagements at all levelsof the workforce towards strengthening the safety culture at Aarti Industries. In April2019 we started a company-wide safety initiative called ‘BE SAFE' a modelsynchronised and formalised to enhance and inculcate the safety culture among every memberof the Aarti Industries family. The objective of BE SAFE is to provide assurance andpersistent thrust on the various initiatives and safe practices on complete healthcheck-ups of all facilities.

Environment

We have been a steward of the environment and our approach to environmentalpreservation evolves with advancements in science technology and best practices. Wecontinue our efforts to reduce our carbon and water footprint and waste and innovate toaddress the challenges posed by climate change. Our 50 KLD sewage recycling plant inKutch Gujarat used the Soil Biotechnology (SBT) for wastewater treatment. Moreover 14 ofour 17 manufacturing sites achieved the Zero Liquid Discharge (ZLD) status.

For us protecting our planet and preserving resources is not only about managingbusiness risks. It is about helping ensure there is enough for everyone who needs them– today and tomorrow.

Communities

It is our endeavour to deliver sustainable outcomes for communities by buildingmeaningful relationships and mutual trust. Whether it be a long-term commitment or anurgently needed response we strive to achieve lasting improvement for society. Over theyears Aarti Industries has focused on impacting:

• Cluster and rural development

• Children and healthcare faciities

• Disaster relief and rehabilitation

• R&D for upliftment of society

• Education and skill development

• Women empowerment and livelihood opportunities

• Water conservation and environment

We liaise with local partners and NGOs to assess needs and take possible action. Thisyear we provided scholarships to students to pursue higher education. We are also fundingvarious schools to set up new infrastructure to facilitate better education for students.

In the field of healthcare we provided counselling to ~620000 mothers onbreastfeeding practices. Additionally we also set up blood donation camps and donatedmobile dental vans to the villages of Dahej and Jhagadia in Bharuch Gujarat. We are alsofocusing on strengthening rural livelihoods by helping the nomadic and de-notified tribesattain identity and live a dignified life. Through our initiatives we managed to bringsmiles to the faces of over 386000 people this year. To assist in the war againstCOVID-19 we donated 150 oxygen cylinders to a COVID care facility in South Mumbai.

Empowering Our People to Create Responsible Chemistry

The people of Aarti Industries come to work each day with focus passion energy andcreativity to make truly differentiated contributions to the world of chemicals andpharma. We set high standards and expectations for and from our people across all areas ofoperations.

Amidst the COVID-19 pandemic and the lockdown many companies faced the challenge ofhiring and onboarding new recruits at a time when physical attendance at the office wasnot possible. At Aarti Industries we enrolled several new recruits through the process ofvirtual joining / e-joining. For close to 500+ employees working in isolation from theirhomes we initiated a range of learning and development and engagement activities to keeptheir morale and motivation high.

With our continuous focus on nurturing young talent and providing them the guidance tobecome future leaders we have onboarded over140+fresh affinity with the engineeringgraduates. Our philosophy is to provide the right set of training to young minds who canbe the drivers of India's future.

Ready for the Bright Future Ahead

Aarti Industries has a clear strategic focus to become a reference in specialitychemicals and pharmaceuticals world over. Our long-term ambition is to further embraceopen innovation and create a fit-for-purpose and sustainable organisation.

We will continue to expand our manufacturing base; launch new products; and invest inR&D product and process development. We are also geared up to benefit from the trendof global supply chains favourably looking at strong Indian chemical companies toestablish long-term strategic supply arrangements.

As I conclude I would like to thank all the employees of Aarti Industries for theirtireless commitment to continue manufacturing chemical and pharma products during thesedifficult times.

I also extend my heartfelt gratitude to all our stakeholders for the trust andcooperation you have placed in us and your. We will continue creating long-termsustainable value for all our stakeholders.

Sincerely
Rajendra V. Gogri

.