Company Profile: Aarti Industries Limited

Excerpt: Aarti’s esteemed Customer list includes Leading Multinationals and Global Giants. It has a marketing & distribution subsidiary in US and UK.

Aarti Industries Limited is a leading Indian manufacturer of Specialty Chemicals and Pharmaceuticals with a global footprint. These products are used in the downstream manufacture of pharmaceuticals, agrochemicals, polymers & additives, fuel additive, rubber chemicals, surfactants, pigments, dyes etc. The company was promoted by Mumbai based technocrats

The company’s integrated manufacturing plants (backward and forward) manufacture more than 125 products.

These units are located in Gujarat, Maharashtra, Madhya Pradesh and Silvassa. The company is listed on Bombay Stock Exchange and National Stock Exchange (market capitalization H6,285 cr as on 31st March, 2017).

Growth journey

Aarti Organics Pvt. Ltd. was incorporated in the year 1984. Company put a unit at Sarigam, Gujarat to make 1,200 tpa nitrochlorobenzenes (NCB) in 1986. In 1990 the company set up additional unit at vapi to NCB with capacity of 4,500-tons. Company changed its name from Aarti Organics to Aarti Industries in the year 1994. In 1998 the company set up Alcemie (Europe) Ltd. , a subsidiary in UK for marketing and distribution.

In 2001 the company commenced commercial production at Jhaghdia and pioneered hydrogenation process based on Swiss technology. In 2016 the company scaled up NCB capacity from 50,000 tons to 75,000-tons, expanded caffeine capacity and merged promoters investment group companies into Aarti Industries Ltd. During the same year company also set up a subsidiary in USA for marketing and distribution.

In 2017 the company commenced calcium chloride plant with capacity of 30,000-tons at Jhaghdia and also commenced multipurpose ethylation plant at Dahej SEZ. It also expanded chlorination capacity from 110 KTPA to 175KTA in FY 2018.

Business Segments

Company has three major business segments viz. Speciality chemicals, Pharmaceuticals and Home & Personal Care

Speciality Chemicals

Under this segment the company makes polymer & additives, agrochemicals and intermediates, dyes, pigments, paints and printing inks.

Polymer and additives: Products are used in aircrafts, automobiles, cruise Liners, electro-static precipitators, bulletproof jackets, electronic gadgets and various other applications.

Agrochemicals and intermediates: products find use in pesticides, insecticides, fungicides, herbicides, fertilizers, nutrients, etc.

Dyes, pigments, paints and printing inks, Pharma intermediates, Fuel additives, Rubber chemicals, etc.


Under this segment the company makes APIs, intermediates for innovators and generic companies. Products are used in anticancer, anti-asthma and antihypertensive drugs as well as oncology therapies and steroids, etc.

Home & Personal Care

Under this segment the company makes non-ionic surfactants concentrates for shampoos, hand wash and dish wash.

Initiatives taken during 2016-17

There are a number of initiatives that the company undertook during the financial year 2016-17 to strengthen its partnership model.

One, it commissioned an ethylation initiative in the Dahej SEZ that will source ethylene through a pipeline directly from the supplier Reliance Industries a few kms away, which will enhance supply seamlessness and moderate logistical challenges. The facility, commissioned in September 2016, will reinforce our capability by increasing the output of agrichemical intermediates by 8,000 to 10,000 tonnes per annum.

Two, company intends to commission toluene derivatives during the first half of 2017-18. The integration of ethylation and toluene derivatives will provide an attractive foundation to service existing customers, accounting for a larger share of their wallet.

Three, the company quadrupled its PDA capacity from a level of 250 tonnes per month (TPM) a few years ago to 1000 TPM, which was commissioned during 2016-17. This expansion will service the growing needs of engineering polymer companies.

Four, the company announced its intention to commission a new research centre and Innovation Complex in the area of advanced chemistry and speciality chemical applications for downstream users. This research centre will strengthen the confidence of customers and enhance our competence in the area of advanced chemistries, positioning the company for sustainable growth across the foreseeable future.

Benzene based value chain


The company commenced commercial production at its multipurpose Ethylation unit at Dahej SEZ, Gujarat, and the second phase of its PDA expansion from September 2016. Using Swiss technology, the plant has a capacity to manufacture about 8,000-10,000 TPA of ethylene derivatives. The product manufactured enjoys applications in herbicides (agrochemicals) and applications in agrochemicals catering to global majors. This ethylation unit is the first of its kind in India, expected to reach full utilization within four years. This unit will enjoy benefits applicable to other SEZ units.

The Company announced an investment of Rs.75 crore to set up a world-class R&D, scale-up and innovation complex equipped with state-of- the-art equipment and analytical tools. The new complex would comprise an R&D centre, scale-up facility consisting of a kilo-lab and a pilot plant, innovation center, dedicated labs for process safety and effluent treatments addressing more than 150 scientists and engineers. The initiative will enable the company to strengthen its presence among global agrochemical, fuel additive, pharmaceutical, polymer and rubber chemical majors. The company announced a fresh investment outlay of more than Rs.1,000 cr for the next two years.

In another recent development the company has entered into contract with a global agriculture company to supply a high value agrochemical intermediary for use in herbicides across I0 years. The supplies are expected to commence from FY20 and generate projected revenues of approximately Rs. 4,000 crores (approximately USD 620 million) over the contract term. The project would entail an investment of about Rs. 400 crores (approximately USD 62 million) by the company. The end-use is among the major growth initiatives of the downstream customer for which approximately US$ 1 billion is proposed to be invested.

Global Presence

50% of the company’s’ revenue comes from global markets and the number is expected to increase. Aarti’s esteemed Customer list includes Leading Multinationals and Global Giants. Aarti’s has a marketing & distribution subsidiary in US and UK.

Innovation landscape

Following are some of the innovations the company undertook:

  • Directly utilized HCL gas, a byproduct of benzene chlorintation, in the manufacture of chlorosulphonic acid (CSA).
  • Produced 100 percent export grade calcium chloride granules from dilute HCL.
  • Used scrub Nox in sulphuric acid from the MDCB plant to manufacture commercial grade nitrosyl sulphuric acid.
  • Commercialized continuous LOOP reactor for the eco-friendly hydrogenation process.
  • It is the only company in India to commercialize the manufacture of flouro compounds from Halex chemistry.

In recognition of outstanding achievements, the Indian Institute of Chemical Engineers bestowed the prestigious Lala Shriram National Award for Leadership in Chemical Industry to our Chairman Emeritus and founder Shri Chandrakant V. Gogri.

CHEMTECH Foundation accorded Aarti Industries with the ‘Outstanding Achievement for Innovation’ Award for the company’s commendable efforts in conserving the environment and sustainable growth through innovation.

Company has transformed itself from make-to-stock company to make-to-order company, is a vendor to number of companies and is a partner of choice.

Innovation agenda focused on value creation and sustainability

Benchmark R & D Program

  • Introduced pioneering technology and manufacturing processes in India
  • DSIR (Department of Scientific and Industrial Research) approved Facilities
  • Dedicated pool of over 100 engineers & scientists
  • GMP approved pharmaceutical plants; ISO 9002 Certified plants; 2 USFDA plants

IPRs for Developing Customised Products & Products under Secrecy Agreements

  • Track record of practicing Stringent & Customised Specifications of the Customers.
  • Aarti has upgraded two of its manufacturing units into Zero Discharge of Liquid Effluents. Substantial Investments have been made to upgrade the ETP Setup
  • Increased Thrust on 3R (Reduce-Reuse-Recover) principles across all operating sites
  • Increased thrust for Plant Automation and Upgradation with adoption of Cost Effective, Efficient and Ecofriendly processes, i.e Focus on SH & E activities
  • Consistently developing New product lines and adopting Greener technologies

Financial Highlights


  • FY17 Consolidated EBITDA up by 14% YoY to Rs. 653 crore with an EBITDA margin of 22%
  • FY17 Consolidated PAT up by 23% YoY to Rs. 316 crore
  • CRISIL has upgraded its ratings on our bank facilities and debt instruments to 'CRISIL AA- /Stable/CRISIL A1+' from 'CRISIL A+/Positive/CRISIL A1


  • Commercialized calcium chloride facility at Jhagadia (Gujarat) in Q1FY17
  • In Q2FY17 Commenced commercial production at multipurpose Ethylation unit at Dahej SEZ, Gujarat. The Greenfield Ethylation unit is first of its kind to be set up in India and has adopted Swiss Technology with a capacity to manufacture about 8,000-10,000 tpa of Ethylene derivatives
  • In Q2FY17, Commenced commercial production of its 2nd Phase at PDA facility in Jhagadia, from 450 tpm to 1,000 tpm
  • In Q4FY17, operationalized captive co-generation power plant at Jhagadia, Kutch and Vapi. AIL now has a total of five power plants – two at Vapi and one each at Jhagadia, Kutch and Tarapur; which would help reduce power costs significantly
  • Operationalized Solar plants with aggregate capacity of 697 KW across five locations.

Multiyear sustainable growth

SWOT Analysis


Aarti’s business model encompasses a number of strengths. Leadership – established record of execution: The transformation of Aarti Industries from an Indian Company supplying to global markets to a global knowledge driven Company effecting partner of choice relationships has been nurtured by the Company’s decisive leadership.

Aarti’s promoters include first generation technocrats; five of six Promoter Directors possess an engineering background; three of four Founder Promoters are chemical engineers from ICT (formerly UDCT). Company has a track record of execution where returns have progressively improved in line with capex growth thereby delivering consistent revenue growth, value addition and margins expansion As a transformational Company, the management at Aarti has always been focused on creating a benchmark innovation program, investing in research led product and process development, creating high-end value added products and chemistries and introducing pioneering technologies. This has made it possible to combine a comprehensive value chain with enhanced operating efficiency, enter niche product spaces and deepen customer relationships. The Company has been recognized as a strategic supplier/partner of choice by major global and domestic downstream customers.

Integration operations with global scale: Aarti has built a global-scale competitive manufacturing enterprise which is environment friendly as it is committed to minimizing effluent discharge. Aarti’s sustained focus on process improvements, cost efficient operations, plant automation and high quality benchmark made it possible for the Company to emerge as one of the lowest cost producers of benzene derivatives in the world. Company is the largest producer of benzene based derivatives in India. Company has both backward and forward integrated facilities, with cost-efficient processes comprising 125 products catering to diverse downstream applications. Besides, Company comprises 17 state of- the-art manufacturing units across Gujarat, Maharashtra, Madhya Pradesh and Silvassa. Scalable, integrated and green operations ensure supply security to your Company’s global customers. Moreover, a combination of competitive, large and integrated supply chains empowered Company to address the growing needs of large global customers with a diverse product mix. Further, the Company enhanced product customization, marked by the ability to switch products based on market dynamics, strengthening resource and asset utilization.

Regulatory: Company is a strong proponent of 'green chemistry' (development of chemical products/ processes that reduce/eliminate the generation of waste). Company was an early adopter of the most stringent global environment, health and safety standards, ensuring optimal productivity and business sustainability. Aarti Industries has been REACH compliant, possesses, six zero liquid discharge units, while reviewing the viability for converting other units into zero discharge. Company has prioritized an emphasis on 3R (Reduce-Reuse-Recover) across operating sites, following the highest SH&E (Safety, health & Environment) standards. Company has invested approximately H250 cr in SH&E during last 5-6 years.


High performance industries:

According to a new research report by Global Market Insights, Inc. specialty chemicals market size is set to touch USD 1,273 billion by 2024. Global specialty chemicals growth is primarily led by increasing population along with rapid industrialization shrinking the arable land. The world population is estimated to reach 9 billion by 2040, causing a surge in food demand. Substantial increase in yield is conceivable through use of agrochemicals. Governments across the world are encouraging agrochemicals use to secure food supply to meet the increasing food demand owing to drive industry growth.

According to Research and Markets, the global herbicide market was $23.97 billion in 2016 and is estimated to reach $34.10 billion by 2022, at a CAGR of 6.05% for the forecasted period. Key chemical companies such as BASF, Monsanto, Dow Chemical Company have been investing heavily in their agrochemical business which has been driving the market for herbicides. Innovation in the crop management technology & procedures and focus on improving agricultural productivity will boost herbicide market.

The global specialty chemicals market is expected to gain from strong growth in end user industries including construction and automotive. Growing consumer demand for lubricants to ease frictional forces in the vehicles will improve growth. Growing construction industry, particularly in China, India and Brazil, will push industry growth in the coming years. Present usage of specialty chemicals in India is significantly low when compared to developed markets. As per FICCI, per capita consumption of chemicals in India is much lower than the western countries, about 1/10th of the world average. According to IBEF, the Indian middle-class household is expected to grow from 31 million in 2008 to 148 million by 2030, fueling huge demand for specialty chemicals in automotives, water treatment and construction.

The global engineering polymers market is projected to register a healthy CAGR of 7.2% in terms of value and 5.7% in terms of volume during 2016–2026, according to Future Market Insights. The automotive and transportation sector is progressively inclined towards adoption of engineering polymers products due to their various thermal and mechanical properties.

Engineering polymers are witnessing demand from packaging, electrical and electronics, automotives and consumer goods businesses. Engineering polymers that help reduce carbon footprint such as polyamides and polycarbonates are particularly in high demand. Globally, speciality chemicals are driven by extensive product and process innovation, a significant differentiator over the commoditized Indian chemical industry. Companies with strong technical expertise, high safety health & environment standards as well as deep customer relationships remain at the forefront to make significant headway in high-value industries. Aarti has progressively leveraged chemistry skills to produce higher downstream products, expanding capacities to global scale for chlorination, nitration, ammonolysis, hydrogenation and fluoro compounds, diazotization etc. The Company has placed a greater focus on better value added chemical processes. The strengthening product mix and scale are likely to drive earnings efficiency of the benzene chain.


Regulatory: Like all chemical companies, Company is subject to central, state, local and foreign laws and regulations relating to pollution, protection of the environment, greenhouse gas emissions, and the generation, storage, handling, transportation, treatment, disposal and remediation of hazardous substances and waste materials.

Costs and capital expenditures relating to environmental, health or safety matters are subject to evolving regulatory requirements and depend on the timing of the promulgation and enforcement of specific standards which impose the requirements. Moreover, changes in environmental regulations could inhibit or interrupt the Company's operations, or require modifications to its facilities. Accordingly, environmental, health or safety regulatory matters could result in significant unanticipated costs or liabilities. European and developed markets have progressively tightened their import regulations citing environmental concerns and protect domestic manufacturers.

The most impactful regulation from an Indian perspective has been the European Union’s REACH (Registration, Evaluation, Authorisation and Restriction of Chemicals), which went into effect in June 2007. This legislation addresses the production and use of chemicals and their potential impact on human health and environment. The substantial impact of REACH will come into play following the implementation of Phase 3 from June 2018 that will regulate any chemical supplied to EU at quantities of 1 tonne per annum more. REACH increases the safety, health and environmental compliance of chemical manufacturers supplying to EU, affecting underlying process costs.

In a scenario where a number of Indian companies are likely to find this transition challenging, Aarti has been REACH-compliant since 2011. Your Company emphasised the 3R (Reduce-Reuse-Recover) principle across all operating sites, following the highest SH&E (safety, health & environment) standards.

Company has invested approximately H250 cr in SH&E over last 6 years. End-user/product/country slowdown: Any slowdown in the growth of end user industries (polymers, additives, pigments, paints, printing inks, dyes, agro intermediates and fertilisers) could impact sectoral growth. Your Company has achieved a substantial level of diversification across products, customers, geographies and applications, completely changing the nature of our business risk profile compared to other companies.

AIL caters to several industries, not overtly dependent on any single industry, customer or geography. AIL’s diversified portfolio comprising multiple products cater to multiple customers across geographies and varied economic cycles. No single customer, product of end-user industry contributed higher than 9% of revenues. Moreover, AIL is a preferred partner for major customers enjoying leading downstream market shares, safeguarding it from usual business risks.