Aether Industries Limited IPO
Aether Industries Limited
Rs.14,766
/ 23 shares
Minimum Investment
IPO Details:
IPO date:
24th May to 26th May, 2022
Issue size:
Rs. 808.04 crores
Listing at:
BSE & NSE
Retail quota:
35%
IPO price:
Rs 610 to Rs 642 per equity share
Minimum lot size:
23 equity shares and in multiples of 23 thereafter
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Company Background
Aether Industries Limited is a speciality chemical manufacturer in India focused on producing advanced intermediates and speciality chemicals involving complex and differentiated chemistry and technology core competencies.
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The company’s business was started in 2013 with a vision to create a niche in the global chemical industry with a creative approach towards chemistry, technology and systems that would lead to sustainable growth. In the first phase of the company’s development through Fiscal 2017, the company focused on building its team and infrastructure and on its R&D centered on building the company’s core competencies. The company’s revenue generation operations commenced with its second phase in Fiscal 2017. The company is one of the fastest growing specialty chemical companies in India, growing at a CAGR of nearly 49.5% between Fiscal 2019 and Fiscal 2021 (Source: F&S Report, May 2022).
The company has three business models under which it operates: (i) large scale manufacturing of its own intermediates and speciality chemicals; (ii) contract research and manufacturing services (“CRAMS”) and (iii) contract/exclusive manufacturing.
Aether Industries is among the few Indian specialty chemical companies to have successfully launched these three separate business models in just 5 years into commercial manufacturing (Source: F&S Report, May 2022).
As of March 31, 2022, the company’s product portfolio comprised over 25 products. According to Frost & Sullivan, in CY2020, the company is sole manufacturer in India of 4MEP, MMBC, T2E, OTBN, NODG, DVL and Bifenthrin Alcohol, and it is the largest manufacturers in the world by volume for 4MEP, T2E, NODG and HEEP. (Source: F&S Report, May 2022).
Let us now look at a few competitive strengths and strategies of Aether Industries Limited...
Competitive Strengths
+ Differentiated Portfolio of Market-Leading Products: Aether Industries is focused on producing advanced intermediates and speciality chemicals involving complex and differentiated chemistry and technology core competencies. Its products have applications across a wide spectrum of uses in the pharmaceutical, agrochemicals, material science, coatings, high performance photography, additives and oil & gas industries. As of March 31, 2022, the company’s product portfolio comprised over 25 products that were marketed to over 34 global customers in 18 countries and to over 154 domestic customers. In the view of Frost & Sullivan, the company has emerged as one of the biggest competition and threats to the Chinese specialty chemical companies for these products and the Chinese customers are dependent on Aether for supplying these products (Source: F&S Report, May 2022).
+ Focus on R&D to Leverage its Core Competencies of Chemistry and Technology: The foundation of the company is its in-house research and development capabilities. According to Frost & Sullivan, the company’s strategic investments in R&D have been critical to its success and a differentiating factor for the company to attain leading market positions for certain products. Based on the technical expertise the company has developed over the years, it is able to carry out innovative processes at global scale, which, according to Frost & Sullivan, is difficult to replicate, and creates significant barriers for new entrants (Source: F&S Report, May 2022). The company’s chemistry and technology core competencies and all of its products have been developed by its R&D team, scaled up in its Pilot Plant, and launched into production with in-house design and engineering. According to Frost & Sullivan, its in-house development (without the support from any clients for R&D) showcases the company’s innovation and research strength, and its expertise in a large range of chemistries and technologies has allowed the company to support a number of end use industries. Aether Industries’ R&D facilities are dedicated to the development of its pipeline and next generation products as well as to the company’s CRAMS customers. As of March 31, 2022, the company had a specialized R&D team of 164 scientists and engineers including 92 scientists (with PhDs or Master of Science degrees) and 72 chemical engineers.
+ Long Standing Relationships with a Diversified Customer Base: Aether Industries Limited’s customers include over 160 multinational, global, regional and local companies. As of March 31, 2022, the company’s product portfolio was sold to over 34 global customers in 18 countries and to over 154 domestic customers. Of the total gross revenue from operations in the nine months ended December 31, 2021 and Fiscal 2021, the company’s largest customer contributed approximately 13.52% and 19.38%, respectively; the company’s top 10 customers contributed approximately 55.76% and 56.23%, respectively; and its top 20 customers contributed 72.93% and 73.50%, respectively. The company enjoys relationships in excess of 5 years with 7 out of its top 10 customers. The company’s long-term relationships and ongoing active engagements with customers also allow it to plan its capital expenditure, enhance the ability to benefit from increasing economies of scale with stronger purchasing power for raw materials and a lower cost base. These enduring customer relationships have helped the company expand its product offerings and geographic reach. Of its revenue from operations in the nine months ended December 31, 2021 and Fiscal 2021, 57.32% and 57.82% were from India, 32.74% and 32.97% were from EU countries, 5.95% and 5.77% were from the North America (United States and Mexico), 3.45% and 2.92% from Asia and 0.50% and 0.52% from the rest of the world.
+ Synergistic Business Models Focused on Large Scale Manufacturing, CRAMS and Contract Manufacturing : The company has three business models under which the company operates: (i) large scale manufacturing of its own intermediates and speciality chemicals; (ii) CRAMS (contract research and manufacturing services) and (iii) contract / exclusive manufacturing. The company is among the few Indian specialty chemical companies to have successfully launched these three separate business models in just 5 years into commercial manufacturing. (Source: F&S Report, May 2022). These business models benefit from, and have synergies with, each other. For example, the company’s customers to which it sells its intermediates and speciality chemicals are also target customers for CRAMS and contract manufacturing business models. The CRAMS business allows the company to work with innovative companies on cutting-edge new products which enhances its own R&D skill sets to develop its products. Further, increasing its production through the contract manufacturing business allows the company to benefit from larger scale production and negotiating better prices with its suppliers.
+ Experienced Promoters and Senior Management with Extensive Domain Knowledge: The company is led by Promoters comprising Managing Director, Ashwin Jayantilal Desai, and executive directors Purnima Ashwin Desai, Rohan Ashwin Desai and Dr. Aman Ashvin Desai, who have a combined experience of over 125 years in the chemical industry. Each of the Promoters is a career-technocrat and is actively involved in the critical aspects of the business, including R&D, process and plant engineering, finance and marketing. All four Promoters are involved in the day-to-day management of the company.
Key Strategies
Here are a few strategies Aether Industries Limited has for its business:
Leverage its strong position in the speciality chemicals industry to capitalize on industry opportunities
Expand its product portfolio and diversify into additional business segments
Expand manufacturing, R&D, and pilot plant capacities
Continue to strengthen its presence in India and expand sales and distribution network in the international markets
Continue to focus on contract manufacturing / exclusive manufacturing by developing innovative processes and value engineering
Aether Industries Limited Financials
And finally here’s a look at key financials of Aether Industries Limited...
Revenue from operations
Particulars (in Rs. million)
Particulars (in Rs. million)
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Top Aether Industries Limited IPO FAQs
The Aether Industries Limited IPO has an issue size of Rs. 808.04 crore. The IPO opens for subscription on 24th May 2022, and ends on 26th May, 2022.
The allotment dates are on or around 31st May, 2022.
Link Intime India Private Limited is the registrar for this IPO.
The dates are yet to be decided.
You can read more about Aether Industries Limited and its IPO from the company’s red herring prospectus (RHP) here.
