Aarti Industries has successfully finalized long-term supply agreements for key feedstock materials, marking a strategic milestone in the company's procurement operations. The chemical manufacturer has secured dedicated supply channels for methanol and toluene, two critical raw materials essential for its manufacturing processes.

Strategic Feedstock Procurement

The newly concluded agreements focus on securing reliable access to methanol and toluene, which serve as fundamental building blocks in the company's chemical production operations. These long-term supply deals are designed to provide stability in raw material procurement and support Aarti Industries' operational continuity.

Supply Chain Enhancement

The finalization of these supply agreements represents Aarti Industries' commitment to strengthening its supply chain infrastructure. By securing long-term contracts for essential feedstock materials, the company aims to mitigate potential supply disruptions and ensure consistent availability of raw materials for its production facilities.

These strategic procurement initiatives align with the company's operational requirements and demonstrate proactive supply chain management. The agreements are expected to provide greater predictability in raw material costs and availability, supporting the company's manufacturing planning and operational efficiency.

Manufacturing Support

Methanol and toluene play crucial roles in various chemical manufacturing processes within Aarti Industries' production portfolio. The secured supply agreements ensure that the company maintains adequate access to these essential materials, supporting its ability to meet production targets and customer commitments.

The long-term nature of these supply deals provides operational stability and enables better planning for the company's manufacturing activities. This strategic approach to feedstock procurement reflects the company's focus on maintaining robust supply chain relationships with key suppliers.

By finalizing these strategic long-term supply agreements for methanol and toluene feedstock, Aarti Industries has reinforced its raw material procurement strategy, setting the stage for sustained operations and continued growth in the chemical manufacturing sector.

Aarti Industries Limited (AIL), a leading Indian specialty chemicals company, has reported a robust 26% year-over-year revenue growth for the second quarter of fiscal year 2026, with consolidated revenues reaching Rs. 2,250.00 crore. The company's performance was primarily driven by increased volumes in Methyl Methacrylate (MMA) products and benefits from deferred bulk shipments from Q1.

Key Financial Highlights

Operational Highlights

• MMA production achieved its highest quarterly output with 98% capacity utilization at 260 KT capacity.
• The company secured a long-term chlorine supply agreement with DCM Shriram, increasing supply from 150 TPD to 350 TPD to support future downstream growth.
• AIL is fast-tracking execution of capacity expansions, including MMA debottlenecking to 300 KT and PEDA capacity of 4000 MT, both expected to commission in Q4 FY26.

Financial Performance

Aarti Industries demonstrated strong financial performance in Q2 FY26, with consolidated revenue growing by 26% year-over-year and 21% quarter-over-quarter. The EBITDA saw a significant increase of 44% YoY and 36% QoQ, reaching Rs. 292.00 crore. The company's Profit After Tax (PAT) more than doubled, showing a remarkable 102% YoY growth and 150% QoQ growth to Rs. 105.00 crore.

Operational Performance

The company's MMA segment was a key driver of growth, achieving its highest quarterly production with 98% capacity utilization. This performance underscores AIL's operational efficiency and strong market demand for MMA products.

Strategic Developments

Aarti Industries has made strategic moves to ensure sustained growth:

1. Long-term Chlorine Supply Agreement: AIL secured a crucial agreement with DCM Shriram, significantly increasing its chlorine supply from 150 TPD to 350 TPD. This agreement is aimed at supporting future downstream growth and enhancing supply chain security.

2. Capacity Expansion: The company is accelerating its capacity expansion plans, with two key projects slated for commissioning in Q4 FY26:

   • MMA debottlenecking to increase capacity to 300 KT
   • PEDA (2-Phenyl Ethyl Diethyl Aniline) capacity addition of 4000 MT

Challenges and Outlook

Despite the strong performance, Aarti Industries faces some challenges:

• Margins remain under pressure across most product portfolios.
• US tariffs have impacted volumes for key end-use applications, including dyes and polymers.
• Finance costs included a forex mark-to-market loss of Rs. 34.00 crore on ECB borrowings.

However, the company's proactive approach to capacity expansion and strategic partnerships positions it well for future growth. The fast-tracking of capacity expansions, particularly in MMA and PEDA, indicates AIL's confidence in market demand and its ability to capitalize on emerging opportunities.

Exceptional Items

The quarter saw some exceptional items impacting the financial results:

• The company received favorable income tax appellate orders resulting in exceptional income of Rs. 29.00 crore.
• Exceptional expenses included a Rs. 7.00 crore provision for doubtful land advance.

Aarti Industries' strong performance in Q2 FY26, coupled with its strategic initiatives and capacity expansions, suggests a positive outlook for the company. However, the management remains cautious about margin pressures and the impact of US tariffs on certain product segments. As AIL continues to execute its growth strategy, investors and industry observers will be watching closely to see how these factors play out in the coming quarters.