On Saturday, Aarti Drugs announced that its wholly owned subsidiary, Aarti Speciality Chemicals has emerged as one the beneficiaries of the Government of India’s recently approved Production Linked Incentive (PLI) for the Pharmaceutical Sector.

The company has received approval for 2-Methyl-5Nitro-Imidazole (2-MNI) with a committed production capacity of 4,000 MT per annum under Target Segment III (Key Chemical Synthesis Based KSMs/Drug Intermediates). The rate incentive will be 10% of sales value per annum for a period of 6 years - FY23 to FY28.

The company said that the committed capex will be funded through a mix of debt and internal accruals. It expects the capex for this project to be spread over a period of 18 months, helping reduce the dependence on imports.

The Govt recently launched a PLI Scheme to promote domestic manufacturing by incentivising pharmaceutical manufacturers to set-up greenfield projects in India with a minimum domestic value addition in four different target segments (Two in Fermentation based - at least 90% and Two in the Chemical Synthesis based – at least 70%) with a total outlay of Rs. 6,940 crores. The objective of the scheme is achieving self-reliance and reducing import dependence in these critical ‘Key Starting Materials (KSMs)/ Drug Intermediates/ Active Pharmaceutical Ingredients (APIs)’ in the country. The tenure of the scheme is from FY21 to FY30.

The applications under four different Target Segments were invited with 30 November 2020 as the last date. In total, 215 applications were received for the 41 products spread across the 4 Target Segments.

The stock price has reacted very positively to this news, opening over 6% higher at Rs.706.35 and rising on to hit a new high at Rs.1025.