Aarti Drugs, a part of the USD 500 million Aarti Group of Industries announced that its subsidiary received approval under Production Linked Incentive (PLI) scheme for the pharmaceutical sector.

"Aarti Speciality Chemicals (ASCL), a wholly-owned subsidiary of Aarti Drugs, stands out to be one of the beneficiaries of the Government of India's recently approved Production Linked Incentive (PLI) for the pharmaceutical sector," company said.

Aarti Speciality Chemicals 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.

Government of India's Department of Pharmaceuticals under the Ministry of Chemicals and Fertilizers recently launched a Production Linked Incentive (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. 69.40 billion.

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.

"We welcome the government's approval to our application under PLI scheme to manufacture 2- Methyl-5Nitro-Imidazole (2-MNI) with a committed production capacity of 4,000 MT per annum," said Adhish Patil, Chief Financial Officer - Aarti Drugs."

This is a very positive development for us, as it will help the company to diversify its product portfolio, increase the top-line and enhance the profitability & margin profile of the company," he added.

"Backed by a strong Balance Sheet, and robust free cash flow generation, the committed capex will be funded through a mix of debt and internal accruals. We are expecting the capex for this project to be spread over a period of 18 months. This will further reduce our dependence on imports. As a strategy, we have always focussed on import substitution and will continue to pursue various opportunities. We remain committed to "Atmanirbhar Bharat" vision of the Government," Patil further added.

Shares of the company gained Rs 17.20 or 2.56%, to settle  at  Rs 688.25.  The total volume of shares traded  was 146,780 at  the BSE (Friday).