Does Apar Industries' (NSE:APARINDS) CEO Salary Compare Well With The Performance Of The Company?

Simply Wall St
February 03, 2021
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Kushal Desai is the CEO of Apar Industries Limited (NSE:APARINDS), and in this article, we analyze the executive's compensation package with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Apar Industries.

See our latest analysis for Apar Industries

How Does Total Compensation For Kushal Desai Compare With Other Companies In The Industry?

Our data indicates that Apar Industries Limited has a market capitalization of ₹14b, and total annual CEO compensation was reported as ₹33m for the year to March 2020. That's a notable decrease of 10% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at ₹15m.

In comparison with other companies in the industry with market capitalizations ranging from ₹7.3b to ₹29b, the reported median CEO total compensation was ₹19m. Hence, we can conclude that Kushal Desai is remunerated higher than the industry median. Furthermore, Kushal Desai directly owns ₹3.4b worth of shares in the company, implying that they are deeply invested in the company's success.

Component20202019Proportion (2020)
Salary ₹15m ₹13m 44%
Other ₹18m ₹23m 56%
Total Compensation₹33m ₹36m100%

Speaking on an industry level, nearly 65% of total compensation represents salary, while the remainder of 35% is other remuneration. It's interesting to note that Apar Industries allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

NSEI:APARINDS CEO Compensation February 4th 2021

Apar Industries Limited's Growth

Over the last three years, Apar Industries Limited has shrunk its earnings per share by 15% per year. Its revenue is down 23% over the previous year.

The decline in EPS is a bit concerning. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Apar Industries Limited Been A Good Investment?

Since shareholders would have lost about 47% over three years, some Apar Industries Limited investors would surely be feeling negative emotions. So shareholders would probably want the company to be lessto generous with CEO compensation.

In Summary...

As we noted earlier, Apar Industries pays its CEO higher than the norm for similar-sized companies belonging to the same industry. Unfortunately, this doesn't look great when you see shareholder returns have been negative over the last three years. What's equally worrying is that the company isn't growing by our analysis. Understandably, the company's shareholders might have some questions about the CEO's remuneration, given the disappointing performance.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 2 warning signs for Apar Industries (1 is concerning!) that you should be aware of before investing here.

Important note: Apar Industries is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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