Deepak Fertilisers, Aarti Industries join hands for Nitric Acid offtake, supply arrangement

Industrial chemicals and fertilisers manufacturer Deepak Fertilisers and Petrochemicals Corporation on Monday said it has signed a long-term binding contract with Aarti Industries for offtake and supply of Nitric Acid, valued at over Rs 8,000 crore.

The agreement is expected to be executed before the close of this calendar year, DFPCL said in a statement adding that the supply arrangement will come into effect from April 1, 2023.

The binding term sheet, signed between Deepak Fertilisers and Petrochemicals Corporation Ltd (DFPCL) and Aarti Industries Ltd (AIL), for a 20-year period will provide specific volume commitments with supply-or-pay, take-or-pay obligations by either companies, thereby providing adequate assurance, financial security and protecting commercial interests of both DFPCL and AIL, it added.

The long-term offtake agreement will enable DFPCL to achieve market security for a significant portion of its Nitric Acid production and is expected to result in revenue of more than Rs 8,000 crores over 20 years.

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"This landmark deal is a testament for the long-term association with one of our largest customers. This deal also enables us to leverage on our competitive advantage for Nitric Acid, a critical building block intermediary chemical for the Specialty Chemicals sector.

"This alliance indicates the strong growth currents emerging from the 'China plus One' trend for the Specialty Chemical Sector in India," DFPCL Chairman and Managing Director Sailesh C Mehta said.

The available brown-field site at Dahej could give opportunities for cost effective capacity enhancements, he said.

"The teams from both ends had put in tremendous effort to make this deal a reality and also to ensure the mutual interest for both of our entities are adequately protected. We see this as a start of a new collaborative journey of our relationship with AIL," Mehta added.

AIL Chairman and Managing Director Rajendra Gogri said, the combination of these leading businesses with distinct strengths and capabilities will help in making the business more sustainable and help both of us to leverage and focus on individual growth opportunities.

"DPFCL has been a long term partner for us by supporting our key raw material needs. This deal enables us to focus on our forward integrated opportunities and helps channelise our resources effectively for driving more research driven long term and high growth avenues for global markets," he added.

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