India’s Deepak Fertilizers bags Rs80bn nitric acid supply deal from Aarti Industries
MUMBAI (ICIS)–India’s Deepak Fertilisers & Petrochemicals Corp Ltd (DFPCL) has secured an rupee (Rs) 80bn ($979m) deal to supply nitric acid to specialty chemicals producer Aarti Industries over a 20-year period.
The formal agreement between the two companies will be executed before end-2022, with the supply deal taking effect from 1 April 2023, DFPCL and Aarti said in a joint statement on 22 November.
DFPCL is the largest integrated nitric acid producer in India with multiple production sites across the country.
The company, along with its subsidiaries has a capacity of about 890,000 tonnes/year of weak nitric acid (WNA) and 230,000 tonnes/year of concentrated nitric acid (CNA).
“This arrangement is a landmark and first of its kind long-term association between two Indian chemical majors to augment each other’s business needs and mutual interests,” they said.
“This deal also enables DFPCL to leverage its competitive advantage for nitric acid, a critical building block intermediary chemical for the specialty chemicals sector,” DFPCL chairman and managing director Sailesh Mehta said.
Demand for nitric acid as a key raw material has been increasing rapidly in India due to the growth in the country’s chemical industry, leading to a significant demand-supply gap, the companies said.
Aarti Industries had been facing a supply crunch of raw material nitric acid since the previous fiscal year ending March 2022, a company source said.
This agreement will help Aarti Industries mitigate the supply chain risk for nitric acid.
“This deal enables us to focus on our forward integrated opportunities and helps channelise our resources effectively,” Aarti Industries chairman and managing director Rajendra Gogri said.
Aarti Industries plans to invest between Rs25bn to Rs30bn to expand its specialty chemicals operations and nearly Rs5bn in its pharmaceutical expansion plans. These projects are expected to come on line over the next two to three years.
The company manufactures specialty chemicals used in various industries including polymers, agrochemicals, dyes, pigments, paints, and printing inks, pharmaceutical intermediates, fuel additives, rubber chemicals, resins, among others.
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