Deepak Fertilisers and Petrochemicals (DFPCL) on Thursday announced a demerger of its mining chemicals and fertiliser businesses.

The company said the demerger was aimed at simplification of the corporate structure and reduction of multiple entities carrying on similar businesses. This would also result in economies of scale for all the business verticals, including a reduction of overhead and administrative costs, the company said.

Sailesh C Mehta, chairman and managing director, DFPCL, said the proposed corporate restructuring would help create strong independent business platforms within the larger DFPCL brand umbrella and enhance stakeholders’ value over time.

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The Technical Ammonium Nitrate (TAN) mining chemical and crop nutrition business had attained a strategic size and relevance to deserve standalone corporate identities and focused leadership, Mehta added.

Mehta said DFPCL’s strategy earlier was to focus on production, cost optimisation, capacity utilisation and efficiency improvement. Now, the strategy has shifted to having a focus on customised specialty in place of commodity and this restructuring was in line with DFPCL’s strategic shift from commodity to specialty, he said.

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The board of Smartchem Technologies (STL), a wholly owned subsidiary of Deepak Fertiliser, approved the corporate restructuring plan. Under the Composite Scheme of Arrangement, the TAN business would be demerged from STL to Deepak Mining Services (DMS), another wholly owned subsidiary of DFPCL.

Deepak Mining Services and STL will be 100% owned subsidiaries of DFPCL. STL would now focus only on the crop and nutrition business (CNB). STL manufactures NPK and specialty fertilisers in India. Mahadhan Farm Technologies, a wholly owned subsidiary of STL that manufactures water-soluble fertilisers, would be merged with STL.

The company said the TAN and CNB had no product, seasonality, markets, branding, or value proposition overlap between them and the demerger would unlock the true potential and enable sector-specific strategic and financial investments in respective businesses.