Deepak Fertilisers & Petrochemicals Corporation has signed a binding 20-year agreement with Aarti Industries for the supply and offtake of nitric acid valued at Rs 8,000 crore.
The companies announced on Monday that they will be executing a formal agreement before the closure of this calendar year and the supply arrangement will come into effect from April 1.
Deepak Fertilisers and Petrochemicals Corporation (DFPCL) is the largest manufacturer of nitric acid in South East Asia and Aarti Industries (AIL) is one of the largest nitric acid consumers in the country.
The DFPCL said this arrangement is a first-of-its-kind long-term association between the two major Indian chemical players.
“The deal provides specific volume commitments with supply or pay, take or pay obligations by either party thereby providing adequate assurance, financial security and protecting either party’s commercial interests,” a DFPCL release said.
Sailesh C Mehta, chairman and managing director, DFPCL said the deal enabled them to leverage its competitive advantage for nitric acid, which is a critical building block for the speciality chemical sector.
“This alliance indicates the strong growth currents emerging from the ‘China plus One’ trend for the specialty chemical sector in India. The available brown-field site at Dahej could give opportunities for cost-effective capacity enhancements,” Mehta said.
Rajendra Gogri, chairman and managing director of the AIL, said, the DPFCL had been a long-term partner for them for meeting their key raw material needs and the deal enabled them to focus on forward integrated opportunities and channel resources effectively.