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Wednesday / February 8. 2023

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A landmark and first of its kind long term association between two Indian chemical majors to augment each other’s business needs

Aarti Industries Ltd (AIL) and Deepak Fertilisers & Petrochemicals Corporation Ltd (DFPCL) have signed a binding term sheet for a 20-year period for offtake and supply of Nitric Acid. The parties plan to execute the formal agreement before the close of this calendar year. The supply arrangement comes into effect from April 1, 2023.

DFPCL is the largest manufacturer of Nitric Acid in South East Asia and AIL is one of the largest Nitric Acid consumers in India. 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. 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.

The deal benefits AIL by way of a long-term supply security for a key raw material. This would meet a majority of AIL’s requirements. It also helps AIL have a greater assurance in sourcing the key RM from DPFCL, who is an existing and the largest integrated nitric acid producer in India with multiple production sites. AIL, being a manufacturer for specialty chemical and downstream products, the present deal provides a strong supply security and enables AIL to focus on future growth opportunities, introduction of new value-added products and value chains for niche applications.

DFPCL, along with its subsidiaries, is the largest player in India for Nitric Acid and has a capacity of about 8.9 Lakhs MT for WNA and 2.3 Lakhs MT per annum for CNA. DFPCL is a market leader in the Crop Nutrition, Mining Chemicals & Industrial Chemicals sectors.

A landmark and first of its kind

Initiative to help farmers adopt best practices in soil nutrition, climate-resilient farming

The Asian Development Bank (ADB) has announced that it would fund the farm efficiency initiative of Smartchem Technologies Limited (STL), a wholly-owned subsidiary of Deepak Fertilisers And Petrochemicals Corporation Limited (DFPCL), through a $30 million loan facility with a tenor of 5 years. This is ADB’s first agribusiness ‘Blue Loan’, and the first such blue loan in India in the agribusiness sector across institutions. The loan will be used to finance capital expenditure as well as research and development of enhanced-efficiency speciality fertilisers.

STL was chosen as a suitable candidate for Asian Development Bank (ADB) support because of its leading market position in the enhanced efficiency specialised fertilisers (EESF) segment, with advanced technical capability and satisfactory financial performance. Growth potential from the enhancement of fertiliser production capacity to provide quality inputs.

Actions to encourage the application of EESFs, which will support the sustainable transformation of agriculture in India while improving its resilience to climate change.

ADB has also given approval for a technical assistance grant of $5,00,000 for building capacity for Soil Nutrition Management among Smallholder Farmers and Climate Resilience in India. The said grant is in addition to financing of $30 Million (“Blue loan”).

Enhanced-efficiency speciality fertilisers have shown increased output while reducing the need for fertiliser application rate and also reduces environmental impact and supports Nutrient uptake efficiencies and thus delivers better productivity leading to improved food security.

Initiative to help farmers adopt best practices