- 21 Nov 2022
- ICICIdirect Research
AARTI INDUSTRIES, DEEPAK FERTILISERS TEAM UP FOR 20-YEAR NITRIC ACID SUPPLY DEAL
DEEPAKFERT - 1359 Change: -21.15 (-1.53 %)News:
Aarti Industries, Deepak Fertilisers and Petrochemicals Corporation (DFPCL) have announced they have signed a binding term sheet for a 20-year period for offtake and supply of nitric acid of over Rs 8,000 crore. The supply arrangement will come into effect into from April 1, 2023
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Nitric acid being a key feedstock product has impacted production of a variety of specialty chemical products in FY22 and H1FY23 due to supply shortage. Concentrated nitric acid amounts to ~8% of total raw material cost for Aarti Industries. DFPCL, along with its subsidiaries, is a the largest player in India for nitric acid and has a capacity of about 8.9 lakh MT for WNA and 2.3 lakh MT per annum for CNA. The deal benefits AIL by way of a long-term supply security for a key raw material. Also, the company believes it will achieve 70-90% capacity utilisation for most plants once the nitric acid situation stabilises. Hence, this is expected to bolster volume growth in future
Impact:
Positive