Home / Markets / Commodities /  2 chemical stocks rally on signing 8,000 crore worth contract

Shares of Deepak Fertilisers and Petrochemicals Corporation rallied more than 7% to 833 apiece whereas Aarti Industries surged about 3% to 679 on the BSE in Monday's trading session after the companies said they have signed a long-term binding contract with each other for offtake and supply of Nitric Acid, valued at over 8,000 crore.

The agreement is expected to be executed before the close of this calendar year, Industrial chemicals and fertilisers manufacturer Deepak Fertilisers said in a statement adding that the supply arrangement will come into effect from April 1, 2023.

The binding term sheet, signed between Deepak Fertilisers and Petrochemicals Corporation Ltd (DFPCL) and Aarti Industries Ltd (AIL), for a 20-year period will provide specific volume commitments with supply-or-pay, take-or-pay obligations by either companies, thereby providing adequate assurance, financial security and protecting commercial interests of both DFPCL and AIL, it added.

The long-term offtake agreement will enable DFPCL to achieve market security for a significant portion of its Nitric Acid production and is expected to result in revenue of more than 8,000 crores over 20 years.

“This deal enables us to leverage on our competitive advantage for Nitric Acid, a critical building block intermediary chemical for the Specialty Chemicals 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," DFPCL Chairman and Managing Director Sailesh C Mehta said.

"The teams from both ends had put in tremendous effort to make this deal a reality and also to ensure the mutual interest for both of our entities are adequately protected. We see this as a start of a new collaborative journey of our relationship with AIL," Mehta added.

AIL Chairman and Managing Director Rajendra Gogri said, “DPFCL has been a long term partner for us by supporting our key raw material needs. This deal enables us to focus on our forward integrated opportunities and helps channelise our resources effectively for driving more research driven long term and high growth avenues for global markets." 

Deepak Fertilisers and Petrochemicals is among the India’s leading manufacturers of industrial chemicals and fertilisers. Aarti Industries Limited (AIL) is benzene-based specialty chemical company.

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