Aarti Industries Ltd. and Deepak Fertilisers & Petrochemicals Corporation Ltd. announced that they 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 1st April 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.

Using the foundation of the current relationship of over the past three decades, this deal further strengthens and elevates the current relationship to a long-term collaborative association for years to come. 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. Over time, with the growth across various Indian chemical companies, the demand for Nitric acid has been increasing rapidly leading to significant demand-supply gap.

This warranted a long term strategy for AIL to mitigate the supply chain risk w.r.t. Nitric Acid and for DFPCL to mitigate offtake risk for one of its key manufactured products. This is indeed a mutually beneficial and win-win proposition to augment the long term needs and objectives from either side.