Specialty chemicals company Aarti Industries Ltd (AIL) has entered into a Rs 4,000 crore multi-year contract with a global agriculture company for supply of a high value agrochemical intermediary, used for making herbicides, over a 10 year period.
The supplies, which are expected to commence from FY20, are expected to generate revenues of Rs 4,000 crores (about $ 620 million) over the contract term. The project will entail investment of Rs 400 crores (about $ 62 million) by AIL. The end-use is among the major growth initiative of the customer and approximately $ 1 billion is being invested for this initiative.
The world population is estimated to reach 10 billion by 2050, causing a surge in food demand. Substantial increase in yield is conceivable through use of agrochemicals. Governments across the world are encouraging viable agrochemicals use to secure food supply to meet the increasing food demand, owing to drive industry growth.
“The contract highlights our partner of choice positioning among the leading global agrochemicals, polymer, pigment, pharmaceuticals and other specialty chemicals companies. Focus on innovation, SH&E (safety, health & environment), green chemistry along with our scale and integrated operations make us a natural partner for our existing as well as potential customers. The opportunity in the agrochemicals space is quite sizeable; this deal in particular will boost our growth trajectory further,” said Rajendra Gogri, chairman and managing director, Aarti Industries Ltd.
The specialty chemicals market has been growing at 14 percent over the last five years and the market size is expected to touch $ 70 billion by 2020. India is the third largest producer of agrochemicals globally and Make in India campaign is providing the framework for Indian companies to deliver faster growth. Recent initiatives, including improvements in infrastructure, regulation licenses and taxes, are expected to further strengthen India's position as a leading global specialty chemicals manufacturing location.
Aarti Industries is one of the most competitive benzene-based specialty chemicals companies in the world. Over the last decade, AIL has transformed itself and has been focusing on the overseas markets.
