Aarti Industries deepens Long-term Partnership with Leading Global Chemical Company

Aarti Industries Limited (AIL) today announced entering into a material amendment to its exclusive long-term supply agreement originally signed with Leading Global Chemical Company (hereinafter also referred to as "Main Agreement").

This development marks a strategic progression and deepening of the partnership, enhancing integration levels and strengthening the longterm supply framework for a high-value speciality chemical intermediate. The engagement continues over a long-term horizon as per the terms of the Main Agreement.

Under the Main Agreement, one of the critical feedstock was provided by the Customer. As part of the extended scope, AIL will undertake a backward integration project to set up a plant that shall manufacture a significant share of this key feedstock in-house, thereby transitioning to a highly integrated, end-to-end manufacturing model.

AIL expects to invest approximately ₹200-250 crore over a period of the next two years towards this upstream integration. This backwards integrated facility is expected to be set up at the same location (where the current plant is situated) to cater to requirements under the Main Agreement, i.e., at Dahej SEZ, Gujarat.

The enhanced integration will enable:

- Highly integrated end-to-end manufacturing of the end Product from AIL facilities

- Opex and freight optimisation through in-house manufacturing vs external sourcing.

- Improved supply chain resilience.

- Enhanced Safety in materials handling.

While the backward integration is not expected to materially impact topline growth, it is expected to positively enhance EBITDA margins over the residual tenure of about 15 years under the Main Agreement through integration efficiencies and operating leverage.

This milestone further strengthens AIL's position as an integrated supply solution partner for global chemical leaders and reinforces India's growing stature as a preferred manufacturing partner for global majors in advanced chemistries.

The Main Agreement, which laid the foundation for a unique, long-term engagement has evolved significantly over time. This expansion underscores AIL's demonstrated ability to build, nurture, and scale enduring global partnerships while continuously expanding its scope and value.

Commenting on the development, Mr. Suyog Kotecha, Chief Executive Officer, Aarti Industries Limited, said: "This expansion represents a strategic deepening of a unique long-term partnership. The continued evolution of this relationship reflects the trust placed in our capabilities and our proven ability to deliver, grow, and expand enduring global partnerships.

By undertaking this backward integration, we are transitioning to a highly integrated, end-to-end manufacturing model for this product. This will enhance supply security, improve cost competitiveness, and strengthen EBITDA over the life of the agreement.

We remain focused on positioning India as a preferred partner for global majors seeking reliable, scalable and technologically advanced chemistry solutions, while continuing to create sustainable long-term value for all stakeholders."

Shares of Aarti Industries Limited was last trading in BSE at Rs. 419.10 as compared to the previous close of Rs. 421.10. The total number of shares traded during the day was 372653 in over 984 trades.

The stock hit an intraday high of Rs. 423.60 and intraday low of 411.95. The net turnover during the day was Rs. 155039115.00.

Source : Equity Bulls

Keywords

AartiIndustries INE769A01020 SpecialtyChemicals LongtermPartnership