Aarti Industries Secures Nine-Year Agrochemical-Supply Contract
It says the current capital expenditure is sufficient to meet the contract requirement.
Aarti Industries Ltd. has entered into a nine-year contract with a global chemical products and solutions company for the supply of a niche agrochemical intermediate.
The contract offers Aarti a revenue potential of approximately Rs 3,000 crore over nine years, with the supplies commencing immediately. The new contract will also have an EBITDA margin of 20%, according to an exchange filing on Wednesday.
The yearly potential will be Rs 330 crore per year and it will be evenly spread out in the total timeline of the contract, Managing Director Rashesh Gogri told NDTV Profit on Thursday.
(Source: Rashesh Gogri/LinkedIn)
Aarti said the current capital expenditure is sufficient to meet the contract requirement. Gogri highlighted that the company's capex is at Rs 2,400–2,800 crore and they have already spent Rs 1,400 crore.
The supply of the end product of the agrochemicals will be in North America, South America and Europe. Gogri expects the demand for agrochemicals to improve slightly from the last three quarters and the growth will be visible by the next financial year.
"I think things will stabilise, and in (the next) three–five quarters, demand should come back," Gogri said. The MD said the pricing would also recover as normalcy returns, exuding confidence that the next fiscal would be a "year of recovery" for not only Aarti. but also the sector as he expects the destocking stage to end.
Aarti's stock was trading 0.94% lower at Rs 639.70 apiece on the NSE compared to a 0.41% advance in the benchmark Nifty 50 at 2.50 p.m.
