Aarti Industries Ltd (AIL) said that they have signed Rs 100 billion multi-year exclusive supply contract with global chemical conglomerate, Sabic Innovative Plastics US LLC.
This contract entails supply of a high-value speciality chemical intermediate over a period of 20 years. The supplies are expected to commence from 2020 with an estimated revenue generation of Rs 100 billion over the contract period.
With this deal, AIL is set to enter a new chemistry range, first of its kind in India and its end product is amongst the major growth initiatives for the customer.
AIL will be investing $35-$40 million to setup dedicated large-scale manufacturing facility for production of this speciality chemical intermediate and it will be built on the basic technology package received from the customer.
The upcoming facility will be a 100 percent export oriented unit in Gujarat. As a part of this contract terms, the customer shall provide $42 million as an advance to AIL in instalments, which shall be adjusted against the supplies in future. This advance shall help reduce the net capital employed, enabling higher ROCE returns for this project.
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