Aarti Industries has signed a $361 million, 9-year supply contract with a multinational company for pesticide intermediates

Aarti Industries Limited (AIL), an Indian specialty chemical company, today announced that it has entered into a nine-year long-term supply contract with a global pesticide products and solutions company. The contract provides Aarti Industries with a revenue potential of about Rs 300 crore (about $361 million) over nine years, with contract supply starting from the current fiscal year.

It is reported that this pesticide intermediate is an important part of AIL's existing comprehensive product portfolio, the pesticide intermediate is the core ingredient in a wide range of herbicides, suitable for a variety of food and cash crops, the scale of the global market is large and steadily growing.

Rajendra V. Gogri, Chairman and Managing Director of Aarti Industries, said: "The award of this contract is another step in making our business stronger, more resilient and more predictable. Signing this contract in such a challenging macro environment is a testament to the hard work of our team and will have a profound impact in consolidating our integrated product value chain." We have established long-term relationships with global industry leaders in different end-user categories. This contract underscores our commitment to turn these relationships into additional long-term opportunities in the future."

As the leading manufacturer of this product in India, this collaboration not only provides Aarti Industries with a stable source of revenue, it undoubtedly strengthens its market position and provides an opportunity for Aarti Industries' continued growth in the pesticide intermediates market and growth in the high-value pesticide segment. According to Aarti Industries, AIL's current capital expenditure plans at its existing manufacturing locations are sufficient to meet the needs of this contract and the company does not expect to undertake additional capital expenditure for this purpose

India's leading CRAMS companies such as Aarti Industries have benefited from the expansion of the agrochemical sector

Agrochemicals is currently a $5.5 billion market in India, growing at nearly 8% a year. According to relevant agencies, the Indian pesticide market is forecast to reach $7.4 billion at a compound annual growth rate of about 9% between 2021 and 2026.

Over the past decade, the trend of sourcing pesticides and their intermediates to shift east has been steadily increasing. As India continues its rapid rise as a global manufacturing hub, Indian CRAMS companies such as Aarti Industries, PI Industries and Deepak Nitrite are poised for exponential strategic growth, supported by policy incentives, localized supply chains and demographic advantages.

Aarti Industries has more than 40 years of experience in the chemical industry and has established multiple global value chains including Nitrochlorobenzene, Dichlorobenzene, Phenylenediamine, Nitrotoluene, Sulfuric acid and downstream chemicals. AIL has the unique competitive advantage of backward integration from petrochemical raw materials, and stands out from many similar companies, with the ability to provide a supply chain that is not affected by global external factors, and become the preferred partner of multinational enterprises.

Rajendra V. Gogri, Chairman and Managing Director of Aarti Industries, previously said in an exclusive interview with AgroPages, "Aarti Industries has long-term supply contracts with a number of top multinational agrochemical companies seeking supply reliability and price transparency. With backward integration of commodity chemicals on a global scale, we are able to obtain the key raw materials needed to produce advanced intermediates and active ingredients at competitive prices. In many cases, our entry into specific value chains has attracted other industry players to invest in building world-class agrochemical manufacturing companies in the country."

Thinking

It is worth noting that Aarti Industries in 2017 signed a 10-year contract worth Rs 400 crore (about $481 million) with a global agrochemical giant to supply high-value agrochemical intermediates for herbicides. But in June 2020, Aarti Industries said the long-term contract had been canceled. The product in question is a key intermediate, 2,5-Dichloroaniline, which is used in the synthesis of the herbicide Dicamba. At the time, wheatgrass was facing farm lawsuits in the United States for causing crop damage due to drift, and the future was uncertain.

According to the Brazilian market news, the 23/24 season of the Brazilian market will exceed 10 million acres of seed sales, and the wheat straw is progressing smoothly in the Brazilian market. The order amount and time limit of Aarti Industries and multinational companies are close to the canceled order, coupled with the subsequent development expectations of Dicamba, although the exact name of the product and the object of cooperation have not been disclosed, but it has triggered market speculation that domestic pesticide manufacturers are also highly concerned about the technical varieties that may be involved