Yara has signed a Heads of Agreement with Deepak Fertilisers and Petrochemicals Limited (DFPCL) based in Pune, India with the intention of establishing a joint venture company for production and marketing of technical ammonium nitrate and specialty fertilizers.
Yara has signed a Heads of Agreement with Deepak Fertilisers and Petrochemicals Limited (DFPCL) based in Pune, India with the intention of establishing a joint venture company for production and marketing of technical ammonium nitrate and specialty fertilizers. Yara will own 49% of the planned joint venture.
The JV's objective is to develop the technical ammonium nitrate market (TAN) in India. The JV will include the 300,000 MT per annum TAN plant under construction at Paradip in Orissa on the east coast of India. Indian TAN consumption is approximately 400 kt per year and is growing at about 5-6% per annum, driven by strong coal demand for power generation. Deepak is the only major domestic producer of TAN, with a current installed capacity of 140 kt. The remaining demand is mostly met via imports.
The joint venture will also review opportunities for production and marketing of specialty fertilisers in the states of Maharashtra and Gujarat, where DFPCL has considerable strengths. The state of Maharashtra is India's largest fruit and vegetable producing region and is the most attractive market for a wide range of specialty fertilizer products. Yara will contribute with its international expertise in nutrient management and application of specialty fertilizers for improving productivity and quality of cash crops, thus improving farm economics in this region.
The JV with Yara is expected to provide cost-effective solutions to the farming community and the mining and infrastructure sector in India.
"Our new partnership with Deepak is a strong fit between their strong position in TAN in India, which has the world's third-largest coal reserves, and Yara's proven strengths in safety, production, logistics and expertise in the use of TAN for explosives", says Thorleif Enger, President and CEO of Yara International ASA. "In addition, this partnership will complement Yara's leading global position within specialty fertilisers with Deepak's strong local market position and knowledge in India's most attractive growing region for fruit and vegetables" says Mr. Enger.
"DFPCL's two decades of strengths in the ammonium nitrate and fertilizer sectors will now be further propelled with global expertise and knowledge. The JV will be value-accretive to DFPCL and will benefit its long-term strategy in nutrient management through specialty fertilizers and value-added mining products and services. It is a win-win situation for both Yara and DFPCL. Together we will create and offer safe, world-class, high quality products for the farmers and the mining and infrastructure industries" says Mr. Sailesh Mehta, Managing Director and Vice chairman of DFPCL.
The heads of agreement will be converted into a final agreement after a due diligence and the necessary company and regulatory approvals.
DFPCL is listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange of India (NSE) with a market capitalization of approximately USD 250 million.