15-year deal: This chemical company announces execution of binding term sheet with Petronet LNG Limited for offtake of Propylene and Hydrogen!

The stock has delivered 15.03 per cent returns in the past 1 years and multibagger returns of 148.02 per cent over past 3 years.

Deepak Nitrite Limited's wholly-owned subsidiary, Deepak Phenolics Limited (DPL), has secured a significant agreement with Petronet LNG Limited (PLL) for the supply of key raw materials. This strategic partnership promises to bolster DPL's operations and fuel its future growth trajectory.

The core of the agreement lies in a 15-year binding term sheet between DPL and PLL. Under this pact, DPL will receive 250 KTPA (kilo tonnes per annum) of propylene and 11 KTPA of hydrogen sourced from PLL's Dahej petrochemical project in Gujarat. This long-term supply agreement provides DPL with assured access to crucial feedstock for its production processes, paving the way for consistent output and operational stability.

Propylene is a vital petrochemical used in the manufacturing of various downstream products, including polypropylene plastics, acrylic acid, and solvents. Securing a reliable source of propylene at competitive rates is crucial for DPL's cost-effectiveness and profitability. Similarly, hydrogen plays a critical role in DPL's production processes, contributing to energy efficiency and overall operational optimization.

The agreement's duration of 15 years speaks volumes about the mutual confidence and commitment between DPL and PLL. This long-term perspective allows DPL to plan its production capacities and future investments with greater certainty, fostering sustainable growth. Additionally, the proximity of PLL's Dahej facility to DPL's operations ensures efficient logistics and minimizes transportation costs, further enhancing the deal's attractiveness.

Deepak Phenolics is a leading manufacturer of phenol and acetone, catering to diverse industries such as construction, automotive, and pharmaceuticals. This strategic partnership with PLL strengthens DPL's position in the market by securing its supply chain and enhancing its production capabilities. With a guaranteed source of propylene and hydrogen, DPL can now focus on optimizing its operations, exploring new product lines, and expanding its market reach.

The deal also holds wider implications for the Indian petrochemical industry. By strengthening domestic sourcing of propylene and hydrogen, DPL and PLL contribute to reducing India's dependence on imported petrochemicals. This aligns with the government's "Make in India" initiative, promoting domestic manufacturing and self-sufficiency in critical sectors.

The stock has delivered 15.03 per cent returns in the past 1 years and multibagger returns of 148.02 per cent over past 3 years.
 

Disclaimer: The article is for informational purposes only and not investment advice.