Aarti Industries said on Monday that it has received a termination notice from a customer with which it had entered into a long-term contract.

 

“The company has received a notice from the global agrochemical major, opting to terminate the 10-year contract it had entered on June 15, 2017 to supply a high-value agrochemical intermediary with application into Herbicides,” Aarti Industries said in a press release today.

 

The company further said that it understands that the reason for the same is the customer’s change in strategy. "They now are looking to focus on the final formulation and would like to source the Active Ingredient rather than their original plan to manufacture it," it said in an exchange filing.

 

Upon the triggering of this termination event, the guarding provisions for compensation under the contract come into effect. As a result, the compensation to Aarti Industries is estimated to be in the range of $120 million to $130 million, the company said.

 

Commenting on this, Rajendra Gogri - Chairman & Managing Director at Aarti Industries Limited said, "The project has been one of the major growth initiatives for us. The present notice was not something envisaged by us. However, the change in the strategy of the customer does not significantly undermine the inherent opportunity in this business. We are fully backward integrated and a strategic player in this value chain. We are confident to be able to cater to the market requirements in this high growing vertical of the agrochemical space. We shall be closely working with the customer and various other players to provide solutions in this high growth herbicide business."