Deepak Mining Solutions Limited (DMSL), a wholly owned material subsidiary of Deepak Fertilisers And Petrochemicals Corporation Limited (DFPCL), has revised the estimated cost of Technical Ammonium Nitrate (TAN) Project, Gopalpur to Rs. 2,675 crore vis-a-vis earlier estimated project cost of Rs. 2,223 crore on November 20.

The cost escalation is due to: Geopolitical issues and related price increases in material (Stainless Steel (SS) from 250 Rs/kg to 370 Rs/kg and Carbon Steel (CS) from 43 Rs/kg to 77 Rs/kg), manpower cost, construction cost, currency variation (from US$ to Rs. 74.55 to 85.13) etc.; Investment in features to enable improvements in safety, efficiency, reliability, sustainability and export compliant quality; Additional cost incurred in the development of the Ammonia Pipeline in the Odisha Industrial Infrastructure Development Corporation (IDCO) common corridor and its connection to Gopalpur port due to various changes and delays, including ownership change of the port from Shapoorji (SPPMPL) to Adani (APSEZ); and Investment in Effluent Treatment Plan (ETP), Zero Liquid Discharge (ZLD) and Ammonium Nitrate (AN) recovery system as the Common Effluent Treatment Plan (CETP) from Tata SEZ (TSSEZL) was not made available. 

Considering the advanced stage of the project execution with over 90% of the requirements ordered/arrived, these costs are unlikely to see any further revisions. Despite this increase in cost, the company believes that the project’s financial metrics remain robust and the project IRR continues to be well above our internal threshold benchmarks. 

The project is strongly aligned with the strategic growth objectives and is expected to generate significant long-term value for the stakeholders.