By: ICN Bureau
Last updated : August 12, 2023 12:26 pm
Approximately 65% of additional CNA capacity is already tied-up under a 20-year contract
Deepak Fertilisers And Petrochemicals Corporation Limited (DFPCL), a leading producer of industrial chemicals, mining chemicals and fertilisers in India, has announced brownfield expansion of Nitric Acid at Dahej in Gujarat which is part of its strategic growth journey. The Board of Directors have approved setting up of Weak Nitric Acid (WNA) plant with capacity of 300 KT PA and two Concentrated Nitric Acid (CNA) plants with total capacity of 150 KT PA.
DFPCL demand-supply gap for WNA is expected to rise from approx. 140 KT in FY24 to 330 KT by FY30. The demand growth is driven by captive and merchant demand, particularly from Nitroaromatics and other downstream industries. Accordingly, the Company plans to expand its WNA capacities by 300 KTPA. Similarly, India's CNA market demand-supply gap will substantially increase from 85 KT in FY24 to approx. 300 KT PA by FY30.
The company would like to leverage its leadership position in CNA segment and would be expanding its CNA production capacity by 150 KT PA based on increased demand. Both WNA and CNA expansion projects are strategically planned to feed into this growth, bridge the demand supply gap and strengthen the Company’s position as a reliable partner for meeting Nitric Acid requirements.
DFPCL is targeting fast-growing Pharma, Steel, Solar and Agro industry value chains, where India is emerging as an alternate manufacturing hub for intermediates. The proposed expansion will allow the company to capitalise on the broader Nitric Acid opportunity based on a long-term supply agreement which was signed with Aarti Industries last year. The new technology adaptation and global scale plant would also give a competitive advantage, and the company intends to increase its focus on export markets.
Commenting on the important development, Sailesh C. Mehta, Chairman and Managing Director of DFPCL, said, "The proposed expansion of our Nitric Acid capacities are directly aligned with the evolving market landscape. Given the increasing demand for Nitric Acid from downstream sectors, including significant committed long-term offtakes, which is driven by the 'China plus One' trend for India's Specialty Chemical Sector, our proposed expansion plans has low market risk.
We are strategically positioned not only to bridge the current demand-supply imbalance, but also to capitalize on growth opportunities through our competitive edge in Nitric Acid, meet supply commitments, and be the market leader. Ammonia from its subsidiary provides sustainable supplies of raw material, resulting in a win-win situation for both the Project and the Ammonia subsidiary.
We strongly believe these strategic investments (including Greenfield Ammonia and TAN) will generate not only sustainable returns of our shareholders in the long run, but also benefit the Indian economy by reducing import dependence and creating local employment.”
India is emerging as a strong player in nitration chemistry and approx. 30% of global downstream nitration capacities are in India used for domestic and export markets. The new capacity will ensure customers to meet their growth plans by having steady and sustainable feedstock supplies in the future.
The manufacturing plants will be set up within the existing Nitric Acid complex of DFPCL Dahej in Gujarat as adequate land is available for the proposed construction. The total project cost is estimated to be approx. Rs. 1,950 crore (including preoperative expenses, contingencies, and finance cost during the construction period). The start of production is tentatively planned in H2 FY2026. The Company will be implementing state of the art technology from leading global technology providers for the brownfield expansion.
DFPCL is the largest player in Indian Nitric Acid business with more than 45% market share. Currently, the total Nitric Acid production capacity (CNA + WNA) is 1,120 KTPA and will expand to approx. 1,600 KTPA post expansion. DFPCL will be leveraging on its 40 years of solid experience in Nitric Acids, with proven expertise in lean manufacturing and handling complex supply chains.
Additionally, to meet the changing market demands, the Company has been innovating and developing specialty grades of Nitric Acid for premium applications in Solar and Steel industry. A part of the new capacity will also be directed toward delivering specialty grades for pharma, steel, solar and other specialty usage.