The Board of Directors of Smartchem Technologies Limited (STL), a wholly owned subsidiary of Deepak Fertilisers and Petrochemicals Corporation Limited (DFPCL), at its meeting has approved a Corporate Restructuring Plan with the objective of unlocking growth potential of each of the businesses.

The Board of Directors has approved the following Composite Scheme of Arrangement: Demerger of the TAN Business (Mining Chemicals) from STL to Deepak Mining Services Private Limited (DMSPL), a wholly owned subsidiary of Deepak Fertilisers and Petrochemicals Corporation Limited (DFPCL); and amalgamation of Mahadhan Farm Technologies Private Limited (MFTPL), being a wholly owned subsidiary of STL, with STL.

This draft Scheme of demerger is subject to customary, statutory, and regulatory approvals including approvals of respective shareholders and creditors, NCLT and all other regulators as may be required.

Strategic rationale for demerger of TAN Business (Mining Chemicals) from STL to DMSPL is focused leadership; demerger to unlock the true potential; and amalgamation of MFTPL with STL. Strategic rationale for Amalgamation of MFTPL with STL is simplification of corporate structure and economies of scale.

Commenting on this development, Sailesh C. Mehta, Chairman & Managing Director said, "Over the past few years, DFPCL group has significantly improved its operational performance, generated cash flows, and strengthened balance sheet whilst focusing on increasing investments in greenfield expansions. The proposed corporate restructuring shall considerably help create strong independent business platforms within the larger DFPCL brand umbrella, hence enhancing stakeholders' value over time."

"Earlier, DFPCL Group’s strategy was primarily focused on production, cost optimization, capacity utilisations and efficiency improvement. Following extensive deliberation to deliver an outward consumer focus, a specified ‘Transformation Strategy’ with the following fundamental drivers has been executed: Focus on Customised Specialty in place of Commodity; Move from Volume focus to Value/Premium End-User Focus; and Shift from Competition Pricing to Value Pricing," commented Mehta. 

"This radical shift in strategy was deemed necessary to significantly improve customer experience, enhance market share, and build a sustainable brand. In terms of growth trajectory and value creation, both TAN and Crop Nutrition business have attained a strategic size and relevance to deserve stand-alone corporate identities and focussed leadership. This transaction shall provide the required strategic flexibility to drive long-term growth and value creation for the end customers, employees and other stakeholders,” added Mehta.