Backward Integration / Capex Support
Deepak Chem Tech Enters Long-Term Agreement with Praxair India for HyCO Plant to Support Polycarbonate Project
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Deepak Nitrite’s subsidiary Deepak Chem Tech Limited (DCTL) has entered into a long-term agreement with Praxair India to build and operate a HyCO (Hydrogen & Carbon Monoxide) plant, ensuring a reliable supply of critical raw materials for its upcoming polycarbonate project
PRICE-SENSITIVE TRIGGER
Event: Long-Term Strategic Supply Agreement
Type: Backward Integration / Capex Support
Impact: Positive
Immediate Effect: Strengthens raw material security and execution visibility for the polycarbonate project, improving long-term business stability
What Happened ?
Deepak Chem Tech Limited (a wholly owned subsidiary of Deepak Nitrite) has signed a long-term agreement with Praxair India (a Linde company) to set up a dedicated on-site HyCO plant at Dahej, Gujarat.
This facility will supply critical feedstocks required for DCTL’s polycarbonate manufacturing plant, which is a key growth project for the company.
key highlights
Project Structure:
- Praxair India will:
- Build
- Own
- Operate the HyCO plant
- Dedicated on-site facility at Dahej, Gujarat
- Supplies hydrogen and carbon monoxide (key feedstock)
Strategic Importance:
- Ensures uninterrupted supply of critical raw materials
- Reduces dependency on external sourcing
- Enhances supply chain reliability and resilience
- Supports scalability of polycarbonate operations
Operational Benefits:
- Improves operational efficiency
- Provides execution visibility for large capex project
- Allows Deepak to focus on core manufacturing expertise
- Reduces logistics complexity
Timeline:
- Facility expected to be commissioned by 2028
- Aligned with polycarbonate plant timeline
End-Use Market Impact:
- Polycarbonate used in:
- Automotive
- Electrical & electronics
- Construction
- Consumer applications
- Targets high-growth advanced materials segment
Note:
This positions Deepak Nitrite deeper into specialty chemicals/value-added materials
Risk Analysis
Key Risks
- Project execution delays (HyCO + polycarbonate plant)
- Dependence on partner (Praxair/Linde) for critical supply
- Demand cyclicality in polycarbonate end markets
- High capital intensity and long payback period
Worst Case Scenario
- Delay or cost overruns could impact return ratios and earnings visibility
Risk Level: Medium
Company Commentary
- Agreement is a critical step in advancing polycarbonate project
- Ensures long-term raw material supply through on-site model
- Enhances execution visibility and operational efficiency
- Partnership leverages Praxair’s global expertise
Official Exchange Filing: Deepak Chem Tech Limited