by Hema Ranjan

Rajendra Gogri, MD of Aarti Industries, says that a customer triggered the termination of a contract signed in 2017 worth Rs. 4,000 crore over ten years. Given that the customer was the one triggering this termination (and the notice is two years long) Aarti said that it will be getting a compensation between $120 to $130 million (approximately upto Rs. 986 crore). This entire compensation amount, Gogri said, will be received by March 2022. 

The active ingredient is already being manufactured by many other suppliers, Gogri added, while Aarti Industries manufactures the intermediary.  "We will be commissioning the plant nonetheless, as there are other end users," Gogri said, "we are considering different scenarios, which may be us tying up with companies who manufacture this ingredient and supply the intermediary, or set up our own active ingredient manufacturing. We are looking at the different scenarios and deciding which one to adopt." 

As of now, Aarti had created substantial additional capacity for this contract, at a cost of Rs. 400 crore on the new plant.

In the absence of the large contract, there are not enough customers to purchase the entire additional capacity as yet. "The other end users are now relatively small - we can in the short term probably use 15-20% capacity of the newly commissioned plant for this," Gogri said, "We will reach full capacity, but we are not sure which year we will reach this capacity."