The Indian chemical sector continues to witness strategic investments and expansion plans as companies strengthen their manufacturing capabilities and capital structures. In a recent corporate development, Deepak Nitrite Limited has announced a significant ₹100 crore investment in Deepak Chem Tech Limited through its subsidiary Deepak Phenolics Limited. The development was disclosed to BSE Limited in compliance with SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, highlighting the group’s ongoing efforts to expand its footprint in the chemical industry.

The investment represents an important internal capital restructuring within the Deepak Nitrite group and aims to support the growth and expansion of its subsidiary Deepak Chem Tech Limited. The transaction involves the issuance and allotment of 1,00,00,000 9% Optionally Convertible Redeemable Preference Shares (OCRPS) with a face value of ₹100 each, aggregating to a total value of ₹100 crore. These shares have been allotted by Deepak Chem Tech Limited to Deepak Phenolics Limited, which is another wholly owned subsidiary of Deepak Nitrite Limited.

Understanding the Structure of the Investment

The investment structure is based on preference share allotment. Deepak Chem Tech Limited issued 1 crore OCRPS at a price of ₹100 per share, which were subscribed by Deepak Phenolics Limited. The total value of this share allotment is ₹100 crore, and the shares carry a 9% optional convertible redeemable preference feature.

This type of financial instrument is commonly used in corporate finance because it allows flexibility in funding. Optionally Convertible Redeemable Preference Shares provide the option to convert the shares into equity at a later stage or redeem them after a specified period. This provides companies with financial flexibility while maintaining control over ownership structures.

In this case, the allotment has been made at par value, meaning each share has been issued at its face value of ₹100. The investment is considered to be on an arm’s length basis, even though both companies involved in the transaction are part of the same corporate group.

Role of Deepak Nitrite Limited in the Transaction

Deepak Nitrite Limited is the parent entity in this transaction and is a well-known name in the Indian chemical industry. The company has established itself as a major manufacturer of chemical intermediates, phenolics, and performance chemicals used across various industries such as pharmaceuticals, agrochemicals, dyes, and petrochemicals.

Through its subsidiaries, the company has been expanding its production capacity and diversifying into new segments of the chemical sector. Deepak Chem Tech Limited is one of the newer subsidiaries of the group that focuses on advanced chemical manufacturing, particularly in the area of fluorination chemistry.

Prior to the allotment of preference shares, Deepak Nitrite Limited already held 100% of the equity share capital of Deepak Chem Tech Limited. After the allotment, the structure remains largely unchanged in terms of ultimate control. The parent company continues to hold full equity ownership while the preference share capital is held indirectly through Deepak Phenolics Limited.

This means that Deepak Chem Tech Limited continues to remain fully owned within the Deepak Nitrite group, maintaining a consolidated ownership structure.

About Deepak Chem Tech Limited

Deepak Chem Tech Limited is an emerging player within the chemical manufacturing segment and operates a state-of-the-art fluorination plant in Gujarat. Fluorination technology is an important component in the production of advanced chemicals used in pharmaceuticals, agrochemicals, electronics, and specialty materials.

The company has been actively pursuing multiple projects across various sites in Gujarat. These projects are part of the broader strategy to strengthen the group's manufacturing ecosystem and cater to the growing demand for specialty chemicals in both domestic and international markets.

Although the company is still in a relatively early phase of development, its operational growth trajectory is visible in its financial performance.

According to the disclosed financial data:

• FY 2024-25 turnover: ₹9.43 crore

• FY 2023-24 turnover: ₹0.86 crore

• FY 2022-23 turnover: Not available

This increase indicates that Deepak Chem Tech Limited is gradually ramping up its operations and production capabilities.

The company was incorporated on October 9, 2020, and since its establishment, it has been focusing on developing cutting-edge chemical technologies and building manufacturing infrastructure.

Purpose of the ₹100 Crore Investment

The ₹100 crore investment in Deepak Chem Tech Limited has been made primarily to strengthen the capital base of the company. According to the corporate disclosure, the funds will be used for:

• Supporting ongoing project expenses

• Enhancing financial stability

• Funding expansion activities

• Meeting general corporate purposes

Such capital infusions are common within corporate groups when a parent company or one subsidiary wants to accelerate the development of another entity within the group.

The funding ensures that Deepak Chem Tech Limited has sufficient financial resources to pursue its projects and expand its manufacturing infrastructure.

This also aligns with the broader strategy of Deepak Nitrite Limited to strengthen its position in the chemical industry through vertical integration and advanced manufacturing capabilities.

Regulatory Compliance and Disclosure

The investment was disclosed under Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Companies listed on stock exchanges in India are required to inform investors and regulators about any significant corporate developments that may impact their financial position or strategic direction.

By submitting the disclosure to BSE Limited, the company has ensured transparency regarding the transaction.

The filing also clarified that no governmental or regulatory approvals were required for this investment. This means the transaction falls within the internal financial and corporate structure of the group and complies with existing regulations.

Related Party Transaction Explanation

Because both Deepak Chem Tech Limited and Deepak Phenolics Limited are subsidiaries of Deepak Nitrite Limited, the investment qualifies as a Related Party Transaction (RPT) under the provisions of the Companies Act, 2013 and applicable Indian Accounting Standards.

However, the company clarified that the transaction was executed on an arm’s length basis. This means that the terms of the deal are fair and comparable to what would have been agreed upon between unrelated entities in a similar situation.

Such disclosures are important for investor confidence because they demonstrate that corporate governance standards are being maintained even in internal transactions.

Chemical Industry Context

The Indian chemical industry has been experiencing strong growth in recent years. Several factors have contributed to this expansion, including:

• Increasing domestic demand for specialty chemicals

• Global supply chain diversification away from certain regions

• Government initiatives supporting manufacturing growth

• Rising export opportunities

Companies like Deepak Nitrite Limited have been actively investing in advanced chemical manufacturing technologies to capture these opportunities.

Fluorination chemistry, which is being developed by Deepak Chem Tech Limited, is particularly significant because fluorinated compounds are widely used in pharmaceutical drugs, agrochemicals, refrigerants, and advanced materials.

This makes fluorination plants strategically important assets in the specialty chemicals industry.

Impact on Deepak Nitrite Group Strategy

The ₹100 crore capital infusion highlights the long-term strategic vision of the Deepak Nitrite group. Rather than relying solely on external acquisitions, the group is focusing on building internal capabilities through its subsidiaries.

By investing in Deepak Chem Tech Limited, the group is strengthening its presence in advanced chemical manufacturing segments that have high growth potential.

Such investments allow companies to:

• Develop proprietary technologies

• Build specialised manufacturing facilities

• Expand product portfolios

• Enter new global markets

This approach can help the group improve its competitive position in the global chemical industry.

Corporate Ownership Structure After the Investment

Before the transaction, Deepak Nitrite Limited already held 100% of the equity share capital of Deepak Chem Tech Limited. After the allotment of preference shares to Deepak Phenolics Limited, the structure remains largely unchanged in terms of ultimate ownership.

The parent company continues to maintain full control over the subsidiary through its equity shareholding.

The preference shareholding held by Deepak Phenolics Limited represents an internal financial arrangement within the group rather than a transfer of ownership.

Therefore, Deepak Chem Tech Limited continues to remain a wholly owned subsidiary within the Deepak Nitrite group.

Financial Strengthening Through Internal Funding

Large corporate groups often use internal funding mechanisms to strengthen subsidiaries that are in expansion or development phases.

In this case, the ₹100 crore funding provides financial stability and capital support to Deepak Chem Tech Limited, enabling it to continue its infrastructure development and production expansion.

Such financial arrangements are beneficial because they allow companies to:

• Reduce dependence on external borrowing

• Maintain financial control within the group

• Accelerate project execution

The investment also signals confidence by the parent group in the long-term potential of Deepak Chem Tech Limited.

Future Outlook

The chemical sector is expected to remain one of the fastest-growing segments in India’s manufacturing landscape. With increasing demand for specialty chemicals and advanced chemical intermediates, companies are focusing on expanding capacity and developing new technologies.

The ₹100 crore investment in Deepak Chem Tech Limited positions the company to benefit from these industry trends.

As projects progress and production capacity increases, Deepak Chem Tech Limited could play a crucial role in the growth strategy of Deepak Nitrite Limited.

The establishment of fluorination capabilities also provides the group with opportunities to enter high-value segments of the chemical market.

Conclusion

The announcement of Deepak Nitrite subsidiary investing ₹100 crore in Deepak Chem Tech Limited represents a strategic step toward strengthening the group’s manufacturing ecosystem and financial foundation.

Through the issuance of 1 crore optionally convertible redeemable preference shares, the company has provided capital support to accelerate project development and operational growth.

With Deepak Phenolics Limited participating in the funding and the parent company retaining full ownership control, the investment reinforces the integrated structure of the Deepak Nitrite group.

As the Indian chemical industry continues to expand, investments like these highlight how companies are preparing for the next phase of industrial growth by building advanced manufacturing capabilities, strengthening capital structures, and investing in high-technology chemical production.

The move ultimately reflects the group’s commitment to long-term expansion, innovation, and leadership in the chemical sector, while ensuring that Deepak Chem Tech Limited receives the necessary financial support to achieve its strategic goals.

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