Neogen Chemicals Limited (Neogen), one of India’s leading manufacturers of bromine-based and lithium-based specialty chemicals, has signed an agreement with MU Ionic Solutions Corporation, Japan.
MU Ionic Solutions (MUIS) is a joint venture (JV) between Mitsubishi Chemical Corporation (MCC) and UBE Corporation and is a group company of the Mitsubishi Chemical Group (the group).
The company operates out of its three manufacturing facilities located in Mahape, Navi Mumbai in Maharashtra; Dahej SEZ, Bharuch and Karakhadi, Vadodara in Gujarat.
The group is one of the global leaders in electrolytes used in lithium-ion batteries with a strong track record of 30 years and has 5 electrolyte manufacturing plants located in Japan, USA, UK and China.
As per the terms of the agreement, Neogen will obtain the license from MUIS for proprietary and confidential manufacturing technology for making Neogen’s electrolyte solutions at its manufacturing facility in India with a planned max installed capacity of up to 30,000 MT per annum.
These electrolytes will be targeted by Neogen to meet the growing demand of lithium-ion cell manufacturers in India.
The agreement will allow Neogen to ensure that the manufacturing plant meets stringent global standards for quality, reliability, safety and efficiency for electrolytes production.
It will also help Neogen to greatly reduce approval times with lithium-ion battery makers.
Neogen is the first ever recipient of a license for electrolyte manufacturing technology by MUIS. It will be the first Indian company to have a proven technology to manufacture electrolytes at scale for lithium-ion batteries in India.
Key terms of the agreement
As per its agreement with MUIS, Neogen will have perpetual rights to manufacture electrolytes up to 30,000mt per year in India (in a phased manner, proportionate to the growth in demand). It will pay a one-time license fee to MUIS to access this proprietary technology and will not have to incur any royalty payments for manufacturing and sale of electrolytes.
However, it has not disclosed the commercial terms of the agreement. It has the option to raise capacity beyond 30,000mt, for which it will have to pay an additional license fee yearly for every 10,000mt.
As per the management, commercial production of electrolytes will commence from FY25-FY26. The bulk of its 10,000mt capacity expansion will be undertaken via this acquired technology. After assessing customer demand, it will decide on capacity expansion beyond 10,000mt. Despite this announcement, the management has not revised its revenue and margin guidance.
This development will strengthen Neogen’s competitive position in the EV space and reduce the approval time for products.
“Since the commercial production of electrolytes is expected to commence in FY26, this deal will not impact our FY24/FY25 estimate materially. However, we may revisit our estimates when further clarity emerges,” it said.
Beyond FY24, growth to be driven by:
i) Capex of INR150cr undertaken in FY23,
ii) Large brownfield and greenfield expansion of its electrolyte and lithium salts capacities, and growth opportunities in its advanced intermediaries and custom synthesis business.
Over the years, Neogen has expanded its range of products and at present, manufactures an extensive range of specialty chemicals which find application across various industries in India and the world. It has a product portfolio of over 242 products.
Its products are used in pharmaceutical and agrochemical intermediates, engineering fluids, electronic chemicals, polymer additives, water treatment, construction chemicals, and aroma chemicals, flavours and fragrances, specialty polymers, chemicals and vapour absorption chillers, original-equipment manufacturers and new upcoming usage in lithium-ion battery materials for energy storage and electric vehicles (EV) application.
Shuchi Nahar is a Certified Research Analyst. She can be found on Twitter at @shuchi_nahar
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