Key takeaway from analyst concall
# Neogen Chemicals has signed an agreement with MU Ionic Solutions Corporation or MUIS, Japan to obtain the license for proprietary and confidential manufacturing technology for making electrolyte solutions at its manufacturing facility in India.
# MUIS will provide the manufacturing technology & plant design.
# Neogen has to pay a one-time license fee to MUIS to use the technology to produce maximum 30KTPA. Whenever Neogen wants to increase the capacity over 30KTPA, the agreement can be negotiated by paying additional license fee.
# The agreement is a perpetual one as Neogen can add the capacity by paying additional license fee as it plans to expand over 30KTPA.
# The agreement only allows Neogen to use the technology to make electrolytes for Indian consumption. These electrolytes will be targeted by Neogen to meet the growing demand of lithium-ion cell manufacturers in India.
# Commercial production is expected in 2025. Neogen will have full rights over raw material sourcing as well as marketing of the product.
# With this arrangement, Neogen will be the first Indian company to have a proven global technology, to manufacture electrolytes at scale for lithium-ion batteries. This will help Neogen to be fully backwardly integrated in the electrolyte manufacturing space.
# Neogen will announce a Capex regarding this agreement after evaluating and understanding the demand of its customers.
# This agreement will also enable the company to set up a manufacturing plant to meet stringent global standards for quality, reliability, safety.
# MUIS is a JV between Mitsubishi Chemical Corporation (MCC) and UBE Corporation and is a group company of The Mitsubishi Chemical Group
# The rationale behind choosing MUIS is its global leadership, brand standing and vast experience in the electrolytes business. MUIS has over 100 electrolyte recipes which gives Neogen a large basket of electrolyte formulations to offer to its customers.
# We believe that this is a positive development as it gives the first mover advantage to Neogen and its association with one of the global leaders in electrolyte manufacturing will help to garner interest and confidence amongst its Indian customers.
