Neogen Chemicals – Niche player in specialty chemicals

Neogen Call on acquisition of manufacturing technology licence for electrolytes from MUIS

1. Collaborated with the global leader of electrolyte MUIS. They have 30 years of experience in Electrolyte and worked with the majority of the cell producers in the world and they are the market leader. For Neogen it will reduce approval times with Indian Lithium Ion Battery makers.

2. Neogen will obtain the licence 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 upto 30,000 MT per annum.

3. Neogen is the first company to receive the first-ever licence issued by MUIS of electrolyte manufacturing technology anywhere in the globe.

4. The licence fees will be paid as a one time fee for 30,000 MTPA and after this 30k capacity for every additional capacity of 10,000 MTPA they will need to pay licence fee for every additional 10k capacity. The licence fee will be capitalised, the payment will be made on the basis of completion of plant capex in next 1 to 2 years in a staggered manner as per the agreement.

5. As per the agreement MSUI will provide and help in manufacturing of the plant with designing, maintain stringent quality, will provide detailed SOP, training from MSUI on how to run the plant, will help in efficiency and speedup the manufacturing. They will also be involved in the startup of the plant like for the first few products on how to produce and manu.

6. The previously announced capex for electrolyte was 10,000 MTPA. As of now they have not decided on how much capacity to put in, should they go with 10k initially and then ramp it up to 30k MTPA or put it directly at a capex of 30k MTPA. This will be decided in the next few months after discussion with the customers and getting an idea on the demand scenario after signing this agreement.

7. The licence fee which they need to pay is on the basis 30k MTPA capacity, so even if they go with lower capacity they have to pay full fee as per agreement.

8. It will help the company to have a fully backward integrated plant for electrolyte and with better quality.

9. This technology will be only for electrolyte in the domestic market, they can’t set up plants outside India without their permission as per the agreement. Even they can’t sell the products outside India without permission from MSUI.

10. Currently this agreement is only for plant commissioning, in future they can also obtain the secondary licence for any specific product or recipe from MSUI or Mitsubishi as per the requirement of the customer. MSUI has hundreds of recipes for different products which they produced in 30 years, each particular cell design has a different recipe.

11. There is no any limitation on purchase of raw material or selling of products in the domestic market. Neogen will also work with the MSUI on marketing and to obtain orders from the customers.

12. Transport of electrolyte is very difficult as they need specialised tanks for transport, so say if one wants to import 30k from Japan then the amount of these special tanks will cost the same as the cost of the plant.

13. Electrolyte will have a shorter working capital cycle as compared to the current business of Neogen.