Ladies and gentlemen, good day and welcome to Neogen Chemicals Limited conference call for analysts and investors. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Nishid Solanki from CDR India. Thank you, and over to you, sir. Thank you. Good evening, everyone, and welcome to Neogen Chemicals conference call for analysts and investors to discuss the business updates. Today, we are joined by senior members of the management team, including Dr. Harin Kanani, Managing Director, Mr. Anurag Surana, Director, and Mr. Ketan Vyas, Chief Financial Officer. We will commence the call with initial thoughts from the management team on the development, post which we shall open the forum for question and answer where the management will be addressing queries of the participants. Before we begin, I would like to share our disclaimer here. Certain statements made or discussed on the conference call today may be forward-looking statements. The actual results may vary from these forward-looking statements. A detailed disclaimer in this regard is available in the press release that has been shared earlier. I would now like to invite Dr. Harin Kanani to share his perspectives. Thank you, and over to you, sir. Thank you, Nishad. Good evening, everyone. Thank you for taking out the time to join us today on this call. It's a historic and proud moment for all of us at Neogen Chemicals today as we collaborate with one of the global leaders of electrolyte to steer our growth initiative around lithium-ion battery chemicals. We have signed a landmark agreement with MU Ionic Solutions Corporation, Japan, MUIS in short, to acquire a technology license for manufacturing electrolytes in India. I'm elated and honored to share that MUIS has chosen Neogen Chemicals for issuing the first-ever license anywhere in the world for the manufacturing technology for electrolytes. This speaks leaps and bounds of our experience and decades of long expertise in lithium chemistry. Not only will this agreement allow Neogen to ensure that the manufacturing plant meets stringent global standards for quality, reliability, safety, and efficiency for electrolyte production, but also help in greatly reducing the approval times for lithium-ion battery makers. Let me now give you some background on MUIS. MUIS is a JV between Mitsubishi Chemical Corporation and UBE Corporation and is a group company of Mitsubishi Chemical Group, which is a Japanese conglomerate as we know. The group is one of the global leaders in electrolytes used in lithium-ion batteries and with a strong track record of 30 years and has five electrolyte manufacturing plants located in Japan, USA, UK, and China. I will share some details of the agreement. As part of the contract, Neogen Chemicals will obtain a perpetual license from MUIS for proprietary and confidential manufacturing technology, which is globally acclaimed for building Neogen's electrolyte solutions manufacturing facility in India with a planned installed capacity up to 30,000 metric tons per annum. The commercial production for which is expected to start in 2025. These electrolytes will be sold in India and meet the growing demand of lithium-ion cell manufacturers here. This arrangement will give us a competitive edge and also a first-mover advantage, as we will be the first Indian company to have a proven global technology to manufacture electrolytes at scale for lithium-ion batteries. With this, we will have full backward integration from manufacturing electrolyte to its major raw material, that is lithium salts. We will leverage our deep relation with lithium suppliers to offer high degree of indigenization to battery manufacturers, thereby reducing the dependence on China for battery raw materials. That ends my initial remarks and updates. I would now request the moderator to open the forum for Q&A. Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants, you may press star and one to ask a question. The first question is from the line of Manish Gupta from Solidarity. Please go ahead. Good afternoon. Thank you for the opportunity. Dr. Harin, when you say it's a perpetual license, you also mentioned that, you know, the capacity is going to be 30,000 metric tons. Is this license limited to 30,000 metric tons or over time as much as you can produce? Thank you, Manish. The license currently is for 30,000 metric tons per annum. As and when we want to increase capacity, in the agreement, there are clauses built in that for every additional 10,000 metric tons per annum, we have to again pay a particular license fee, from time to time, and then we can keep increasing capacity. It is a perpetual license for 30,000 metric tons per annum, and for every additional 10,000 metric tons per annum, there is a agreement fee which we need to pay. If there is a upgrade in technologies over future, that has to be discussed separately at the time when we are setting up additional capacity. Okay. Will you be disclosing the commercial terms on this? Like, it may or may not be... Is it linked to revenue? Will you be disclosing any details on that? Unfortunately, as part of our agreement, we are not able to share the exact commercials, but as I explained, this will be like a one-time fee, which we will be paying. It will be basically like a CapEx, like, you know, to build this CapEx, the technology that we require, which we are getting. It will be part of our capital expenditure. Okay. Dr. Harin. For the manufacturing technology, there is no royalty which we have to pay down the line. Okay. Second question was, can you explain a little bit more about how now your raw material for batteries is derisked from China? Is it that you will be sourcing all the raw materials now from Japan? No. This is basically the manufacturing technology license. The raw materials, which will be basically be a Neogen choice as long as it meets the whatever minimum requirement of quality which we or, let's say, MUIS would recommend for achieving the quality. The raw materials can come from anywhere as long as they meet the minimum quality requirements that we have. We already had suppliers from India. Planning the key raw material, the salt, we were already planning to make ourselves, so that continues to remain the plan. For other some of the lithium-based additives also we are planning to make ourselves. But for the non-lithium, we had suppliers in Japan, in Korea, in China. It will be a mix of that. There are a few Indian companies also who might start making solvents or additives in future, and we'll be happy to work with them as well, as long as they meet the requirements. Okay. My third question and final one, Dr. Haren, was that, you know, China has much higher scale in India in salts, right? I read somewhere that China has 95% of the world's capacity for salt. If there is an Indian company that ties up with a Chinese company for salt and they import the salt into India and they use solvents locally to produce the electrolyte, would they not be far more cost competitive compared to you, even assuming some import duty just because of the massive scale that China has? Yeah. You know, when we have looked at historical stable price of China, of the lithium salt versus, let's say, the price of the salt made by a Japanese or a Korean manufacturer, mostly what we have seen is the difference is around 15%-20% in the price between the two sources. We feel with, you know, Indian manufacturing cost advantage over, let's say, Japan or Korea, we would not be too expensive as compared to China on a stable, like price. You know, of course, when we work with China, even internationally for our even pharma intermediates for last 20 years, China can make prices which are very low and very high. You know, at that point of time, you can't always match them. Like, you know, like on a stable basis, what we have seen is that our cost should not be very high. It's not, like, you know, it's not the same as compared to the Chinese salt production. We believe that, you know, with the backward integration. The other thing would be that, you know, people who are part of PLI would require at least like ideally a 60% plus kind of a valuation. It will be very difficult for somebody to just import everything and mix it in India, okay, and, do that, and meet the 60% criteria. The final bit will be, you know, that you need to be assured that the quality of whatever salts are coming from China are meeting. If you're going for a quality Chinese production, you know, again, the cost differential might not be too high. This is our assumption. If I may slip in two more questions, Dr. HarIn. One is that within, this, with this technology tie-up, does it also include any, contract manufacturing opportunities, for you, for the global market? You know, this technology is mostly for electrolytes and our main focus for electrolyte formulations is for India. Therefore, you know, this would not directly like, you know, open up contract manufacturing per se. However, you know, in some sense it can help in a soft way in a sense that, you know, this shows the confidence which, let's say, global companies have in Neogen's capabilities for building the plant with the complex plant of global standards. Indirectly it may help us in our, like, you know, salt production for the international kind of an application. Okay. My last question is that, given that, you know, you have said now signed these technology agreements with output kind of milestones, basis what you know today, what is your best guess by which time you think you can hit 30,000 metric tons? You know, this is too new, we would still stick to what we had said of, you know, guidance which we have given for 10,000 metric tons per annum to reach by FY26 and FY27. But again, this was before the agreement. Now that the agreement is signed, we wish to basically go to our customers again, see, like, you know, how many customers sign up and what are their projections. Once we have their projections, based on that, we'll able to decide how the 30,000 metric ton will be reached. Will it be in phases? Will it be direct? Accordingly we'll take a decision on that. Okay. Thank you, and congratulations. Thank you so much. Thank you. Next question is from the line of Tarang from Old Bridge Capital. Please go ahead. Hi, good evening. Three to four questions from me. One, will we see applications in NMC batteries or LFP or both? The electrolytes that we'll be producing will be for both and other cathode chemistries also. The electrolytes are common. However, the recipe for each one is different and the composition will be unique, but this plant will be able to produce for both. At electrolyte level, only the mixing changes, but the technology remains more or less similar, whether you are making for NMC or for LFP. Okay, got it. Actually, I had a follow-up on similar lines. The output, the 30,000 times output, will it be homogeneous or will it be heterogeneous, depending on the customer and his requirements? We have a 30,000 metric ton per annum as plant for multiple customers and multiple recipes to be produced in the plant. It'll be heterogeneous, right? Yes. Okay. Just a couple more. Typically, on a per ton or per kg basis, what is the dollar value that you are anticipating? Secondly, how long was this interaction in the offing? I mean, what were the considerations from your partner side to sort of select you? My sense is that there would have been other players as well. If you could just, you know, give us some sense on that. Yeah. You know, actually the specific electrolyte price depends a lot on the composition and the purity. You have electrolytes which are used for very high-end use, where the quality requirements are very stringent. Also important for the battery life and the quality and the performance of the battery. The electrolyte price keeps varying. I would still request you to use our prior guidance that when we hit 10,000 metric ton per annum with some extra salt capacity, we are looking at a revenue potential of around INR 1,000-1,200 crores. Maybe take some kind of an idea with that. It's difficult to give you a very specific number because of the variation in this heterogeneous electrolyte composition which we discussed, as well as the volume. In regards to your second question, yeah, why they chose us. I think, you know, I mean, we basically demonstrated to them our ability and expertise to make lithium ion salts. Like, you know, we've been doing that for last 30 years. Also, we were preparing on this for last two to three years. We had done our homework. As I said, on our own also, we had already made samples, and we were able to submit samples to our customers. We feel, you know, just the fact that we've been. Like, we approached them for quite some time back. You know, our homework which we had done in terms of making the salts, the technology development and the understanding that we really had, as well as, you know, the fact that already most of the customers were in touch with Neogen. We think it's a combination. They never said a specific reason why they chose us. But if you get a chance sometime, please ask them and let me know if there is something additional to this. Got it. Last, how much is the CapEx that you are anticipating for this capacity? See, again, I would point to our last guidance, which we have, which is, like, for meeting the 10,000 metric ton per annum capacity as well as the electrolyte salts required for that. With our own technology, we estimated around INR 450 odd crores of CapEx. Now there are two things we have to. Like, you know, in next couple of months, we need to basically work with our customers to understand, okay, is it gonna be 10,000 and then 30,000 or 15 and 30 or directly 30, et cetera. Like, you know, are we doing in phase? Are we doing directly? Also, we need to understand what is the difference between our technology and their technology, and to some. Like, we have some idea, but to what extent there will be additional CapEx required. It'll be more appropriate for me to share a more specific number once we have the basic, first few exchanges with the customers as well as with them, and then we go to our board, get our plans approved, and then share the revised CapEx plans and revenue plan. Okay. Thank you. Thank you. Thank you. Next question is from the line of Noel Vaz from Union Mutual Fund. Please go ahead. Yes. just to, I mean, just point a little bit further. regarding the, Noel, sorry to interrupt you. Your voice is not coming very clear. I'll return to queue then. Yes. Thank you. Next question is from the line of Nilesh Ghuge from HDFC Securities. Please go ahead. Hi, Hari. Congratulations. Thank you, Nilesh. Yeah. Hari, my question is on the electrolyte. See, electrolyte, they produce by using this technology constitute what% of total existing electrolyte produced globally? You know, what I know is that, as I've shared in our press release and the slide deck which went with that they currently have, they are already having plants in Japan. They have a plant in Europe, US, as well as China. Totally they have five plants which they are operating. They are operating for 30 years. Like, you know, because, like, there's no very clear percentage market share globally, which is very clear. In some reports, I have seen it as a 20% market share, but there's no specific number which has been given worldwide. What we know is that, you know, they are one of the oldest. They've worked with almost majority of the cell producers of the world. Like, you know, they are really looked up to as a market leader or a global leader for electrolyte production. Okay. I mean, apart from this, let's assume that they have 20-25% market share. Apart from this, the leading manufacturer, the 30-year experience in it. Apart from that, is there any, you can say synergy between your way of producing electrolyte and their... That's the reason you go with them, whether you want to go with the MU Ionic Solutions? Is it so? Yeah, the main motivation behind this is that, look, as we have said also earlier in the call that while Neogen has been preparing for quite some time, we are working with our customers, we are learning. If we partner with somebody who already has a 30 years of experience, we can like, you know, increase our learning to global scale much faster. Like, you know, if on our own, if you would have got it right first time, 98%, 99%, with a partner we can do that 99.9%, 99.99%, right? This gives a lot of comfort. While, you know, customer can sell us, approve a sample from our lab, but you know, again, there will be question if Neogen will be able to produce the same at a commercial scale. If the commercial scale is being built by somebody who has already made plants in 5 different locations and supplying successfully from there, then that gives the comfort to our customers. I think, you know, that's the main motivation. Outside of China, like when you said 20-25% world over, if you look at outside of China, I mean, the market share percentage is much, much higher. Okay. Any idea how big the other plants are, other five capacities are? Sorry, their plant capacities? Yeah. I'll have to check. You know, they are in tens of thousands of range. Okay. Yeah. I don't know if that's a public information which they've shared with everyone. Maybe, let me check and come back. They are of a similar scale as what we are planning. Some are slightly bigger, some are slightly smaller, depending on the time when they were set up. Just, last question, Doctor. See, this MU Ionic Solutions, will they help Neogen in marketing this electrolyte, in India, in any way? Yeah. We have plans where, you know, we can discuss with our customers jointly, et cetera. Again, as far as the agreement is concerned, the main intention is, you know, they're providing a comfort that whatever quality and the capacity which is designed for will be met. You know, that is the main comfort which we'll get out of that for the customer. Okay, thanks. Thanks a lot. Thank you. The next question is from the line of Yash Shah from Investec. Please go ahead. Hi, sir. Congratulations on this development. Sir, my question was, now the additional of the 10,000 tons, we've already set up 250 tons. The additional 9,750, this is more of a clarity question. The 9,700 tons which are going to come, will, the MUIS technology will be incorporated in that. Is that right? The understanding is correct? Yeah. Yeah. You know, now especially the greenfield plant that we were basically planning, we plan to build it using the MUIS technology. Like the new plant. The intermediate trial plant, we'll have to go ahead and see. The large plant which we were planning, the bulk of the 10,000 metric ton that we are planning will be with this technology. Okay. Basically how our schedule was divided was that the 5,000 tons will come in H1 of 2026. Are this technology is also coming in 2026? Like mostly 2025 calendar year, that's mostly 2026, FY26. Yeah. The 5,000 tons of the 10,000 tons will come in MUIS. The rest 5,000 will be using our technology itself. The understanding is correct, right? Yeah. We'll basically, you know, relook at our plans with this, and we'll just make sure that, and also we'll have to talk to our customer and customer demand. Based on that, we'll try to see that the majority of the capacity which is coming online, is coming online with the MUIS technology. Okay. Okay. Got it, sir. Sir, another question was, I just wanted to understand what kind of barriers our competitors could face, if they have to basically enter into a similar kind of a tie-up with, global majors like how we have done it? What are the other barriers you think our competitors can face which give us an edge? You know, I earlier answered a question why they chose us over others. It's very difficult. I mean, this is a technology which people don't give out very easily. You know, they guard this technology very strongly. First of all, convincing somebody to part with this technology, giving them the confidence that you'll use it properly and, you know, the products which will be made using this will be good. It requires a lot of convincing to do. It took us many visits, you know, many interactions with the customers to get to that point. I think that would be the main challenge. Got it. Got it, sir. That's all from my side. Thanks once again. Thank you. Next question is from the line of Noel Vaz from Union Mutual Fund. Please go ahead. Yes. Can we hear now? Yes. Yes. I just wanted to just be more specific on the exact CapEx and the capacity. The earlier guidance regarding capacities and CapEx stand, there's no upward revisions in government, right? Noel, as I mentioned that, you know, currently what we had shared was 10,000 metric tons per annum, INR 450 crore CapEx, including the salts. With this announcement, we'll have to again go back and talk to our customers and see whether we need 10,000 or we need more, or like, you know, what is the capacity which is needed in the same period of time. Of course, that 10,000 was also gonna get increased. One is, you know, basically we need to redetermine whether it is 10,000 or more than 10,000. The second point is gonna be that was with, you know, Neogen's own technology. We also have a Japanese technology, so there'll be some components of the technology or the CapEx requirement will be slightly different. We'll have to put both these. Once the agreement is there, we can have little more open. We have a approximate broad level idea, but we need some more additional details which be clarified once the license is signed. Over the next few months, once we get this information from them, then we can have a revised, basically how the CapEx is going to understand, like, how the capacities are going to build and what is going to be the CapEx required for that. rstand, so our margins regarding views for margins, return ratios, it's roughly still the same as Neogen's technology or say the new technology in terms of the end result. I think it should not be. There's no major deviation as such. I mean, that's just to recommend it Yes. I mean, the intention is and, like, you know, the target should be to maintain the same margin levels. Okay. Understood. Yeah, that is all from my side. Thanks. Thanks, sir. Thank you. Next question is from the line of Nitin Tiwari from Yes Securities. Please go ahead. Hi there. Good evening. Thanks for the opportunity and congratulations on signing of this agreement. Thank you, Nitin. Yeah. My questions are actually very basic. What my understanding went for electrolyte was that the primary component of that electrolyte is actually the salt, right? That understanding is correct. Yes. That's alls is still something which you are going to manufacture. That's not a part of this technology. That is your core competency that you'll still be doing as per your earlier established plan. Yes, that's correct. Sir, what I'm trying to understand is that what basically changes, I mean, like, you know, from the electrolyte salt onwards in terms of technology that, you know, making this agreement, a sort of a value add vis-a-vis what we were already planning to do? Sure. Nitin, see, basically what the customer is going to be finally using is the electrolyte. What is going inside the cell is the electrolyte. Of course, salt is where we need to control purity, control impurities. You know, this entire process of making very accurate composition of the electrolyte which is required as per customer, like, you know, again, from a batch to batch basis. This consistency from batch to batch ensuring that each lots are meeting the exact specification. Now, let's say you have an additive which is used like 0.5%, right? 0.5% or even 0.05%. The accuracy of that, the variation which is allowed in that is like 0.005%. This level of precision, repeatability, something which at a commercial level we were basically trying to do on our own. Now if we have a partner, there's a bigger confidence in the minds of the customer that, yes, this will be of the same quality or the composition which I want. That peace of mind which you get to the customer. You know, one thing which Neogen missed is that my electrolytes produced in the commercial plant are not used in batteries, let's say for decades. Whereas the electrolytes which are produced by Mitsubishi are used in batteries for decades. They have proven themselves. That proven factor, you know, gives additional comfort to the customer that, yes, if Neogen makes using Mitsubishi's, I mean, MUIS's technology, then Neogen is more... The commercial plant as, will, like, you know, will be in line with the expectations which they are getting. Understood. Basically, this is basically in terms of the process and the additives which go beyond electrolyte salt in terms of manufacturing the complete electrolyte. Is that where the expertise comes in? Yes. Second part of the question is that, like, does this technology license also basically includes the technology which goes in setting up the plant in, I mean, like, you know, in terms of what equipments, what facilities and so on and so forth are going to come up in the plant. Is that also a part of the license? Actually, that is the main part of the license. The license part is going to be how to set up the plant, what should be the specification of the, let's say, reactor, the load cells, the equipment, the sensors. The entire design and like, you know, like if you are mixing also 10 things, which is the order in which you will mix. You will mix for how long. That process and the plant is what is the manufacturing license which they have shared. Separately, as and when, like, you know, my customer wants a specific Mitsubishi recipe, right? They said, "Oh, I want a NUIS recipe number A, B, C, D, E, F, G." We have to go back to them and say, "Okay, can you give us a separate license for the recipe?" The recipe can be either specified by customer or can be proposed by NUIS, so that is a separate requirement. The current requirement is basically setting up the plant. What will be the design of the plant, what will be the process by which we will be doing. It's not only just the design of the plant, but they have another subsidiary which will actually be, a group company, sorry, which will actually be, constructing the main plant where the mixing is gonna take place. It's... It's using the same vendors or same people who have already produced from them in the past. That gives the comfort that the plant is made with the same technology as which it's already operating in other parts of the world. Understood, sir. Sir, the next question is that, given that you mentioned that, you would go back to them in terms of, like, you know, seeking a secondary license for manufacturing of the product, right? Yes. I mean, do they then have a control over who you are going to sell the product to? Can they? Are they going to be a decision maker in that decision, that, you know, where the product is going to get sold? Yeah. Yeah. No. Like, you know, for example, if my customer already has a recipe, I can use my customer recipe, and then I don't have to go back to them. There is no requirement. The only condition as part of this agreement is that this is for supply of electrolytes within India. As I have shared earlier, you know, electrolytes are always, like, supplied locally, so this is again targeted for Indian supply of electrolytes. There is the only restriction is that we can't sell the electrolyte internationally without taking their prior permission. Right. Like, you know, I mean, possibly this is my last question on this. Just, like, you know, continuing this thought a little bit more. What I'm trying to get at is that if the use of this technology and this license, is it going to create any kind of commercial dependency on them in the time to come, where, your decision-making would be impacted by what they decide in terms of, like, you know, either maybe licensing or, like, you know, in terms of, allowing you to use a certain additive or not use a certain additive? I'm just thinking along with you, so you can give some light. No. Yeah. No. There's no commercial dependency of that nature. As I said, the only dependency is that whenever we go beyond 30,000 metric tons per annum, we need to pay them a certain license fee for every 10,000 metric ton per annum additional capacity increase. We have a set number in the agreement which we need to pay to them. The only other requirement is that we can't set up a plant internationally using their technology. These are the two restrictions that we have without taking their prior permission. Again, even if we want to set up internationally, they are happy to discuss with us. As long as there is no overlap or interference with their existing business and subject to conditions, they may agree for an international license as well. Again, our focus right now when it comes to electrolyte is India. That's the only thing which we are thinking. For 30,000 metric tons per annum, we already have a license. Beyond that, for every extra 10,000, we are supposed to pay them a fee. You know, we are free to basically increase capacity in India. Understood. To sum this up, and correct me if I'm wrong in my understanding, basically this license is for setting up the plant and, like in terms of equipment and process flow, and you are basically free to source, your own raw material and to sell the product to whoever you choose to sell. It's just that, like, you know, they're helping you in terms of, manufacturing of the product by sharing with you the tech, like, you know, which is involved in terms of, proportions and so on and so forth in terms of manufacturing of the product. That's right. Yes. You are perfectly right that this is basically on the manufacturing technology on the plant. And then what product gets produced can be with our own recipe, customer recipe, and in case if we are using their recipe in future, we need to get into a separate agreement for that. Otherwise we are free to basically source raw materials from wherever we want, like, you know, as long as they meet their specifications, if they want to guarantee the final output also the customer specs. Otherwise we can basically source it from anywhere else and also we can sell it to anybody in India. Understood. Thanks. That's all here, sir. All the best. This is really a commendable development. Congratulations again. Thank you, Nisit. Thank you. Next question is from the line of Rohit Nagraj from Centrum Broking Limited. Please go ahead. Thanks for the opportunity and congratulations on this landmark development. My first question is, if the PLI plants from the domestic manufacturers get delayed, then how are we safeguarded? We plan to come up with the plant sometimes in 2025. If their plants get postponed and they get delayed to 2026 or 2027, is there any, you know, remedial action that we will have? Thank you. You know, whatever I have talked to customers, I mean, to my customers, most of them need to start or want to start by 2024 or 2025. Like, you know, I don't see them having a Delay going into 2026 and 2027, where all of them are delayed and all of them start only in 2026 or 2027. The second thing is, you know, in such a case, as you said earlier, in case if there's no electrolyte demand, of course, our investment also we will keep reviewing and keep staggering. The second thing also is that the salt, which we are trying to achieve global customers. Salt is where the demand in the market is already there, and that's our kind of plan B, that at least the salt capacity which we will be building for this can be utilized to serve the global market as well. Right. Just an adjacent question to this. Is there any toll manufacturing opportunity from MU, given that their capacities are at a particular level and we are coming up with our newest capacity in case there is demand from other regions and if they are not setting up the capacities in immediate future, we could supply to those particular locations and either to MU or to those customers? Rohit, again, as I mentioned earlier, you know, most of the time the electrolytes are, like, efficiently produced and sold only locally. Therefore, you know, like, mostly the target of this is for the India market. Okay? However, like, you know, specifically if there is a short-term need where, let's say one of the regions of MUIS already has a plant, and if they feel there's a shortage and they want to approach us, that's something we will, you know, discuss at that point in time. And of course, the plant which is designed by them would give them a comfort. Currently neither the intention nor the intent current is that, you know, this will produce electrolytes for MUIS worldwide. Right. The second question is, how many recipes does MU manufacture for different customers globally right now? I don't know. It must be tens or hundreds of them. Yeah. I mean, they have a very wide range of recipes over last 30 years, which they would have produced for all different kinds of cells. My guess is it would run into hundreds. I don't know the exact number for them. just, you know, concurrent question, how many recipes the Indian manufacturers would like to have? I mean, the customers that you're talking to. A single customer will have multiple recipes or they will stick to a single or 2 recipes? Historically what happens is that each particular cell design has a recipe. Like for example, you know, like even especially in the EV segment, if you have a particular model of, let's say particular OEM maker which has a particular cell, once the recipe is finalized, for quite some time they don't change. Suppose like, you know, if there are 3 different kinds of cells or 4 different kinds of cells being produced by the cell makers, they will have 4 different. It depends on the number of customers they will have and the number of models they will be serving. That will decide the number, but it will always be multiple recipes for each given customer. Right. Got it. Thanks a lot for answering the questions and best of luck, sir. Thank you so much, Rohit. Thank you. The next question is from the line of Maheshwari from Morgan Stanley. Please go ahead. Thank you for the call, sir. I have a related question around technology transfer. Can you just talk us a bit about of how you would be kind of getting the know-how transfer as well in terms of manpower, marketing, et cetera? The know-how transfer, so basically first is the design, then detailed SOPs, and then also there will be some training which we will be receiving at their site and some training which their team will provide at our site. Together, combination of this, the design, the recipe, the SOPs, the, like, you know, in-person training and sharing the information. That's how it will. They will also be involved in the startup of the plant. Like, you know, making the initial products which are required by our customers and showing that, they meet the specifications desired by the customer as well as the capacity that we plan is being achieved. That will be part of the technology transfer agreement. On the marketing side, will they be involved as well? We've had some because, you know, we were discussing with Indian customer needs, and they were also discussing some of the Indian customer needs. We plan that like, you know, post this agreement we'll also align our strategies because their main intention is to supply the electrolyte, I mean, this plant to supply the electrolyte to the customer. We will work together with them on the marketing side of it. It's not part of this agreement? This is a MOA signing which we are currently doing. Okay. Got it. Just the last question was in terms of the 30 KT of capacity, what kind of battery capacity that can it support? You know, again, it depends on NMC or LFP. Fair enough. electrolyte, LFP require more electrolyte. Based on whatever numbers we've gotten from customers and, you know, assuming it kind of half enough, we have basically assumed around 950 metric tons per annum per gigawatt hour. This would support somewhere between 30-35 gigawatt hour of cell production capacity. Got it. Clear. Thank you, sir, for answers. Okay. Thank you so much, Mahesh. Thank you. A request to all the participants, please restrict to two questions per participant. If time permits, please come back in the question queue for a follow-up question. The next question is from the line of Amar Maurya from AlfAccurate Advisors. Please go ahead. Yes, sir. Dr., thanks a lot for the opportunity. Couple of questions. First is like, you know, let's say what kind of cost advantage we will be having, let's say, you producing in India and MUIS producing in Japan? You know, each site will have its own cost structure, but the biggest advantage when it comes to electrolyte is that, you know, electrolytes have to be made locally because it requires very, it requires very specialized tanks, and the investment into these tanks is so much that suppose if we wanted to sell same 30,000 metric tons from Japan as opposed to making it in India, the investment into tanks will be almost the same as the investment into electrolyte plant. Therefore, you know, that's one of the advantage. Also the logistic advantage of sending the tank to India and then returning it back. Also just like, you know, practical sense of, like, trying to work with multiple customers, multiple chemistries. All of this is very difficult to do internationally, and this is the main advantage of the plant being in India as opposed to being in Japan. Okay. Secondly, let's say, you know, this license fees, since you are planning to initially, let's say, start with 10,000 or 15,000 metric ton, but you would be paying the license fees for total 30,000 metric ton. Correct? Basically, you know, we've not yet decided. In a sense, what I wanted to say was that our original plan was 10,000 metric tons per annum, which is what we had already announced. Now with this announcement, we'll go back to our customers and make the decision. That will decide whether it's, like, how the capacities are gonna get scaled up. We will come back to you in few months on that. Yeah, I mean, your clarity is correct that the license fee is one time and that license fee is for a 30,000 metric ton per annum plan. Okay. You have not disclosed that license fee, correct? Yes. We have not disclosed that as part of the requirements of our agreement. I got it. Thank you. Fine, sir. Thank you, sir. Thank you. Okay. Thank you. Thank you. Next question is from the line of Ashish from Invest & Invest. Please go ahead. Yeah. Hi. Thank you for this opportunity. I wanted to again understand the roadmap of revenue that you shared, I think INR 1,200 crores by, in 3 years, is it? We are at around INR 650-700 crores run rate right now. What would that be? INR 1,200 crores by? I think, you know, if you go back to our last investor presentation, we have given two numbers there. Our existing revenue, our existing business of pharma intermediates and agro intermediates will also grow between INR 950 crore to like around INR 1,200 crore, depending on the price of lithium. INR 950 crore-INR 1,100 crore, depending on the price of lithium, by FY26 or so. Separately we had said that we are making this INR 450 crore investment into electrolyte and electrolyte salt production, which would reach around 10,000 metric tons per annum capacity. For that, we had shared a revenue projection of around INR 1,000 crore-INR 1,200 crore by FY26, FY27. We are saying that this business adds, I mean, 50% of, I mean, equal to the current business revenue by 2026, 2027. That's. I mean, yeah. I mean, the existing business may still continue to grow and not may, will continue to grow. Yes, this is our- The opportunity in this, again, is the same as the current business to reach in three years. Yes. Okay. That's why we created a subsidiary, because this is going to grow at a very different growth rate as compared to our existing business. We wanted to have that clarity because the CapEx, the performance of this will like, you know, have its own, positives and bounds, et cetera. That's why we've created a subsidiary, which gives clarity to the investors on what's happening in the regular business and what's happening in the battery material business. How would the working capital cycle for this business be? Historically, I mean, we understand that your inventory days have been higher because your inventory has to be in different stages of production than your orders come from customers. Is it similar in this business or this will be more shorter working capital cycle here? This has to be a shorter working capital cycle because, you know, as you shared in the past, the main driver for the higher working capital requirement of our existing business is that we have many products and many customers. We have more than 100 molecules which make every year, and we serve 350, 400 customers. As opposed to that, this will be like lesser number of clients, like 15 or 18. Even if we take average three or four formulations, if we work with all of them also, it's around 35, 40 different formulations. These are like engineering applications, so it's kind of more clear requirement throughout the year. We estimate that the working capital cycle or the complexity in this will be very different and will be improved and better. Should we assume about maybe 100 days or something like that against, say, 150 days plus for the current business? Or is it too early to kind of guess on that? Yeah. I think it's too early, but, you know, I think we've given some guidance around that, like, you know, in our last few calls. Just kindly refer that. Sure. Sure. Sure. Sure. Thank you, sir. Thank you. Thank you. Next question is from the line of Sabyasachi Mukerji from Bajaj Finserv. Please go ahead. Yeah. Hi. Thanks for the opportunity, and congratulations, Dr. Harin. My first question is on the license fee. I understand that you are not disclosing the, you know, quantum of the license fee. Regarding the nature of the payment, will it be a, like a one-time bullet payment or will it be like a milestone basis on revenue recognition? How will it be? It will be milestone basis, but it's basically this is, as I said earlier, is a licensing agreement for manufacturing, right? It is related to manufacturing technology, it'll be part of our CapEx. As we complete our CapEx in 2 years or 2 and a half years, by the time we complete our CapEx, there are some internal milestones of the project, and accordingly the fee will be paid. It will not hit the balance sheet at one time, right? I mean, over the years, next 2, 3 years it will. At one time. Yes, you are correct. Okay. Okay. Next, my second question is, does this technology enhance our efficiency of the manufacturing process or, I mean, does it improve the asset terms and the entire unit economics for the battery chemicals business? Does it help on that side? Yes. We also believe that, you know, with 30 years of experience, which they have, you know, there are a lot of things which also we can learn on efficiency, getting it right, you know, the speed at which we can make electrolyte, what is the best combination. Like, you know, we feel that it will teach us some new things as compared to what we already know and improve. When we combine our knowledge and their knowledge, we will be better off and have more efficient, more reliable, and more from the point of view, you know, reliable. Consistency of supply. When you start something new for the first time, you are likely to make some mistakes. Like in a chemical plant, whenever we scale up, you know, there are bound to be some learning. If you have somebody who has already done such scale- up and who's already doing it at a very large scale, and you can actually go in their plant, learn, or they can come and teach you in your plant, then that's when, you know, we feel the learning will definitely help us be more efficient. Got it. That's very helpful. My last question is, you know, on one of the previous participants also asked that, you know, China is a very large in terms of the battery, the lithium salt and all. I believe Tinci is one of the giants in that. The some of the global cell manufacturers like LG and all, and even I think Tesla have contracts with Tinci. What if, you know, if the same thing happens like in India, like the cell manufacturers, you know, go to contract with the Chinese guys, will it be a threat for Neogen? How do you look at it? See, there is Tinci, but there's also MUIS and then there are more Japanese and Korean companies which are already producing electrolytes and competing against Tinci worldwide. Correct? Like, you know, this is one point I would like you to consider. The second thing is that, like, you know, if Tinci wants to make it from China and then supply to India, like as I've explained earlier, that this has to be a local business and they will have a lot of challenges in terms of like, you know, this cost, the logistical cost and the complexity associated with the transfer of the cylinders going back and forth and the investment which they would have to make. I think these are our moats. The fact that we are here locally. PLI requires local production. It's difficult to do this business internationally. The fact that we are backward integrated into making the salt, and now that we also have a partner who already has a global approval. All of these becomes kind of our moats to be able to be more competitive against international competition. Got it. Thank you. That's all from my side. Thank you. Thank you. Next question is from the line of Alok Ranjan from IIFL Asset Management. Please go ahead. Yeah. Hi, Harin. congratulations. Thank you, Alok. Yeah. First question is, just wanted to understand the technology part more. Whether we were talking to other companies apart from MUIS, and is there a difference between technology of different electrolyte companies, given the same salt and solvent? Is there any efficiency of electrolyte different, taking MUIS technology or taking other company's technology? Whether we were talking to other companies also apart from MUIS? See, would like to clearly say that, you know, of all the companies which are outside of China in electrolyte production or even including China, MUIS was, or like basically Mitsubishi and UBE were the oldest and most regarded for, and in our opinion, has the highest market share and highest number of customers, as compared to anybody else. This is our advantage. Like, yes, we did talk to others, but like the most serious discussion that we've had, has been with MUIS for quite some time now. Whether a particular technology, let's say MUIS technology or let's say other than MUIS, can there be difference in terms of efficiency of the electrolyte which will come given the same salt and the solvent which is there, just based on the technology which will be used to mix it? Yeah. Just the technology with which you are mixing it and then ultimately also what you are mixing, both of these things are important. Of course, right now we are discussing the, like, how to mix part. Again, doing it in an efficient way can ensure one is the productivity and the second is the quality and the consistency. These are the things where the technology will play a role. Also this allows us to then you know, discuss with them about what to mix, and that is the recipes and the specific additives which they use in this. These are, again, each company has its own propriety. Once we start with this, if once we have the plan, then, you know, the opportunity for us to get their recipes for Indian customers with a specific additive, becomes high. They also constantly keep developing new recipes as well. We also like, you know, can work with them for such kind of joint development for India-specific customer requirements. Got it. Second question is there any safeguard from your side, as in whether MUIS will not give technology to any other company in India? Also the associated question is, let's say Tata, which is a leading EV player in India, and they are, they might be currently having a typical recipe, either bought from ABK or let's say MUIS. We need to buy in majority of the case recipe also the secondary also technology part we need to buy. They are the two last questions. I think, you know, the technology procurement will be partly be driven by the customer choice, in the sense that if the customer has his own recipe, then we don't need to buy it. If the customer is depending on a technology partner who has approved MUIS, then we need to separately buy the recipes also. However, you know, again, that will again depend on the choice of the customer. However, you know, the fact that we already have the license from them, whenever we have to do that, becomes more efficient. Because let's say we made it with our own plan and we just wanted the recipe. Again, will our plan be able to produce the right quality of that recipe remains a question. Having their plan gives them the confidence that, yes, this recipe can be more easily be implemented in Neogen, and that makes it easier. Again, it's finally ultimately going to be driven by the customer. Like, some of the customers are doing their own R&D and coming up with their own recipes. If they have the recipe, then only the manufacturing plan gives them the confidence that, yes, this is a globally designed plan, so it will have the safeguards required to meet the quality and consistency of your product. Response to that question in terms of whether MUIS will not give technology to any other company, is there any clause mentioned? You know, this is a perpetual license. Like in our experience, no Japanese company will give a perpetual license which is exclusive for life, right? It's like a, not a exclusive license for life, but like, you know, currently intention is both MUIS and Neogen will work together. So far as we know, they currently have no intentions of, like, you know, licensing it immediately to anybody else. Got it. Just last question if I could squeeze in? Now our focus, since we have, the technology partner, now our focus will be to create more and more recipes, based on the customer specification. That will be the key area of focus. Am I understanding right? Now, you know, our focus really is that once we have this question mark kind of answered to our customer that will Neogen commercial plan be able to produce the electrolyte of the same level of which the samples we have given to them or the recipe which they desire. I mean, once the customer has more confidence, go to this customers, again, understand their requirement and then get a clarity on what the volumes would be, and then accordingly make our plans to basically take care of those customer requirements. Got it. Perfect. Thank you. Thanks, Adeel. Thank you. Thank you. Next question is from line of Sanjay Shen from ICICI Securities. Please go ahead. Thank you. Good evening, sir. Thanks for taking my questions. First on the key raw material. I think the salt we plan to manufacture in-house. What are the key ingredients that we may want to produce in-house and what are the others we want to buy from the market? Salt is, I guess, is 17%-20% of the recipe. There is still 80% of the recipe need to be added to reach to the solution, right? Yeah. you know, basically electrolyte consists of any lithium electrolyte salt, followed by solvents. Maybe three or four solvents are used by the customer. Then between, let's say two or three and as high as maybe four or five additives. It's a mixture of roughly eight or nine components. Historically what we have said is that the electrolyte salt, which is the main component in terms of cost, will be made by Neogen, or our intention is to make it ourselves. The additives also which are needed, if they are lithium-based additives, once we achieve some scale, we would like to make the lithium additives also ourselves. Neogen has already developed several technology for these additives, in-house. When it comes to the solvents, which are the other major components, these are mostly like a petrochemical outcome. you know, this is not like Neogen's key expertise. Either you can buy this internationally or there are Indian companies who have intention to develop these solvents in India because they have markets other than lithium-ion batteries as well. When these get produced in India, there are two things. One, they can be just a commercial grade, but need to get purified to make the, let's say, electrolyte grade. Such purification Neogen may be able to do. If they can already give us the electrolyte grade from the beginning from India, you know, we would directly buy. The solvents will still be bought out. Some of the additives which are like, let's say non, lithium-based, we need to take a call. I mean, Neogen's organic business, can they make that? Whether it makes more sense to buy from the existing. Those will be bought. The lithium salts and the lithium additives which have lithium in it, these are the ones which Neogen intends to make ourselves. Great. Great. My second question is more on the type of the cells which these electrolyte salts will go in. One is EV-based cells, and the other one goes into the consumer electronic which they'll be used extensively lithium battery. The expertise is equally strong in both the applications for the NVOs? Mm-hmm. Yeah. Technically we can use the facility for both. Although, you know, I think, our major target has been, I mean, at least my understanding is most of my customers' major target has been for either EV or the energy storage. These are the two applications because the majority of the volume is coming from that. Let's say if somebody has also for consumer electronic, they set up a cell manufacturing, we should be able to cater to that as well. No, no, just to rephrase it. I'm telling the capability which we are getting, is equally competitive globally for the EV segment as well, right? Yes. I mean, the main target is the EV and energy storage for the electrolyte in terms of volume, you know? Got it. One last question. Apologies, I'm adding one more here. In terms of approval, what we are getting is just the process. The product and all we intend to make it either by recipe coming from the customer or in-house or say in some cases from the partner. The approval cycle doesn't change, right? Because it's just a process which we are getting and probably we are becoming more efficient. From the product perspective, we have to go through that entire stabilization, validation and verification, and only then the supplies will start. That understanding is clear? Yes. That, you know, ultimately each customer would want to validate a plant, but validate your commercial plant and make sure that the product from there is approved. It's just this process of the validation becomes faster. Also there's more confidence, so there can be a pre-decision that, hey, as long as it's coming from the same technology, like as the previous plant which they have used, then the validation process can just be to make sure that is the product which is made, let's say internationally, versus the one which produced by Neogen has the same spec because the technology by which it has to be produced remains the same. In that sense, it reduces the validation time. Great. Thank you. Thank you. Best of luck for the process. Thank you. Thank you. Next question is from the line of Nandini Maheshwari from Mirabilis Investments. Please go ahead. Yeah. Hi, Vipin Gore this side from Mirabilis. Sir, I have just one question, kind of a basic one on the electrolyte making process. While we do understand there are varieties of electrolyte based on purity, the eventual pricing of electrolyte is also dependent largely on the lithium availability and how the price moves there. If you could just help us bifurcate the value addition being done in the process of making salt from salt to electrolyte. In these two steps, what's the value addition being done? For example, let's say in our calculations, we have assumed twelve and a half USD per kg as the electrolyte cost, once it gets fully utilized by the end of FY26. Of this twelve and a half USD, what could be the price of salt and yeah, what would be the actually price of the value addition that we're doing while making salt to solvent? You know, again, it's a bit difficult for me to answer because, you know, it depends on each composition, what additives, which solvents, et cetera. Broadly speaking, you know, in the final price of electrolytes, usually the electrolyte salt contributes somewhere between 30%-40%. This also depends on the price of lithium, et cetera, but usually that's the contribution which comes from the salt. There is a contribution which comes from solvents and additives, and the rest is the manufacturing cost and the profits that you have for making the electrolyte. Of this, $12-$13, we can roughly assume that roughly $4-$5 is the salt cost, and then rest is you're adding solvents and additives onto it, and then finally you're having it electrolyte. If, as again, from this, moving from salt to solvent, if again, like move out the cost of solvents and additives, all the raw materials that are added into that change, so what would roughly they be of the raw material, do you think? Again, like ultimately when you go back, what you said is that when we are doing the entire process ourselves, our EBITDA is expected to be similar to our existing business, like, you know, in the range of around 17.5%-18%. We said in electrolyte around 30%, 40% is usually, the salt contribution. This $12.5 number might be derived number. We've never shared that. You know, again, the price of the electrolyte also varies significantly. I'm not able to give further clarity at this point, unfortunately, than this. Maybe, like, you know, as our customers become more clear, the formulations become more clear, then, you know, we'll have a more clearer idea. Also lithium prices also worldwide kind of stabilize a bit. We'll have a better, clearer idea or numbers which we can give you. Okay. Okay. This $12, seven and a half dollars is likely based on the INR 1,000 crore top line guidance that they're giving and 20,000 capacity on the electrolyte. Yes. Again, you know, there is a range there, INR 1,000 crore-INR 1,200 crore. It's also, it's a total business. There's some electrolytes, also some electrolyte salts, which may sell it in the form of salt. That's why, you know, I'm like, you know, the seven and a half number is a derivation, but it's something which is, not directly, implied by us. Okay. Okay. The reason why I'm asking this is that since the electrolyte constitutes 10% of the overall battery roughly, and of that if 50% is valuation is being done from salt to from salt to electrolyte, then that means if 5% is what we are talking about of the overall 60% in the PLI, like that's the, you know, value addition that a battery maker would be kind of incentivized to take this step. Is there a possibility in future that they might be thinking of importing salt from China and then giving it to us and for converting it to electrolyte? Is that also a possibility? You know, if you are thinking from a point of view of a PLI requirement of 60%, as I mentioned, you know, if you just import electrolyte salt, that itself is 40%. You'll also have the solvents which are currently not made in India, which have to be again imported. When you add all of that, it's very difficult to reach the 60% target. Whereas as opposed to that, if when we are doing it, when we are only importing lithium metal, I mean lithium carbonate, which comes out of the mine and doing majority of the processing, we also have to import a bit of phosphorus or depending on some other imports. In any case, we are always safely at able to cross the 60% barrier. That's quite helpful. Thank you. Thank you, mister. Thank you very much. Ladies and gentlemen, that was our last question. I would now like to hand the conference over to the management for closing comments. Thank you so much everyone for joining for our call today. Thanks for your interest in Neogen and your support always. We hope you have a great evening and, we hope you all are safe and looking forward to interact with you over time. Thank you. Thank you very much. On behalf of Neogen Chemicals Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.