Neogen Chemicals Ltd

Neogen Ionics Limited, a wholly-owned subsidiary of Neogen Chemicals, has acquired approximately 2,64,285 m² of land in Pakhajan, Dahej PCPIR, Gujarat, to establish a worldclass, state-of-the-art battery material facility.

"Success is the sum of small efforts, repeated day in and day out."

— Robert Collier

Dear Shareholders,

I am happy to speak to you once again, especially as F.Y. 2023-24 was a landmark year for Neogen Chemicals. We embarked on an accelerated growth trajectory alongside laying a strong foundation for the future. The year was transformative, underpinned by our steadfast commitment to innovation, excellence, and sustainable growth.

Globally, F.Y. 2023-24 presented numerous challenges, including geopolitical conflicts in Europe, heightened tensions in the Middle East, cheap imports, and supply chain disruptions. Our agile business model and robust manufacturing prowess enabled us to navigate through these adversities and deliver a resilient performance.

To ensure sustainable growth, we focussed our efforts on the emerging field of lithium-ion battery material, particularly its application in Electric Vehicles (EVs). This strategic direction aligns with IndiaRs s ambition of achieving zero emissions by 2050 and the growing adoption of electric vehicles (EVs). Our investments and innovations in lithium-based solutions position us at the forefront of this transformative shift, enabling us to contribute to a greener and cleaner future.

Establishing a world-class battery materials facility at Dahej PCPIR, Pakhajan, Gujarat

Neogen Ionics Limited, a wholly-owned subsidiary of Neogen Chemicals, has acquired approximately 2,64,285 m² (~65 acres) of land in Pakhajan, Dahej PCPIR, Gujarat, to establish a world-class, state-of-the-art battery material facility. This greenfield site will be our largest facility dedicated to battery materials which would equip us to take advantage of emerging business opportunities.

I am extremely delighted to state that we have also secured a manufacturing technology licence from MU Ionic Solutions Corporation (MUIS), Japan, to produce electrolyte materials

using globally acclaimed technology and plant design, with a capacity of up to 30,000 MTPA. With 30 years of experience, MUIS is a global leader in electrolytes for lithium-ion batteries, operating electrolyte manufacturing plants in 4 Countries; Japan, USA, UK and China; with a total of 5 plants. This agreement positions Neogen as the first-ever company in the world to implement MUISRs proven global technology for manufacturing electrolytes at scale for Lithium-Ion Batteries, enabling us to meet the growing demand for lithium-ion cell manufacturers in India.

As part of this project, we will set up a 30,000 MT electrolyte plant using technology licence obtained from MUIS and a 3,000 MT electrolyte salts and additives plant based on our indigenous technology. We have allocated a capital expenditure of Rs 1,500 crore for the upcoming capacities, with the majority of funding already tied up through project finance. This investment is anticipated to generate revenue between Rs 2,500 and Rs 2,950 crore, depending on lithium prices.

The plant design is complete, and we have begun issuing purchase orders for construction-related activities. Construction, including related utilities, is expected to start soon, with an aim to inaugurate this facility in the second half of F.Y. 2025-26. WeRs re building the initial commercial capacities for electrolytes and lithium electrolyte salts to meet immediate customer needs, with trial production already commenced. I am happy to share that we have started shipping small batches of lithium electrolyte salts to global customers and electrolytes to local customers and are awaiting feedback on product quality and efficacy.

Building our strengths

We have made significant strides during the year to build our strengths. We acquired BuLi Chemicals India Private Limited (Buli Chem), a company with expertise in manufacturing N Butyl Lithium and other organolithium products using lithium metal, which are essential reagents for lithiation reactions. The acquisition provides Neogen with a cutting-edge technology platform that can be leveraged across both pharmaceutical and agrochemical intermediates. Our local customers have already approved N Butyl Lithium under NeogenRs s ownership, and now, even the global customers have begun to approve. This marks a significant leap in enhancing our capabilities and expanding our market reach.

Securing finances

In the second half of the year, we successfully raised capital to meet our expansion objectives through a preferential offering of equity shares. We secured around Rs 253 crore from esteemed high-quality institutional investors. I extend my heartfelt gratitude for the confidence and support instilledin us and our future endeavours. We utilised the net proceeds to fortify our presence in battery materials while accelerating growth in the existing business of specialty bromine derivatives, advanced intermediates, custom synthesis and contract manufacturing. Additionally, we strategically deployed these funds to repay existing debt, creating a surplus for further expansion based on evolving market scenario.

Well-positioned for the future

Notwithstanding the global headwinds, we are progressing rapidly towards realising our long-term vision. Simultaneously, in the existing line of our business, consistent focus on value addition and long-term agreements with our customers remained the key to our continued success. To mitigate the significant declines in bromine and lithium raw material prices, we increased our base volumes across various product categories.

Once operational, our ongoing greenfield projects will bolster our competitiveness in the emerging lithium-ion battery materials sector. With the first-mover advantage and by maintaining consistent product quality and ensuring timely supply, we hope to establish Neogen Ionics as the market leader and the most preferred player for electrolytes in India for Electric Vehicle (EV) applications.

The dedicated and focussed efforts of Neogen family too were instrumental in achieving our strategic objectives. I would like to thank both our clients and Neogen family for their relentless contributions and for being a part of our dynamic journey.

Going forward, the demand outlook remains favourable, and our goal is to sustain this momentum. Our growth will be driven by expanding capabilities in complex chemistries, focussing on advanced intermediates and custom synthesis and contract manufacturing, making deeper inroads into battery materials, and leveraging innovation and R&D expertise to enhance our offerings and business prospects.

I would like to take this opportunity to thank our customers, employees, partners, suppliers, and all other stakeholders for their relentless trust and support. Together, we will continue to build a brighter and sustainable future for Neogen and enhance value for all its stakeholders.

Warm regards,