Neogen Chemicals Ltd. · NSE:NEOGEN
Neogen Chemicals — Q3 FY23 Earnings Presentation
36 slides from Neogen Chemicals's earnings presentation, Feb 12, 2023
Slide 1: Cover letter to stock exchanges for earnings presentation
)( .~aNEOGEN ~~~ CHEMICALS LTD. 7' February 12, 2023 BSE Limited National Stock Exchange of India Limited Department of Corporate Services Listing Department, Floor 25, Phiroze Jeejeebhoy Towers, Exchange Plaza, Dalal Street, Kala Ghoda, Fort Bandra Kurla Complex, Bandra (East), Mumbai 400 001 Mumba
Slide 2: Expanding Capabilities, Exploring New Horizons – Q3 & 9M FY23 Earnings Presentation
Expanding Capabilities Exploring New Horizons Q3 & 9M FY23 Earnings Presentation February 2023
Slide 3: Safe Harbour
Safe Harbour Certain statements in this document may be forward-looking statements. Such forward looking statements are subject to certain risks and uncertainties like regulatory changes, local political or economic developments, and many other factors that could cause our actual results to differ m
Slide 4: Table of Contents
Table of Contents Introduction to Key Financial Neogen Chemicals Developments Performance 4 15 20 Industry Overview – Way Forward & CSR Lithium-Ion Batteries Initiatives Contact Us 28 30 34 3
Slide 5: Introduction to Neogen Chemicals
Introduction to Neogen Chemicals 4
Slide 6: Neogen Chemicals – At a Glance
Neogen Chemicals – At a Glance ISO 9001:2015, 242 10% 29 ISO 14001:2015 & 439.3 34% 41% ISO 45001:2018 Products developed Of workforce in Exporting Manufacturing units certified on Net worth - FY22 5-years Revenue 5-years PAT CAGR by in-house R&D R&D team countries Quality & SHE management systems (
Slide 7: Evolution of Neogen Chemicals
Evolution of Neogen Chemicals 1970’s to 1991 Pre-Neogen 1991 to 2016 Pre-expansion 2016 to 2022 Present ▪ Mr. HT Kanani graduated as a Chemical Engineer and ▪ ‘Neogen Chemicals’ commenced business operations in ▪ Acquired 12 acres of land in Dahej for Greenfield expansion started his association wit
Slide 8: Key Milestones
Key Milestones Leading manufacturer of Bromine and Lithium- based specialty chemicals since 1989 Phase I & II expansion completed: Increased Organic Chemicals reactor capacity from 154,000 litres to 407,000 litres through brownfield expansions. Current reactor capacity is 422,000 litres Raised Rs. 2
Slide 9: Business Overview and End User Industries
Business Overview Select Clientele Bromine Compounds Organic compounds containing chlorine, fluorine, iodine-based Pharmaceuticals combinations thereof and others including grignard reagents Agrochemicals End User Industries Organic Advanced Intermediates Chemicals Combining bromination with other c
Slide 10: Compelling value-proposition
Compelling value-proposition Innovative Product Portfolio Excellent R&D Enduring Customer Capabilities Relationships State-of-the-art Established Manufacturing Relationship with Facilities Suppliers Specialised Experienced Business Board of Directors Model with High 9 Entry Barriers
Slide 11: Experienced Leadership Team
Experienced Leadership Team Mr. Anurag Surana, Non-Executive Director ▪ Holds a bachelor’s degree in commerce with Honours from the University of Delhi Mr. Haridas Kanani, ▪ Experience of more than 20 years in Contract Manufacturing business Mr. Harin Kanani, B.TECH (CHEM) M.I.I.Ch.E. ▪ A well known
Slide 12: Robust Manufacturing Expertise
Robust Manufacturing Expertise Strong Manufacturing Infrastructure Land Factory Land Area Capacity Certifications of Manufacturing Facilities Utilisation Inorganic Organic Chemicals Chemicals (Reactor capacity) (Tonnage) Mahape (Since 1991) 1 acre 100% 69,000 Liters 1,200 MT ISO 9001:2015 from Burea
Slide 13: Developed strong R&D capabilities
Developed strong R&D capabilities Developed 58-member dedicated R&D team, including 7 senior personnel with doctorates in chemistry (Ph. D.) from Established two in-house reputed institutions and CMD and MD are actively R&D units, one each in with 15+ years of involved and spend Mahape and Vadodara,
Slide 14: Key Export Geographies
Key Export Geographies Europe Japan China USA Korea Middle East Exporting to 29 countries, with key export geographies in United States, Europe, Japan and Middle East Export sales of 44% in FY22 13
Slide 15: Competitive Advantages
Competitive Advantages Large and diverse array of products Experienced promoters Strong Manufacturing with domain knowledge Capabilities Established and stable Diversified and Stable relationship with suppliers Customer Base Specialised Business Model with Continuous Investment in high entry barrier
Slide 16: Key Developments
15 xX sa r INT Vay x NEOGEN CHEMICALS LTD Key Developments
Slide 17: Update on various expansion initiatives
Update on various expansion initiatives Details of expansion projects announced: Current project updates: Expansion of specialty organic • Commissioned 15,000 litres (15m3) chemicals capacity by 60,000 • Remaining 45,000 litres (45m3) will be Existing Business litres (60m3 ) commissioned by Sept 202
Slide 18: Wholly Owned Subsidiary for Battery Chemicals business
Wholly Owned Subsidiary (WOS) for Battery Chemicals business Battery Chemicals business will commence in a separate entity, which will be a wholly owned subsidiary of Neogen Chemicals Limited. Distinct demand supply dynamics and High volume business: Battery Chemicals CAPEX requirements: This busine
Slide 19: New CAPEX announcements
New CAPEX announcements ▪ Board approval for expansion of: – Electrolyte capacity to 5,000 MT to be operational by • Once operational, these projects will June 2024 add to revenues from FY25, and will – Specialty Lithium Salts capacity to 1,000 MT (232m3) to peak out in FY26/ FY27 be operational by
Slide 20: Capacity & potential revenue target based on expansion
Capacity & potential revenue target based on expansion Battery Chemicals Existing Business Incremental capacities that will be operational Business Organic Chemicals Inorganic Chemicals FY23 ▪ 15,000 litres (15m3) in Organic Chemicals Capacity (Reactor capacity) (Tonnage) Electrolyte: 10,000 MT (by
Slide 21: Financial Performance
20 xX sa r INT Vay x NEOGEN CHEMICALS LTD Financial Performance
Slide 22: Key Performance Highlights – Q3 & 9M FY23
Key Performance Highlights – Q3 & 9M FY23 Q3 FY23 9M FY23 Q3 FY23 Revenue break-up Revenues Rs. 186.3 crore Rs. 482.3 crore *Exports, 40% 46% 53% EBITDA Rs. 30.1 crore Rs. 79.0 crore Domestic, 27% 32% 47% *Including deemed exports Profit Before Tax Rs. 20.7 crore Rs. 50.4 crore 51% 31% I
Slide 23: Financial Summary – 9M FY23
Financial Summary – 9M FY23 Rs. crore REVENUE • Robust growth in revenues was aided by higher utilization levels across plants supported by sustained demand trajectory across key end user industries 9M FY23 482.3 46% • Initiatives around scaling up the high-margin advanced intermediates and custom s
Slide 24: Revenue break-up – Q3 & 9M FY23
Revenue break-up – Q3 & 9M FY23 Q3 FY22 Rs. 105 crore Q3 FY23 Rs. 136 crore 30% Organic Chemicals 9M FY22 Rs. 264 crore 9M FY23 Rs. 326 crore 23% Q3 FY22 Rs. 27 crore Q3 FY23 Rs. 50 crore 85% Inorganic Chemicals 9M FY22 Rs. 66 crore 9M FY23 Rs. 157 crore 137% 23
Slide 25: Seasonal Variance Factors
Seasonal Variance Factors ▪ Neogen’s business has some seasonal drivers, due to which the company tends to deliver stronger financial performance in the second half of the financial year (October to March). Seasonal variance is driven by strong demand from Europe as orders tend to scale up in Octobe
Slide 26: Financial Table – Profit & Loss Statement (Standalone)
Financial Table – Profit & Loss Statement (Standalone) Particulars (Rs. In crore) Q3 FY23 Q3 FY22 Growth (%) 9M FY23 9M FY22 Growth (%) Revenue 186.3 132.6 40% 482.3 330.5 46% Expenditure 156.1 108.8 43% 403.2 270.5 49% EBITDA 30.1 23.8 27% 79.0 60.0 32% Margins 16.2% 18.0% -177 bps 16.4% 18.1% -176
Slide 27: Management Commentary
Management Commentary Commenting on the Q3 & 9M FY23 performance, Mr. Haridas Kanani, Chairman & Managing Director, at Neogen Chemicals said: “We registered solid performance trajectory in Q3 FY23, bolstered by 40% Y-o-Y gains in revenue with healthy profitability, where both EBITDA and PAT increase
Slide 28: Historical Financial Trends
Historical Financial Trends Net Revenue from Operations** EBITDA (INR crore) Margin (%) (INR crore) 19.0% 19.1% 487 336 18.1% 18.2% 306 17.8% 239 17.8% 163 111 20 29 43 58 64 87 FY17 FY18 FY19 FY20 FY21 FY22 FY17 FY18 FY19 FY20 FY21 FY22 ** Revenue is Net of Excise PAT (INR crore) Margin (%) Networt
Slide 29: Industry Overview: Lithium Ion Batteries
Industry Overview: Lithium Ion Batteries 28
Slide 30: Strong Opportunities in Lithium Battery sector
Strong Opportunities in Lithium Battery sector Government focus on self-reliance in battery manufacturing Demand Estimates for the Indian Market has opened up new prospects ▪ After inviting global bids for giga-scale Advanced Chemistry Cell (ACC) production units, the GoI selected four bidders from
Slide 31: Way Forward
Way Forward
Slide 32: Way Forward
Way Forward Increasing Custom Synthesis & Foray into sunrise sector of Lithium-Ion Contract Manufacturing portfolio Batteries Expanding production capacities Focus on operational efficiency and Focus on advanced speciality functional excellence intermediates 31
Slide 33: CSR Initiatives
CSR Initiatives
Slide 34: CSR Initiatives
CSR Initiatives Focus areas in CSR Rural development Education Healthcare, sanitation and Environment nutrition sustainability Conservation and management of natural resources 33
Slide 35: Contact Us
Contact Us About Neogen Chemicals Limited Incorporated in 1989, Neogen Chemicals Ltd. (NSE Code: NEOGEN; BSE Code: 542665) is India’s one of the leading manufacturers of Bromine-based and Lithium-based specialty chemicals. Its specialty chemicals product offerings comprises of Organic as well as Ino
Slide 36: Thank You
Thank You