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Neogen strengthens electrolyte aspirations with technological tie-up

ICICIdirect Research 11 Apr 2023 DISCLAIMER

What's Buzzing? 

Neogen Chemicals has signed a landmark agreement with Japan's MU Ionic Solutions Corporation (MUIS) to acquire a manufacturing technology license for electrolytes in Dahej, India. Commercial production is likely to commence in 2025. The company aims to meet the growing demand for lithium-ion cell manufacturers in India through this collaboration. 


MU Ionic Solutions has a track record of being one of the global leaders in electrolytes used in lithium-ion batteries. Electrolyte component accounts for ~9% of total cost of Lithium-ion battery (3.7V). Neogen will obtain the license from MUIS for proprietary and confidential manufacturing technology for making Neogen’s electrolyte solutions at its manufacturing facility in India with a planned maximum installed capacity of up to 30,000 MTPA. The license is perpetual till the time production is 30,000 MTPA and is required to pay one-time license fee in instalments. The company will be required to pay an additional license fee to MUIS on capacity beyond 30,000 MTPA or for any change in technology. 

Our Perspective: 

Neogen will be able to solidify its position in the Indian electrolyte industry thanks to this agreement. The standardised Japanese technology can help improve the battery performance, including power output and lifetime, with functional additives tailored to the purpose, which will ultimately give a competitive advantage to Neogen by gaining confidence in the minds of customers in domestic market. The capital expenditure for extra electrolyte capacity over the prior projection of 10,000 MT by FY26 would rely on increased customer demand. Also, the company will only sell the electrolyte domestically. We think Neogen is in an excellent position to gain a sizable market share in the local electrolyte market given the tailwinds in the lithium battery sector, to be driven by the PLI scheme in the battery segment. The government is targeting Rs 18100 crore outlay for the PLI scheme, which requires 60% of indigenously procured battery material.

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