Neogen, Gujarat Fluorochemicals: India's Chemical Makers Prepare For EV Boom
As India’s carmakers line up investments in electric vehicles and demand for battery-powered scooters takes off, potential suppliers sense an opportunity. Chemical makers are among them.
India's EV market is still nascent with demand mostly coming from two-wheeler segment. India's rising fuel prices accelerated that shift. But the country's top automakers including Tata Motors Ltd., Mahindra & Mahindra Ltd. and Hyundai Motor Ltd. have announced investments to build battery-powered capacity. That will also drive demand for supplier of components and inputs.
'Huge EV Opportunity Ahead'
Neogen recently started manufacturing electrolytes for lithium-ion batteries, leveraging its decadal expertise in lithium salts, the brokerage said citing the management. They anticipate "huge opportunity" in EV batteries as demand for electrolytes is slated to grow to 70,000 million tonnes by 2030, it said.
The completion of capacity addition at the Dahej, Gujarat plant ahead of schedule has strengthened the capability for the production of high-margin more complex products, Neogen's management said at Edelweiss' Emerging Ideas Virtual Conference 2021. Accordingly, the company has announced a Rs 35-crore capex for a 250 MT pilot battery electrolyte manufacturing project.
More clarity on the company’s plans is expected in the next six to nine months once battery manufacturers announce their capacities, leveraging the government's production-linked incentive scheme, Edelweiss said.
'PVDF Demand Growing Rapidly'
Gujarat Fluorochemicals, a manufacturer of fluoropolymers, fluoro-specialties and bulk chemicals, is also foraying into new-age businesses such as battery chemicals for EV batteries, solar panels and hydrogen fuel cells.
The company announced a capital expenditure of Rs 2,500 crore for battery inputs, with Rs 600 crore, Rs 900 crore, and Rs 1,000 crore spread over FY22, FY23, and FY24, respectively.
The management said demand for polyvinylidene fluoride is growing rapidly because of its applications as a cathode binder in EV batteries and back-sheet in solar panels, according to Edelweiss.
The company has also announced an additional 100 MT capacity for the flouropolymer, which will be operational by early FY23. Backward integration is also on the table via setting up manufacturing facilities for VDC (vinylidene chloride) and R142b (also a refrigerant), the key raw materials for PVDF, Edelweiss said.
Too Early To Identify Winners
While India lacks lithium, it still has "good chemistry skills" and therefore can do well in binder, anode, and electrolyte manufacturing, InCred said in a Dec. 15 note.
However, it's too early to identify "winners" of the incentives scheme and that a "basket approach" may be the right way to go. Multiple Indian companies have developed fluorine chemistry skills like Gujarat Fluorochemicals, Navin Fluorine International Ltd. and SRF Ltd., it said. But, as of now, only Gujarat Fluorochemicals makes PVDF and has plans to make LiPF6 electrolyte. "Other companies need to develop these skills."