#neogenchemicals notes with B&K securities :
Like and retweet !!

1. Products and contracts
During the lockdown the company received two long term contracts
i)Innovator pharma customer who is already purchasing some molecules from neogen
ii)International agro innovator with whom neogen is working for complex 6-7 stage molecules

After the VAM machines were introduced in India, Neogen was the first company to manufacture Lithium bromide required in VAM machines
Current revenue mix is 50% bromine 30% advance intermediates(10% CSM) and 20% lithium which will change to 40% bromine 40% advance intermediates (20% CSM) and 20% lithium.
2. Capex :
i) Good demand in pharma & agro but it was unmet due to insufficient capacity.
ii) Doubled lithium capacity
iii) Increasing Bromine -Organic capacity. Phase I completed. Phase II will get completed till Q3 start.
FY 22 revenues :450 Cr
FY 24 revenues :650 cr
3. Neogen Team :
i) Mr. surana from PI Indsutries is now on the board & he is an advisor. Dahej site got developed under his guidance.
ii) Employees increased from 200 to almost 400.
iiI) Haridas kanani (Founder 70 years +) focuses on r&d and selecting the right people
4. Customers :
i) It is not easy to please customers demand like thermax and voltas. (Lithium segment). As they demand premium quality. Neogen never turned down customer demands and tried to fulfil as much as possible
ii) Adopted CGMP practises from 2008
iii) Planning to add another segment for diversification (Probablt agrochem)

5. Chinese markets
i) Shortage of resources in China have caused innovators to outsource their products to India.
ii) International customers who worked with Chinese for 4-5 years shifted to neogen for new molecule due to lack of commitment & trasperency from manufactuer
iii) Stringent environment policy and high labor cost are slowing the momentum in china.
iv) China turned bromine importer from bromine exporter.

Conclusion :
Till now management is walking the talk. We should track the developments of 2nd phase of the bromine capex & how management handles the balance sheet!

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