Thread by @soicfinance

Jubilant Ingrevia Ltd.
#JUBLINGREA

Annual Report 2022 Thread 🧵🧵🧵

Key pointers:
1. Company
2. Speciality Chemicals
3. Nutrition & Health
4. Chemical Intermediates
5. CapEx Plans

Let’s dive in 🥽

1. Company:

Jubilant Ingrevia is a part of the globally-present multi-billion dollar Jubilant Bhartia Group, vertically-integrated Life Science products and innovative solutions provider catering to diverse sectors namely pharmaceutical, agrochemical, nutrition, consumer and

industrial customers with customised products and solutions that are cost-effective and conforming to excellent quality standards.

The company has globally certified manufacturing facilities that house critical technology platforms used to develop and deliver a broad portfolio

of high quality ingredients that find application in a wide range of industries. The company also extends to custom research and manufacturing for pharmaceutical and agrochemical customers on an exclusive basis. With a strength of 2,100 employees serving 1,500+ customers in more

than 50 countries across the world. The company also has 3 state of the art R&D centres with 92 scientists with 60+ products in pipeline for next 4 years.

2. Speciality Chemicals:

This is a niche business segment which contributes 28% in the total revenue of the company.

Speciality chemicals is a very vast business space that forms the building blocks for a wide array of sectors. Jubilant Ingrevia,is one of the largest global manufacturers in the Pyridine & Picolines value chain and offers a comprehensive product basket of 85 value-added products

using renewable starting materials. Complete forward and backward integration in this business gives a distinctive edge against peers and has positioned the company amongst the top two global leaders in Pyridines and a leader in 17 Pyridine derivatives. Around 40% of the export

from this segment is to regulated markets which results in sustainable revenue for the business segment.

Speciality Chemicals business is organised across four businesses:

a) Pyridine & Picolines: This business is the flagship segment as the products are building blocks for the

Crop Protection Chemicals, Fine Chemicals and Nutritional products. Refer the image to get a detailed snapshot of how Pyridine & Picolines business offers building blocks for various products of the business.

b) Fine Chemicals: Fine Chemicals business offers Pyridine, Picoline

based valued added products that primarily find application in Pharmaceuticals API, Personal Care and Electronics. The company has recently enhanced its product portfolio with product launches of Diketene and its Derivatives-Esters and Amides at its newly commissioned plant at

Gajraula facility. These products have a wide range of applications in high-growth sectors namely pharmaceuticals, agrochemicals, yellow and orange dyes and pigments and flavour and fragrance industries.

c) Crop Protection Chemicals: This primarily comprises Agro Intermediates

and Agro Actives consisting of Insecticides, Herbicides & Fungicides. Agro actives have been introduced as a part of strategy to complete backward integration of Pyridine, Picoline and Diketene derivatives. The company also offers Microbial Control Solution which comprises a

range of safe and highly efficacious Biocides for application in paints, coatings, industrial, cosmetic and personal care industries.

d) Custom Development and Manufacturing Organisation (CDMO): This is a niche business within the entire Speciality Chemicals business segment

which is very complex and challenging. The company has expertise in almost 35 key technology platforms and hands-on experience of 40 years, to position itself as a reliable CDMO partner for global Pharmaceutical and Agrochemical companies.

This business provides revenue visibility over the medium term, for when our product is approved, the company becomes the sole supplier for that particular intermediate to the innovator through the life of the patent. Currently the company has five molecules in its pharmaceutical

CDMO pipeline out of which three are in Phase III for antiretroviral, anti-cancer and anti-diabetic applications and two are in Phase II for anti-cancer and anti-thrombotic applications. Our agrochemical CDMO pipeline includes two molecules.

3. Nutrition & Health Solutions:

This segment contributes 16% in the total revenue of the company. It comprises Nutritional Ingredients like Vitamin B3, Vitamin B4, Picolinates and premix formulations for animal and human nutrition.

The key strength in this vertical is backward integration of building blocks coming in from the Chemical Intermediates and Speciality Chemicals. Recently the company has commenced manufacturing a herbal range of products for animal feed under the brand ‘Phytoshield’.

4. Chemical Intermediates:

This segment contributes 56% in its total revenue. The company develops and delivers building block ingredients based on Acetyls and Ketene chemistry platforms, having applications in multiple daily use products for customers across the world and for

the Speciality Chemicals business segment.

This segment possesses a wide product basket comprising Acetyls and Alcohol derivatives which include Acetic Anhydride, Ethyl Acetate, Acetic Acid, Anhydrous Alcohol, Acetaldehyde, Formaldehyde and Propionic Anhydride.

Let’s take a closer look at these products:

a) Acetic Anhydride: This product is used in multiple applications across all key life sciences sectors. Jubilant Ingrevia features among the top two global merchant market suppliers of this product and is the largest supplier in India

The company caters to diverse, large and high-growth user sectors such as pharmaceutical APIs (Paracetamol, Ibuprofen, Aspirin, Prazoles, etc.), agrochemicals, vitamins, speciality polymers, food ingredients, aromatics, dyes and other industrial uses. With three manufacturing

sites in India, they possess the competitive edge to sustain uninterrupted supply to customers across the globe.

b) Ethyl Acetate: Ethyl Acetate is an environment-friendly solvent, which is used by the pharmaceutical, packaging, coatings and ink industries. Company has been a

leader in India and also has a significant global presence for this product.

c) Acetaldehyde: Company is the world’s largest producer of Bio-based Acetaldehyde, a product that is backward integrated into our BioEthanol. This product is sold in domestic and overseas markets and

finds applications in alkyd resins, pharma, flavours & fragrances, etc.

d) Green Acetic Acid: Company has commissioned 25,000 TPA green Acetic Acid plant from Bio-based Acetaldehyde in the first quarter of FY 2023. It will cater to the increasing demand in the food preservative

segment across the globe. This food-grade Acetic Acid is in high demand globally. It will provide a healthier option for food preservation requirements, as compared to the Acetic Acid produced through the petroleum route.

e) Speciality Ethanol: Company sells to OMCs for the Ethanol Blending Programme. Also sell our Pharmaceutical Grade Speciality Ethanol to various Pharmaceuticals customers for niche application.

f) Propionic Anhydride: This product is used in manufacturing of agrochemicals

(mainly herbicides), aromatics, dyes and pharmaceuticals (APIs). Company established a market presence in this business space to be among the top merchant suppliers of this product in India. The demand for Propionic Anhydride is poised to grow at a healthy rate backed by strong

traction in the agrochemical segment following growth in Clethodim capacity.

Refer to the image for understanding integration:

5. CapEx Plans:

Company has announced the CapEx plans of ₹2050 Cr for the period FY22 to FY25. At peak utilisation these capex will generate additional revenue of ₹4500 Cr. The company is shifting revenue mix towards the high-value, high-margin segments –

the Speciality Chemicals Products and Nutrition & Health Solutions. It will contribute about 65% to total revenue against 46% in FY 2022.

The break-up of ₹2050 Cr capex is as follows:

A. Speciality Chemicals: ₹1300 Cr

Phase 1: ₹550 Cr

i. Dikete Unit: Moving up the value chain of Ketene, India consumes 28,000 TPA of which 60% is imported. Commissioning 7,000 TPA capacity as import substitution.

ii. CDMO: GMP - Multipurpose plant for pharmaceutical intermediates.
Non-GMP - Two multipurpose plants for

Pharmaceutical & Agrochemical intermediates.

iii. MPP Agro Active plant: Moving up the value chain of Crop Protection active & meeting growing customer demand. This is part of forward integrations to address the global USD 65 billion crop protection chemicals space.

Phase 2: ₹750 Cr Capex planned in FY23-25

The proposed Investment is for expansion of – Diketene Derivatives, Agrochemical Intermediate & a new greenfield GMP plant for CDMO. Also plan to invest in new plants for foraying into Fluorination Deriv and Agro Actives (Fungicides)

B. Nutrition & Health Solutions: ₹200 Cr
Plan to set up – a GMP compliant plant for Pharma Grade Vitamin B3, and plants for enhancing the portfolio of Animal & Human Nutrition products.

C. Chemical Intermediates: ₹550 Cr

Phase 1: ₹250 Cr

i. Food grain Acetic Acid: Acetic acid is a crude derivative. As such, its price is subject to high volatility owing to the fluctuation in crude oil prices. To de-risk and to widen addressable market space, the company is setting up a green acetic acid unit which will produce

food-grade products. This can be used in ketchups, pickles and a host of food items.

ii. Acetic Anhydride capacity expansion: Growing demand & Geographic expansion

Phase 2: ₹300 Cr

The company will be setting up a grain based green Specialty Ethanol plant and undertaking other debottlenecking initiatives.

RISKS: As with any chemical company risks like fire, leak etc. persist. Further the company is in expansion phase, so the risk of poor execution exists.

Raw material price fluctuations too can be an overhang on margins and eventually profitability.

DISC: Not invested and no reco to buy or sell

Hope to have added value to your investing journey

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THE END