- On going chip shortage affected SDA revenues in Q4.
- SDA are used in manufacturing of zeolites which have application in emission control of vehicles.
- Q1 and Q2 will have lower demand due semiconductor shortage.
- Got formal approval from 2 large customers for SDA segment. Supply for one of the customer will start from Q2 2023, for second customer supply is expected to start from Jan 2023. Orders are expected from one more customer for which plant trials are expected to complete in 2022.
- Electrolytes salts revenues have grown 87% compared to previous year but it only contribute 1.3% of total revenues. Got formal approval from one of the customer for energy storage application and commercial production order have given by the customer. For another customer tatva chintan is working on pilot plant. Applications are increasing in supercapacitor and energy storage devices in electrolytes segment. Multifold growth is expected in this segment.
- Offered opportunity by large MNC customer in electrolyte and high purity segment. This is high entry barrier segment due to stringent quality requirements. Tatva chintan will be only company in this segment from India and select few globally. Commercialization will take 18 to 24 months after initial sample approval.
- Pharma and agro products (PASC) : 12% year on year growth. Revenues in this segment crossed 100 cr contributing 23% of total revenues.
- Commercial production start for One of the product in this segment and volume growth is expected in future. One more product which was under approval since 2020 has now fully approved by the customer and commercial supply will start from Q2 22. Production will ramp up in next 2 years for this product. Both of this products need PTC technology for production.
- Zeolite catalyst based continuous flow chemistry is needed for another product. Development work has been completed for this product and will be submitting samples within few weeks. Setting up pilot plant for this product as well. Commercial supply will take 18 months time to materialize.
- Sent the plant scale samples for new product for metal extraction. Commercial production will start post Q4.
- Progressing very well with solvents for electric battery application using continues flow chemistry.
- Expected good growth in PASC segment.
- Development team successfully run pilot scale capacity for flame retardants. Full scale plant trials will start from June post installation for necessary equipments in Dahej. Tatva chintan will be starting with one product and then will develop multiple products in flame retardants category. Focusing on high purity and niche areas under flame retardants segment. From June approvals are expected by customers.Going forward Tatva chintan will post revenue from this segment separately
- Lockdowns in China affecting the shipping,Logistics and availability of certain raw materials but tatva chintan stocked enough raw materials in Q3 2022. Most of the customers for tatva chintan able to absorb price passon by tatva chintan due to increased raw material prices and freight.
Cost increases :
- Freight cost : 3.7% to 7.6% of revenue YOY
- Fuel costs : 3% to 6.2%
- Packaging cost 1.7% to 3.1%
PASC->Electrolyte ->Flame retardants ->PTCs
- New plant in Dahej is expected to start from Q3 2023.
- SDA demand is expected to come back from H2 2023. There will be pent-up demand once semiconductor shortage will normalize. Tatva chintan increasing the inventory to cater to the demand in H2. Total SDA revenues in FY 23 will be similar as compared to FY 22.
- Initial investment plan of 150 cr, there will be additional 75 cr capex for continuous flow chemistry.
- Flame retardants size of market size is very big (Few Billion Dollars) but tatva chintan would be focusing only in niche area related to electrical applications. Revenues from flame retardants can be similar to total revenues of tatva chintan today. This segment is scalable.
- Current capacity of flame retardants is 80 to 100 MT/ Month. With expansion capacity can be 400 to 450 MT.
Applications of flame retardants
Growth expectations for FY 23
- SDA will remain flat due to semiconductor shortage.
- PTC can grow 20%
- PASC can grow 30 to 50%
- Electrolyte segment can have multifold growth. (Currently contributing 1.3% of revenues)
- There can be good growth despite flat SDA.
Monoglyme
- Currently getting moisture content of 30 to 35 PPM, target is to reach 20 PPM.
- Tatva chintan is currently doing dehydration in 2 stages due to which 50% more capacity is required or they have to add additional capacity for dehydration.
- At any stage of purification 4-5% of product is lost along with water. So final plan is to achieve dehydration in one step.
- Margins is 2 step dehydration is lower compared to one step.
- Demand for monoglyme is 15000 to 18000 MT and tatva chintan would be supplying around 3000 MT in future.
SDA
- Customers takes 2 years for approval.
- Tatva chintan currently have 3 large customers. Initially tatva chintan used to supply very small quantity but currently tatva chintan is supplying 50% of the required of these customers.
- It’s not easy for customers to change their source as applications as SDA have specific niche applications.