TATVA CHINTAN Q4FY22 Earnings Call Highlights

On a Product Development Spree

• Received commercial approval in the PTC segment from 2 well known MNC Customers in FY22 in Pharma & Agro space each who will start commercial usage from FY23.

• Large part of SDA demand is coming from auto emission control application, ongoing shortage of semiconductor chips availability is leading to subdued demand for SDAs. Expect to see weaker demand for SDAs in Q1FY23 and Q2FY23.

• Weaker demand in SDAs is more of order postponement due to RM supply concerns. There would be pent up demand once supply crunch eases. H1 would be weak and H2 would be strong. SDA revenues would be flat in FY23. Euro 7 transition to push demand higher.

• Received formal approval for SDAs from 2 large customers, supplies would begin from Q2 and expects supplies to begin from Jan 2023 for the second customer.

• Received formal approval from a new customer in Electrolyte salts segment for energy storage device application and have been awarded commercial supply opportunity this year. Also in pilot scale approval with a new customer. Was given initial approval opportunity with another new customer.

• Under PASC, 1 product has got into full scale commercialisation and 1 more product which was in approval since 2020 has now been fully approved by the customer and shall start supplies from Q2. Demand ramp up to been in next 2 years. Both products involve PTC technology in production.

• Would be submitting samples for a new product within few weeks, involves zeolite catalyst based continuous chemistry application to achieve superior quality. Working on Pilot project. Commercial supplies in 18 months.

• Monoglyme continuous flow development work is completed. Large scale commercialisation in next FY. Would be gaining market share.

• Developed and submitted sample for new product in area of metal extraction. Commercial supply in Q4.

• Progressed very well with development of a solvent into EV Battery application area using continuous flow chemistry. Pilot scale in Sep/Oct 2022.

• Granted opportunity to develop 2 more products in Agro phase involving continuous flow chemistry. Expect strong growth in PASC segment in FY23.

• Development team successfully run pilot scale trials of a product in flame retardant category, pilot scale from June at Dahej. Beginning with 1 product. Focusing on high purity and niche application areas of products in Electronics area. Segment is very scalable. Intend to supply to East Asia.

• Have been offered an opportunity by a large MNC customer to take into approval process with high purity substances in semiconductor and electronics application. High entry barriers. Commercial supplies in 18-24 months. Not much CAPEX required. Have to invest in Air quality of the plant.

• Freight cost increased from 3.7% to 7.6% of sales YoY. Fuel costs increased from 3% to 6.2% of sales YoY and packaging cost increased from 1.7% to 3.1% of sales YoY.

• Installed capacity as on FY22 was at 294KL with 27 assembly lines with utilisation of 90% and 64% respectively.

• With so many product launches, plan is to use unit 4 land over next 18-24 months for a fresh capex cycle.

• Expect PTC to grow at 20% in FY23. PASC to grow at 30-50% and 4-5x growth in Electrolyte salts in FY23.

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