Ami Organics Unveils new manufacturing facility in Ankleshwar, Gujarat
www.bseindia.com/xml-data/corpfiling/AttachLive/21ff97c1-d725-4f04-84da-d97544b537d6.pdf
Lots of happening in Ami Organics in last 2 week.
Known of promoter - Chovatiya family sold large chunk in block deal (However Mr. Patel denied in his previous interview that Chovatiya family is going to sell further stack). Good thing is Good institutions bought it. Stock fell on that day bcoz of large deal goes with discount to LMP.
Interestingly on the same day company files circular that they did MOU with GOG for manufacturer of Electrolytes with global company however I wasnât able to gauge company name of that Global company. So I highly doubt, this circular was coined on that particular day to just support the price after block deal.
Interestingly another promoter bought 0.2% stack from open market 2 days before.
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Promoter buying selling 1 month before qtr result is pretty common. This is because trading window will close and no further transactions can take place.
I might be wrong here. But hope I am not wrong.
Ami organics is going to be a Raw material supplier to TESLA? May be. But How. Please read fully
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Ami organics Electrolyte division has already announced that it has 2 electrolyte additives and they have already confirmed they are in advanced stages of contract binding with a company and they will announce it in the upcoming Vibrant Gujarat Summit 2024.
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I have digged little I have figured these are the products
1.Vinylene Carbonate
2.Fluoroethylene carbonate
Why I am excited about these products.
Tesla has filled a patent in 2019 about a new chemistry which will enhance the battery cycle to 1 million miles. ( which uses Vinylene Carbonate )
Tesla patents new longer lasting battery with better performance and cheaper cost | Electrek.
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To further confirm the statement in 2022 there is article tesla might use this in new batteries
BattScout
In these lithium difluorophosphate based patents, the electrolyte comprises a lithium salt with a non-aqueous solvent and an additive mixture (including lithium difluorophosphate and fluoroethylene carbonate or vinylene carbonate).
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But We canât conclude this will make AOL as the supplier for tesla right Except for the new development might confirm it.
Tesla and Vibrant Gujarat Event
There is a recent development that Tesla might announce their new factory in Gujarat at the vibrant gujarat summit 2024 which is confirmed by Spokes person of Gujarat Government. ( Vibrant gujarat summit starts at Jan 10 2024 ). And we all know tesla going to create new car which will suit indian market.
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AOL and Vibrant gujarat Event
This is the recent announcement of AOL ( Which is full of hints and pride ) and they also mentioned about Vibrant gujarat summit
Image 1
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Image 2
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Added bonus. Recently on Dec 28 two main promoters bought significantly from market at 1163 Price levels.
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Does Ami Organics going to have contract with one of the Tesla battery raw material supplier ?. May be.
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But based on my research the new batter chemistry is promising for the future and have future outlook for 10 years.
Disclosure : Invested
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Sorry for spamming this here :
Battery bets :
- Key Ingredient - Tata Chemical (Soda Ash)
- HSCL : Lithium Ion Battery components
- Electrolyte Salts - GFL, Neogen, Tatva Chintan
- Electrolyte Additive - AMI Organics, Aether Industries
Ami Organics has a dedicated plant for Electrolyte Additive with current capacity of : 500 TPA
- Electrolyte additive niche market
- Secondly the additive needs to have a high purity
- Asset turnover will be high
- 9 customer has approved : out of which 3 Korean client which is contributing 50%-80%
- Electrolyte additive industry size is roughly about 200000 MT market size
- Gross margin for electrolyte additive will be 48-52%
- EBITDA 25%
- One needs to know what is IRA and potential benefit to India :
New IRA guidance limits battery components made in China | Manufacturing Dive.
- Electrolyte is a Monopoly but Aether getting into this, can be regarded as duopoly.
@Worldlywiseinvestors : I dont know if you know about IRA and the above.
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I agree, @nithin_Shenoy
Both the companies are competing for the same product. It looks like the product is solid and few players only exist in the space currently
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But also it looks itâs due to the new macro trend of USA which is âforeign entities of concernâ ( which you mentioned as IRA )
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Due to that cars reduced from 43 to 13 Which can be availed for US tax credit and the trend intensifies in 2025 even more which is leading to new countries other than china entering the battery manufacturing space for the US market which is reason I think both the companies entering to produce these new battery chemicals
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Lets understand what are electrolyte additives
- Salt Additives: These additives are additional salts added to the electrolyte solution to enhance ionic conductivity. Examples include lithium salts like LiPF6, LiBF4, LiClO4, etc. Lithium salts are commonly used in lithium-ion batteries and are essential for their operation.
- Solvent Additives: Different solvents or solvent mixtures are used as additives to modify the properties of the electrolyte, such as viscosity, conductivity, and temperature stability. For instance, ethylene carbonate (EC), propylene carbonate (PC), dimethyl carbonate (DMC), and other organic solvents are often used in lithium-ion battery electrolytes.
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Functional Additives: These additives are specifically designed to serve various functions, including improving cycle life, thermal stability, and preventing undesirable reactions. Examples include:
- Electrolyte Stabilizers: Compounds like vinylene carbonate (VC), fluoroethylene carbonate (FEC), and others enhance the stability of the solid electrolyte interphase (SEI) layer, reducing degradation during charge/discharge cycles.
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Fluoroethylene Carbonate (FEC):
- Purpose: FEC is utilized to enhance the stability of the solid electrolyte interphase (SEI) layer, which forms on the surface of the lithium-ion batteryâs graphite anode during cycling. This SEI layer is crucial for the batteryâs performance and longevity.
- Benefits: FEC helps in forming a more stable SEI layer, reducing electrolyte decomposition, and improving the cycling performance and overall lifespan of the battery.
- Use: It is often added in small concentrations to the electrolyte mix used in lithium-ion batteries.
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Vinylene Carbonate (VC):
- Purpose: VC, similar to FEC, aims to improve the stability of the SEI layer, especially on high-voltage cathodes, like nickel-rich cathodes.
- Benefits: VC contributes to the formation of a stable SEI layer, reducing the degradation of the cathode material and enhancing the batteryâs cycling stability.
- Use: Itâs used as an electrolyte additive in lithium-ion batteries, typically in small amounts in the electrolyte solution.
- Flame Retardants: Additives are used to improve the safety of batteries by suppressing thermal runaway reactions.
@siva_kannan There is one more coming up in line that is NEOGEN
All the companies are running behind electrolyte additives
Now given all 3 who takes the lion share?
- Neogen - wherein in the have the entire value chain
- Aether/Ami Organics - wherein they have electrolyte additives
From a customer point of view, i would basically end up buying from one customer than buying from many and separating the transactions
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@nithin_Shenoy very well done. Just one thing to add is that it may not be about entire value chain. The main reason is electrolyte solution can not be exported due to safety/hazard issues. Whereas electrolyte salt and additives can be exported.
One risk is evolving battery technology solid and liquid (lithium ion based or sodiumion based). Ami has additives for both the types. Technology risk for Ami is low vs. Neogen. Neogen is expecting sodium ion will not take over the world until 2030.
One benefit for Neogen is that they have tieup with mitsui for recipies which they can produce at large scale and approval from oems may take less time due to mitsuis existing relationships.
A difficult topic we can overcome with collaboration.
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Thanks @joinjp2003
Here are their common variances :
- Sodium-ion batteries might use sodium salts like sodium hexafluorophosphate (NaPF6), sodium chloride (NaCl), sodium perchlorate (NaClO4), or other sodium-based compounds.
- Lithium-ion batteries commonly use lithium salts such as lithium hexafluorophosphate (LiPF6), lithium carbonate (Li2CO3), lithium perchlorate (LiClO4), and lithium tetrafluoroborate (LiBF4).
Now coming to sodium ion - only 4-5 companies have developed this product and has patent.
- Faradian
- BYD
- KPIT
- CATL : Cherry Auto
See now the Electrolyte additives 2 that @siva_kannan talked about can commonly go into Lithium and Sodium batteries.
So clear winners can be 3 companies.
Now coming to the Electrolyte salt : The salts differs as stated above in variance section.
So @joinjp2003 as you highlighted Neogen is on the other end of pendulum ventured into Lithium already thats correct and they are doing research on sodium.
AMI Organics dont do Electrolyte salts
NEOGEN does the Lithium part
There is one more company in India who does Electrolyte salts for sodium and zinc 
To bridge the gap now, electrolyte additive has place in all 3 companies but one who makes electrolyte salt for sodium is crucial.
Sodium Ion is best used for batteries, supercapacitors, and other energy storage devices.
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Hi, didnât Ami Organics tie up with electrolytes manufacturer and were going to announce the name in Gujarat Summit?
I donât think they have announced anything. Any info?
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was trying to know the reason but the post was deleted, can you highlight the reason if possible ?
But the Indian company which does electrolyle salts for sodium and zinc (Tatva chintan) is unable to show any fruitfull results so far⊠They expect good days ahead may be Q1FY25 or Q2F25.
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@rikin_shah Does this means that they donât have pricing power, and customer is not worried and can easily replace Ami Organics? Impression was that client donât like to change API intermediaries to avoid quality issues.
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There could be more than one supplier mentioned in the DMF, in which case the customer will still have a choice from whom to buy.
Moreover, even where the customer buys from you, the pricing can still be based on market rates, which is what the earlier extract from Q2 concall states. So there may be some assurance of volumes but not of prices.
FY25 is crucial for Ami as several projects are coming to fruition and need to start generating cash. Fermion contract, as well as rest of the capacity at Ankleshwar will have to be utilized quickly. Then there is the electrolyte additives business to be ramped up where the company says they have signed several long-term supply agreements. For Baba again, it seems fresh approvals are required from the customers due to change of ownership, that delays the ramp up. How long this will take is not clear. Until all of this, the cash position remains stretched.
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Is there any pricing power?
API manufacturers (customers of AMI) keep up to 3 vendors in different geographies (China, EU, India). The manufacturers ensures AMI competes with other suppliers for orders. The competition depends upon various factors including cost. AMI owns somewhere above 50-60% MS for their suppliers and going by the commentary, management aims to maintain that (so cost is going to be parameter here)
So is there no moat?
Management had previously clarified that the moat comes with the time of the project. As time progresses, the API manufacturer starts hesitating to change suppliers. However, that doesnât mean manufacturers cannot. Management very honestly called out that the business can be replicated but technology/time will need to be invested.
Will pricing power come in the future?
Since AMI doesnât want to end up competing with their customers they will unlikely make the final products. So there is going to be some pricing power but it has limitations.
Perhaps we should keep a watch as AMI grows or if comes up with something outsmarting competition.
Disclosure: I am invested in AMI organics. This is my understanding and I may be wrong. I may change my views or exit/add/sell my investment anytime.
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Just sharing a recent blog on Ami organics.
Recently Samit Vartak of Sageone has invested in it.
Ashish Kacholia, Samit Vartak, Ravi Dharamshi, Saurabh Mukherjea, Malabar Fund etc are bullish about Ami Organics. Stock has underperformed but Experts recommend buy â Ashish Kacholia, Samit Vartak, Ravi Dharamshi, Saurabh Mukherjea, Malabar Fund etc are bullish about Ami Organics. Stock has underperformed but Experts recommend buy
Hope you find it useful.
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Thank you for sharing. Normally, people make good money by investing in a good company before it comes in news and buying target of the well-known investors!!
FOMO sometimes gives reasonable return or no-return!
Normally, I keep such company under tracking and wait for any market wide panic, which may give good entry price!
Disc - Invested in PI Industries (<1500 level and adding on every good correction). Unless, I find better chemical company than PI Industries, I normally let it go to FOMO guys!!
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