Found this while exploring Jindal’s progress on Capacitor films. It seems they recently succeeded in developing films with capacitor application and likely made this announcement during the 9th Specialty Films & Flexible Packaging Global Summit - 2022 (Sept 5-6). They even shared some key attributes of their product that may help compare with Xpro’s offering.
Source: LinkedIn
Latest AR FY21-22, “company produces capacitor films”, pg.151.
One of Xpro’s competitors Toray industries is listed.
Latest investor presentation for Toray:
Toray is a giant. It’s film division is housed under Advanced Chemicals => Films division. The films division alone does ~2.5B$ sales annually
Toray through its film brand Torayfan claims to be a leader in EV capacitor market globally:
This biaxially oriented polypropylene film delivers high thermal and voltage resistance for the capacitors of hybrid, plug-in hybrid, battery, fuel-cell, and other electrified vehicles. The new offering makes it possible to downsize vehicle power control units (PCUs) while enhancing thermal resistance and efficiency. This feature enhances the design freedom and fuel economy of these automobiles.
Film capacitors are a prime application, which commonly found in the electronic appliances and IT equipments. They are also used in electrified vehicles, for which annual demand will likely rise around 20% as environmental regulation becomes more stringent, particularly in Europe and China. Torayfan dominates the automotive capacitor film market because of its unique features in maintaining thinness and voltage resistance.
PCUs are vital to electrified vehicle powertrains, which regulate motor output, and need to be as compact as possible to boost the design flexibility of these automobiles. Polypropylene film capacitors are the largest core components of PCU inverter circuits. Inverters are devices that change direct current to alternating current and regulate the frequency. Recent years have seen demand rise particularly for high thermal resistance on top of a prevailing need for downsizing. It has been challenging, however, to significantly increase the thermal resistance of biaxially oriented polypropylene films.
Toray started mass production of this latest Torayfan offering after completing performance assessments. The company seeks to boost capacity at the Tsuchiura Plant in Ibaraki Prefecture, which is scheduled to go on line in 2022, to match growing demand for automotive capacitors. Toray is pushing ahead with plans to lift production capacity for such films by around 60%.
Here is a latest capacity dump for torayfan
What i found quite fascinating is that it looks like MLCC (Multi layer ceramic capacitor) also uses films made by Toray though a different brand:
Toray leads the global MLCC mold release film market, producing these offerings at the Mishima and Gifu plants in Japan, Penfibre Sdn. Berhad in Malaysia, and Toray Advanced Materials Korea Inc. The domestic upgrade will enable Toray to capitalize swiftly on the MLCC market’s expansion, as Japan is the biggest consumer of release films.
Lumirror™ is an incredibly smooth film which Toray has developed based on its decades of experience in film development. This film provides a thin finish for ceramic layers and is free of irregularities. Many MLCC manufacturers have adopted it, helping them to miniaturize and raise the capacity of MLCCs.
Toray’s new line will have one of the largest MLCC film production capabilities in Japan, embodying the company’s quality enhancement capabilities with existing lines. This setup will enable Toray to cater to market demand in coming years for thinner and smoother films.
^ does look like Lumirror film for MLCC is a more indirect application unlike Film capacitors where film is the heart of the capacitor.
Disclaimer: Invested, biased.
Bruckner is the de facto leader in making machineries which make these Capacitor films. Almost all capacitor film makers take machines from bruckner. What differentiates a film maker is the specific configuration & customization done by film maker working with bruckner to ensure best throughput & quality of the end films.
Since 1970, when the first capacitor line was supplied by Brückner, more than 40 lines have been successfully installed.
(This tells us about the rough size of global industry. For context, xpro has 1 line. has placed order for 2 more lines).
Latest capacitor film technology for Chinese market leader
Quanzhou Jiadeli Electronics (JDL) is China’s market leader when it comes to capacitor film production. The long-term Brückner customer now took the next step to strengthen its position. Two more Brückner capacitor film lines will complete the already impressive machine park of four lines.
Also found out about Hubei Jiayue who got a high speed high capacity line from bruckner installed in November 2022:
Poor results…
35%Tax
what’s the reason for this much? anyone closely tracking
I was reading a Goldman sachs report on EV supply chain. Some key learnings:
Some learnings from reading about Faratonic from Internet
Disc: Invested, studying more.
Key thing to pin down in my opinion is the precise size of opportunity per EV 2W & 4W. Im working on it.
Thanks for the write up. Currently do they supply to any EV player in India?
The reason is that that is how real world is. Same 2 cos can compete and collaborate.
This is ok. On some products where they are not as competitive as xpro they can buy from xpro. On some where they are competitive they might manufacture
For example consider shivalik and vishay. Vishay manufactures some of resistors but not ultra low ohmic shunts
This depends on the machines as well. I believe the latest machines xpro will get will enable them to manufacture sub 4 micron films as well.
You are sort of right. The lower micron films have higher capacitance enabling application in some of the new age tech application like EV, Solar etc. See Bruckner website
I believe q4 might prove to be better than Q3 with a earlier onset of summers & warm temperature.
Been adding lately.
Disclaimer: invested & biased this is in no way a recommendation to do any buy or sale transactions
Promoters exercised their warrants.
Hello everyone.
Any idea why the taxes fluctuate so much?
Hi ,
I have few quieries please clarify.
is Biax dielectric films used in Lithum Ion battery used in 2w ev
I see 2W EV segment growing with new players entering { Ola , Hero , Amper(Greves) ,Ather …}.
Can Xpro be a proxy in this segment or is it mainly in high voltage capaciotors for industry use and Hybrid EV .
Is Xpro’s dielectric film getting used in indian markets by EV players.
Who are the branded players who are using xpro’s dielectric films.
Thanks in advance
The realization of Biax division is continuously increasing.
As the current Biax division capacity (4000MT) is fully utilized at revenue growth is coming from realization benefit only.
Management is confident of the same thing repeating in FY24 also.
This can be driven by high technical grade product mix (low thickness)/ Global supply demand mismatch/ China + 1/ Toll manufacturing. Probably all of these combinedly played a role & realization moved up.
Between FY16 (realization was Rs 220/kg) to FY20 (Realization was Rs 242/kg) realization is pretty much flat.
Now they are investing 500+ cr for 2 more lines. Incremental capacity will be 8k MT.
Assuming they will be reaching near full utilization by FY27 & will be doing thickness as low as 1.5-2 micron, realization may move upto Rs 650/Kg.
That should do an asset turn of 1x. The question how sustainable is the realization growth? Would have loved to hear more from management but they do earnings call annually.
Xpro annual concall
High level takeaways: quality is the differentiator here. Customization, configuration, process parameters for capex + high lead times for equipment, development, testing, productionization + customization of the product for specific customer application bake in high switching costs & entry barriers. The TAM highlighted is massive. With the new lines xpro will target exports for EV & solar and the global TAM for these applications alone is 70-80 lines in 2030. (For comparison, Bruckner has total lines installed till date since last 50 years which is 40-50). There is likely to be a long term demand supply mismatch imo which will ensure stable pricing. On growth he said that it will be substantially higher than 15%. Each line is a straight 30% import substitution. Realisation being higher for lower films will push the ebitda margins higher as well
Disclaimer: invested, biased. Will look to add if there is any weakness after next few quarterly numbers
While there were a lot of positives from the concall: 1) clear indication of decadal structural growth (import substitution + sunrise segments + exports + value addition) & 2) high degree of domestic barriers to entry driven by long machinery lead times and technical expertise; one thing that concerned me was the capex number per line which seems to be much higher than expected.
Just some basic math:
Capex for 1 line: 300-325cr : 250 cr (for 1 machine) + 50-75 cr (building/utilities 30% of machinery). Note for second line which is likely to be greenfield the capex will be even high. Probably to the tune of 400 cr.
Revenue: 200-250 cr (3500 MT @ Rs 600-700/kg)
EBITDA: Rs 80-100 cr (40% assumed)
EBIT: 65-85 cr
Working Capital: 20-25 cr
Total Capital Employed per line ~350 cr
ROCE: ~18-24%
The incremental ROCEs seem low for the kind of entry barriers and monopoly status the company enjoys. If we compare against some other businesses which make relatively niche products (Shivalik, Ester Industries, Raghav Productivity, Fine Organic, etc), they seem much lower.
In fact, if we see the capex done for the first Dielectric line in FY13/14 it was about 150 cr. It seems a lot of the incremental supply/demand mismatch benefit is being eaten away by the machinery manufacturer
Shivalik makes its own EBW machines which leads to much lower capex by tune of 5x. Xpro doesnt do that. These machines are more complex than shivalik’s EBW machines. Also, the ROCE demonstrates the sum total of porter’s 5 forces. For xpro, the supplier (bruckner) is even more powerful than xpro is. This is what leads to these sort of ROCE. In shivalik’s case, it is most powerful link in its value chain (except perhaps end OEM like Tesla)
Disclaimer: invested in both, biased.
I had a chat with a senior bruckner india ex employee regarding bruckner. Please find notes below:
the purpose of this call is to evaluate a company called XPro india limited which is an indian Biaxial dileetric capacitor film maker.
Q1. Why does it take bruckner so much time to scale up production? For companies ordering today the delivery date is 4 years away. Why? What limits bruckner’s scaling up?
A: Biax oriented film. Oriented in 2 directions. Longitudinal direction. Other type of film monoaxial are very compact machine. Biax tech is a huge machine. THis machine takes lot of time.More than 70,000 components. Different suppliers. Manufacturers. Testing/validation. It is set of 16 machines integrated & synchronized together electronically. Continuous operation operated from single control room. Mechanical configuration takes lot of time, writing logic takes lot of time. Since 2009 onwards, demand for packaging film has grown very high level domestic as well as export. This has led to heavy burden on machine maker. Demand or repeatability of 1 part. Sourcing has to be from same supplier who supplied that part earlier. Its like a sine way. It goes up, Drops down, again goes up. Its like a sine wave. Even sub supplier may not be ready to expand on a small demand.
Q2. To what extent are these capacitor film biax extrusion lines/machines customized by the capacitor fim company per the order of the customer?
A: Capacitor grade: different grades for input. Although substrate is PP. But we need metallization also. Biax orientation is same in packaging & cap films. Cap grade film fall under technical or specialty grade. Not commodity grade product. High end application. Difficult type of manufacturing under controlled clean room manufacturing. Machines are customized. Normal PP is different from capacitor grade. Capacitor grade doesnt go beyond 1000 KG/hour. 1 customization which is done on all machine. Must be able to cater to Low speed operation. Diff sections like: RM handling, drying, extrusion, filtration, minimum & maximum flow rate. Normal flow rate does not work for capacitor films. Capacitor: Thin & ultra thin films. 2 micron to 15 micron films. All packaging: 10-75 micron film. Lot of customization is needed. Filtration is very low volume. Diff types of filters. There may not a cooling bath, low volume cooling bath, the feet that are designed have a different structure, different finish, Contact winding, gap winding, online treatment where operating parameters are customized, cap film: very narrow width: 400mm. Packaging is 1200 mm wide. Low capacity production. Precision control of operating parameters, hygienic environment.
Q3. Is the configuration of such machines a secret sauce of the client? Is it possible for bruckner to sell the same machine which they sold to xpro to also sell the same machine to any other capacitor film maker in india? Or is the design/configuration of such machine lines protected by any IP (intellectual property) which XPRO owns?
For so & so machine bruckner may not be able to supply and will outright refuse. Few machine or few section have got IP protocol. They are not ready to discuss enquiry & quotation for some machines.
Q4. Why is there not much competition for such machines ? Why does bruckner have a monopoly in this space?
A: Machine technology is of orientation. Developed in 1960s. Pioneer was Mr bruckner. Another german company started making. Lot of people tried to copy the machine. Bruckner is best for PP. Someone else could be best for polyester. Each company has their own specialized fields. Fair technology practices. In china they try to copy. But there are lot of things behind : metallurgy, requirements, performance may not be the same. Couple of companies are well reputed. Bruckner is market leader for PP based biax capacitor films. Efficiency, reliability, engineering etc bruckner is best.
Q5. Xpro has placed an order for these machines in 2021 september. The timeline they shared with their investors is 2-4 years from then. Does that sound like a reasonable timeline to you?
A: No way anyone else can supply machine in a period less than that.
Q6. Biax machines: Pricing of machines: 20m euro.
A: Price of machine is machine is driven by features you add into it. You can even bring it down as long as you have experience & knowledge to bring it down. Technical negotiation rather than price negotiation. Level of automation. Make of the machines.
Q7. Can client customize in house?
A: What bruckner does is: It goes up & then comes down, The entire value chain is cyclical, Business of machine supplier is also cyclical. How do they ensure they have continuous business? By way of upgrades, spare parts (identical & same): customization has to be there, otherwise every
2. Whether you can customize in house: generally there are guarantee & warranty clauses: maybe 24 months or X months. Until such time you cannot modify it in house. I need support for next XX months. Then that will add to the pricing also. Protocol for handover : free to tamper, upgrade it, reinstall it, whatever you want you are free to do, OEM will also help you with upgradation service.
Q8. Buying this machine is not like you tell i want to buy capacitor grade machine. You give enquiry takes 1 year to finalize the agreement. They have to combine ingredient according to client requirement. Client has to be technically prepared. Sending right enquiry. Bruckenr needs 2 months : 3 big box file quotations. Several sections of machine.
Q9. Can a client use packaging film machine to make capacitor films:
A: It seems possible. But they have to do capacity downsizing. Clean room conditions, hygienic conditions
Book lamination varies by 5% doesnt matter. Change in thickness of flim changes the capacitance of the capacitor.
Needs lot of Precision by way of understanding the bottlenecks of different sections.
Major hardware changes. (Sahil’s notes: this is what xpro must have done for first machine) For a week you have to keep line idle.
Q10. Who are the other large customers for bruckner’s capacitor film division in the world who have the capability to manufacture 2-4 micron capacitor films at scale ? Name & country.
To be most interesting insight was that the machine is very complex, and difficult to create in house. The complex supply chain means that any of the dozens of sub-vendors or the 10000s of components could be the bottleneck
Disclosures same as before
Xpro India current earning calls and related stuff
Hi Sahil,
Thanks a lot for providing Scuttlebutt information.
Could you please share any research reports about Xpro India
