CG Power and Industrial Solutions Ltd anticipates generating revenue from its semiconductor business within a span of four years, coinciding with the completion of the OSAT project.
The company recently received approval from the Union Cabinet under India’s Semiconductor scheme to set up an Outsourced Semiconductor Assembly and Test (‘OSAT’) facility at Sanand, Gujarat.
“It is a new line of business for us. This is a long gestation project. The project will take 3-4 years to complete,” Natarajan Srinivasan, MD and CEO of CG Power and Industrial Solutions said in the Q4 analysts call on May 6.
The estimated investment in the project over five years is Rs 7,600 crore and the same is expected to be funded by a combination of government subsidies, equity contribution and potential bank borrowings as required, the company said.
“...there is a huge amount of demand, the fact that the government wants these projects to come up with substantial help from them speaks of a huge demand, I think the whole semiconductor industry is growing globally,” he added.
CG Power and Industrial Solutions, during the quarter incorporated a subsidiary named CG Semi Private Limited ('CG SEMI') on March 08, 2024, to set up an Outsourced Semiconductor Assembly and Test ('OSAT') facility, it said in the statement.
Renesas Electronics Corporation, Japan and Stars Microelectronics, Thailand are the Technology and joint venture partners for the OSAT facility.
The Murugappa Group firm recently kicked off the construction work for its OSAT facility in Gujarat.
The factory will manufacture a wide array of products – ranging from legacy packages such as QFN (quad flat no-lead) and QFP (quad flat package) to advanced packages such as FC BGA and FC CSP, which will cater to industries such as automotive, consumer, industrial and 5G among others with a capacity to ramp up production to 1.5 crore units per day, the company said previously.
Srinivasan also said that the motor segment within industrials is currently under stress but he hopes things will improve after elections. "The situation will be clearly known after the elections. Because of elections some of the projects going slow. We will wait for one more quarter."
Currently, about 30 percent of the industrial segment revenue comes from railways, mainly from propulsion systems. Of the remaining 70 percent, nearly 85 percent is contributed by low tension (LT) motors.
The company targets 20-25 percent consolidated revenue growth for the current financial year (April-March 2024-25) given the strong order of around Rs 6,300 crore.
Of the total order book, around Rs 3,700 crore is in power systems, Rs 1,500 crore in railways, and the rest in industrials.
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