CG Power & Industrial Solutions Ltd, a part of the Murugappa Group, is moving faster than expected on its ambitious Outsourced Semiconductor Assembly and Test (OSAT) project, with a mini-plant set to start production this quarter and the larger facility in FY27.
The company is funding the semiconductor foray using proceeds from its recent qualified institutional placement (QIP) and is also evaluating potential acquisitions.
“CG Semi is absolutely on track. The mini-plant, as we had projected, will start production and the main plant, which is the larger one, will start production in the next fiscal. So, we reviewed the project, and I think they are, in fact, a little ahead of the target. So, that is doing good,” Amar Kaul, MD & CEO of CG Power and Industrial Solutions, said during the Q1 earnings call.
CG Power is building semiconductor capabilities through two units — CG Semi and Axiro. Axiro houses the radio frequency and chip-design business acquired from its Japanese partner Renesas and other affiliates.
“Axiro, which is a radio frequency and chip designing facility — there revenue will start already flowing in because that was a direct movement and acquisition of this facility,” Kaul said.
The company reported a more than 50 percent jump in employee costs year-on-year, mainly due to hiring for CG Semi and the integration of Axiro operations.
“So, that’s coming out to CG Semi as well as that, you know that we did the acquisition of Axiro, so that also is coming. As you know, in that business, the staff cost and employee cost would be much higher… for the first year, any acquisition that happens will be the transition year, and then you will see the upside going there, and that’s specific to Axiro,” Kaul said.
“CG Semi itself, if you are looking at employee cost at a consolidated level…there are almost 170 people already on board and with no revenue. But again, we have made that investment, it’s a more strategic investment because most of them have been trained right from operators to engineers in various plants of our partners outside India, and right now they are on the job of learning,” he added. “So, our lead time from manufacturing start till you start the shipments will be compressed with the investment that we are doing now.”
The OSAT unit is being built with a $222 million investment in Sanand, Gujarat, as part of a joint venture with Renesas, which is contributing chip- packaging technology and holds a minority stake. Thailand-based Stars Microelectronics is also a minority investor.
CG Power has invested around Rs 400 crore in CG Semi, so far, underlining its commitment to becoming a serious player in India’s fast-growing semiconductor manufacturing ecosystem.
Q1 report card
In the first quarter of FY26, CG Power & Industrial Solutions posted a 29 percent YoY growth in consolidated revenue at Rs 2,878 crore. Net profit was up 11 percent to Rs 267 crore ago.
EBITDA rose 17 percent to Rs 381 crore, though margins declined to 13.2 percent from 14.7 percent on input cost pressures.
Kaul said the company remains on course to achieve 30 percent revenue growth in FY26. “The order book is strong, so we’ll continue the momentum of the growth that we have demonstrated,” Kaul said, noting that expanded capacity and recent acquisitions will help sustain growth.
While margins dipped slightly in the April–June quarter, Kaul expects full-year blended margins to settle in the 14–15 percent range. He attributed the softness to a shift in the industrial segment’s product mix toward lower-margin railway traction electronics, but said corrective actions are already in motion.
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