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SPEL lines up Rs 430 cr for capacity expansion

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SPEL Semiconductor Ltd, originally promoted by the Chennai-based Spic Group, is planning to invest over $100 million (Rs 430 crore) over the next five years in capacity expansion at its Maraimalai Nagar plant, 45 km from Chennai.

The company, which provides assembly and testing services for integrated circuit (IC) manufacturers on job-work basis, will fund the expansion plan through debt, said Ar Rm Arun, vice-chairman, SPEL Semiconductor.

He said the company had decided to increase its production capacity in a phased manner to address the booming market largely for IC products in Asia. In the first phase, the annual capacity would be increased to 680 million units every year from the current 425 million units, with an investment of $25 million.

Similarly in the subsequent phases, another $75 million will be invested. By 2012-13, the total capacity will be increased three times to over 1,500 million units every year.

Similar facilities would come up in special economic zones (SEZs) in and around Chennai. But, the plan is in the preliminary stage.

SPEL’s ICs are used in consumer electronics applications such as cellphones, digital cameras, and in desktop PCs, notebooks and automobiles. It’s a 100 per cent export-oriented unit (EoU) mainly catering to the US.

SPEL is now planning to foray into the European market as well. Arun said they were is in discussion with three big companies there that are into computing, communication and consumer electronics segments. In the next six to eight months, the company hopes to get orders from these European customers.

SPEL reported a 238 per cent growth in net profit during the first quarter of 2008-09 to Rs 2.04 crore from Rs 60 lakh for the same period last year. Sales increased to Rs 21.83 crore from Rs 14.93 crore.

In 2005, demand for electronic products in India was $28.2 billion. With its growing middle-class population, consumption is likely to reach $363 billion by 2015 growing at a compound annual growth rate (CAGR) of 30 per cent. Based on this, India’s semiconductor demand is likely to exceed $36 billion by 2015.

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