Building high precision, large sized complex fixtures was our major core competency in the past. Recently our majority of income is generated from high precision, mid and small size fixtures for the electronics and semiconductor equipment industries.
Exploring the possibility of starting operations in Mexico or USA in 2023-24.
We have put up 3 plants in Guindy, chennai, we are now putting up a large fourth plant in sriperumbudur area, chennai. Here we are planning to add 100 machine capacity. This capacity will be mainly for electronics and semiconducor equipment industries.
Rv forms had only two manufacturing units till recently as per our information , Now they are saying they have setup a third unit and planning for a large fourth unit. This may be in line with four phase expansion outlined in the AR -2022. We have not seen a growth in manufacturing revenue in line with these expansions. Company continue to do 15 cr revenue rate per annum while RM expense have increased substantially. Hopefully we might see growth in mfg revenue now onwards.
Happy and excited to know that company is saying majority of their income now comes from electronics and semiconductor segments. These are segments which offers high growth potential and having high entry barriers.
I love this point that you highlighted. India is rapidly growing as a destination for manufacturing at all stages of the electronics industry value chain (ex: more iPhones being made in India), and Forms and Gears is smartly positioning itself to take advantage of this shift. Also geographically, they’re well situated to serve their clients well, as Tamil Nadu is an established (and growing) electronics manufacturing hub.
I am waiting for the next quarter and AGM to update my thesis regarding ASM.
ASM Technologies (and by extension Forms and Gears) has a very strong footing in Tamil Nadu and Karnataka, and the Chennai to Bengaluru belt is turning into a robust electronics manufacturing hub, and they are primed to take advantage of the opportunities in these two states.
With a presence in Western India, with the new Pune office, I am expecting to hear about big client wins. If they do not have a good client roster in Western India by the time of the AGM, I will question the decision to set up an office there.
There are long lead times and long sales cycles for specialized equipment in the semiconductor industry. However, it has been about a year since the JV with Hind High Vacuum was launched, and I expect to see some traction by the time of the AGM as well.
To summarize, ASM is sitting on a goldmine of three opportunities: workholdings/fixtures for the electronics industry, a new catchment area in Western India, and a semiconductor industry that’s in the limelight. All that matters now is how they execute.
Overall seems like this company on transformation phase from a service provider to a DLM player.
Some of the points discussed are given below.
DLM will grow to become 40%-50% of overall business from current 15% in next 2-3 years.
Current revenue mix
Hitek (semicon+electronics) 45%
Auto mobile 20%
In Semi/electronics space we don’t have any competitors in India, in automobile there are many players.
Working with many EV players, beginning to scale these segment now. Working with iisc for some products in autonomous vehicle, we will talk about it after reaching the RnD to some level. Also in the process of building some equipment’s for EV.
Additive manufacturing we do it for last few years and have plans for it
We works with no 1 and no 2 players in semicon equipment space. Cannot disclose names and other details as we have NDA with them.
No slowdown/recession in the segment we operate we see many opportunities emerging in the areas. Conservatively we will do 20% revenue growth for next few years. Without any inorganic and major product wins.
Asm ventures : a) Lavella, airtel planning to aquire more stake it is doing well and became largest sdwan company in the country. b) Eclectic : We developed some cyber security products for manufacturing industries after partnering with them. This is getting some traction now.
120-130 products under qualification process some are through and some are at trial stages. Normally it takes 6 to 24 months for the entire process. We have been spending lot of money for these processes in last 2-3 years.
Forms and Gears running at over all 40-60% capacity utilization. old plant running at 60% and two new units are running at 40% And further expansion is considering in next few months. Turn around should happen in this year.
Semicon JV : Couple of equipment’s we are building we will be able to talk about only after some level. Industry is at inflection point in India and globally.
ASM Tech aquires semcon uk this time, intresting commentary from semcon regarding the divestment.
“Our engineering activities in the UK within the business area Engineering & Digital Services need to be scaled up in order to ensure delivery capacity and long-term profitability. We
have reviewed different options and concluded that our best option is to divest the UK engineering operations to one of our partners, ASM Technologies, which already has a
presence in the UK. This transaction will be to the benefit of our customers and employees
within this segment in the UK while allowing us to focus on other prioritized growth areas,”
says Markus Granlund, President and CEO of Semcon.
As per EXPLANATORY STATEMENT attached to board resolution for fund raise , purpose of the fund raise is -
“upto Rs. 130 Crores towards funding organic and inorganic growth opportunities and
strategic acquisitions including but not limited to mergers and takeovers, acquisition by
Slump Sale etc. or acquisition of any business undertaking on going concern basis or
acquisition through SPA directly by the Company or through its subsidiaries or Joint ventures
or associates as approved by the Board from time to time”
So it looks like some acquisition is on cards.