Shares of CG Power and Industrial Solutions Ltd surged close to 20% in trade on Wednesday after the company said that it has filed an application with the Central government to set up an Outsourced Semiconductor Assembly and Test facility (OSAT).

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In a filing to the stock exchanges, the Murugappa Group company said that it has filed an application with the Ministry of Electronics and Information Technology (MeitY) seeking approval to set up an OSAT facility.

The estimated investment on the project over a period of five years is $791 million (approximately ₹6,592 crore) and the same is expected to be funded by a combination of subsidy, JV Partners equity contribution and debt as required, the company informed the bourses.

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With the filing of the application the company seeks the grant of subsidy for the setting up the new facility under the Modified scheme for setting up of Compound Semiconductors and Semiconductor Assembly, Testing, Marking and Packaging (ATMP) or OSAT facilities in India, the company informed the bourses.

The company proposes to set up the OSAT unit as a Joint Venture in partnership with technology providers and anchor customers.

“Subject to the project and the subsidy being approved, the company proposes to implement the same as a Joint Venture in partnership with technology providers/anchor customers, which are under discussion”, the stock exchange filing mentioned.

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Recently, the CG Power and Industrial Solutions announced an expansion of capacity in the switchgear segment. The consolidated order book for the segment stood at ₹5,229 crore in October.

In the second quarter of the current fiscal the company's standalone net sales increased up to 20% to ₹1,900.14 crore. Net profit nearly doubled year-on-year to ₹355.24 crore in the September quarter of FY24.

Watch: In a CNBC-TV18 interview, Renu Baid Pugalia, Senior VP-Research at IIFL Institutional Equities, discussed CG Power's intention to set up a semiconductor facility.

Earlier, the company retained its revenue guidance in the range of ₹7,000-7,500 crore for the FY24.

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(Edited by : Asmita Pant)

First Published:Nov 22, 2023 12:50 PM IST