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M. Ramesh

To raise $30 million from abroad next year

Chennai , March 14

Encouraged by on-target financial performance and booming market for chips, Chennai-based SPEL Semiconductor Ltd, has chalked a $250-million expansion spread over the next five years. That includes increasing the capacity of its chip assembly and testing facilities, a foray into IC design and a possible entry into newer products such as crystal oscilloscope.

But the immediate plan is to raise $30 million (Rs 135 crore) from overseas markets to fund the next phase of expansion, the company's Vice-Chairman, Mr Ar. Rm. Arun, told Business Line. The funds would be raised through a combination of equity and convertible and non-convertible debt, he said.

This $30-million capex would then come close on the heels of another $5-million expansion project that has just begun. This will take the company's capacity from 15 million a month to 18.5 million. Commercial production from this project will commence by January 2007, Mr Arun said.

SPEL reported sales of Rs 33.85 crore for the first nine months of the current year, against Rs 26 crore in the same period last year. Mr Arun said he was confident that the company would meet its turnover target of Rs 50 crore for the current year. "Profitability has been better than last year," he said.

He said that the company expected to be able to wipe off its accumulated losses not later than the second quarter of next year.

With part of the expanded capacity, turnover next year would be around Rs 65 crore, Mr Arun said.

On the company's plans for getting into IC designing, he said that SPEL would like to enter designing "pre-made modules", which the IC manufacturer could buy and develop further. SPEL would like to "create a library" that a customer could use in order to shorten his design cycle time. But the design foray is at least two-and-a-half years away.

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