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Jairam Sampath, Whole-Time Director & CFO, Kaynes Tech, says “between 40% and 50% growth is likely for FY26. FY26 might be one more additional benefit will be there, second half our semiconductor revenues will also kick in and some little bit of PC board revenues will also kick in because by that time we would have completed at least the bulk of our installation of our production facility. So, FY26 yes, certainly you can expect whatever FY25 numbers are there, at least 50% kind of growth on that.”

You went public closer to Rs 700 if my memory serves me right.
Jairam Sampath: Yes, the issue price was Rs 587.

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Rs 700 has become Rs 2,800. You have been a multibagger in less than one-and-a-half year. Must be a great feeling?
Jairam Sampath: I think a lot of kindness has been shown by investors and the public and more importantly, our customers, which is the basis of all these results.

You have reaffirmed your guidance of Rs 1,800 crore. What is giving you confidence that you will be able to do Rs 1,800 crore?
Jairam Sampath: So, our business, like I have said earlier, is a little bit of a longish term. It is not a quarterly business. If you see December 31st, we had an order book of about in excess of 3800 crores. So, some of those orders are meant for this quarter, some are for the next year and then there are some orders which are FY25 and FY26 as well. So, we have full coverage of orders for this quarter. So, it is a matter of execution, receiving the components, making sure that all the manufacturing is done. So, we are sure that should happen for this quarter.

The historical challenges which everyone had, lack of components, semiconductor availability, supply chain issues, all that is sorted?
Jairam Sampath: Yes, okay, let me put it this way. The environment has improved a little bit, but I think we have also improved our response to the environment. We are a little sharper now in terms of identifying those which are likely to be bottlenecks and then we make sure that we take some extra precaution. While at the same time, making sure that we do not excess stock, we are also having the responsibility for keeping the working capital within some limits, so yes, environment has improved a little bit but our response has improved very well.

Help us explain this entire Aptos Technology collaboration, what it means for you.
Jairam Sampath: Yes, so we have got three collaborations in the semicon area. And one of the things that whenever I have talked to people, I have been normally saying that a company wants to be an integrated EMS player. So, when you say integrated EMS player, earlier the definition was that if you made plastics and metals and you did assembly, then you become a comprehensive EMS player, contract manufacturer. But today what has happened is the kind of technology development that is happening, there is a lot of microminiaturization happening. At some point in time in future, a lot of assembly work will reduce for a given product for the simple reason that some of those components will morph into a small silicon wafer and then, of course, value has to be added by some company which converts that wafer into IC, which is essentially an OSAT company. Our destination in our OSAT business is to do high-end OSAT which includes things like compound packaging, which includes things like advanced packaging, compound semiconductor, and of course modules which we, in our imagination, looks like will become more and more prevalent going into the future. So, while we have to start with a partner like Globetronics, which is in Malaysia, for the basic semiconductor assembly because we need to learn the first and then second stage wherein we wanted to learn the advanced packaging and as you know India has lost a lot of time in semiconductor both…, especially in OSAT business.

So, we need to leapfrog into the higher-end semiconductors so that we are future-proof. We are able to take care of all the future requirements of the customer. In that context, people like Aptos from Taiwan and of Japan, they become very important actually because they have already capabilities in advanced packaging and so they bring also with them the respective ecosystems of their nation. So, essentially, the way to look at it is we are being helped by Malaysia, we are being helped by Taiwan and Japan which is the best kind of combination.

I have an Axis Capital report with me and the projections are that this year you are on course to do between Rs 2,500 crore to about Rs 3,000 crore of turnover FY25. So, is that a fair estimate that you would be somewhere in that range?
Jairam Sampath: Yes, it will be between that. Though we may not be able to give you guidance right now, that is a fair estimate. Going by the order book, etc, that is a conclusion we can make.

What visibility you can share with us for FY26 because the order book that you have will not be executed in FY25, it will be in FY26.
Jairam Sampath: So, book to order is typically one-and-a-half so typically what we are seeing is on an average we have an order book for about one-and-a-half years. So, FY26, I can confirm to you that at least the growth rates will be the same if not higher. So, anywhere between two, five, and three is the kind of target for the coming year based on whatever order books we are having.

I guess between 40% and 50% growth is likely for FY26. FY26 might be one more additional benefit will be there, second half our semiconductor revenues will also kick in and some little bit of PC board revenues will also kick in because by that time we would have completed at least the bulk of our installation of our production facility. So, FY26 yes, certainly you can expect whatever FY25 numbers are there, at least 50% kind of growth on that.

Can I say that this kind of growth, as the base becomes higher, could be there for the next five years at least? I am not talking about absolute guidance, but directionally, can you grow at 40-50% for three to five years?

Jairam Sampath: Yes. In terms of capability to grow, one of the things people, the investors and analysts, everybody asks me is that, will the company be able to sustain its growth by its own merit, by generating reserves and cash within the company? So the answer to that is yes. As of FY25 end, we will certainly, we have worked this year, there will be some small improvements in our net working capital next year, some more.

And by all analysis, it is telling us that our EBITDA numbers will also probably improve in terms of percentage. So with this kind of a situation, we will have a good operating cash flows. So we will invest more and more into FY26 and for FY26 capacity.

Similarly, FY26 maybe will generate some more cash and then that part of it will get invested by FY27. So the hint here is that demand is not the problem, the problem will be capacity creation. And so that is what we are now working on, we are making sure that we have adequate representation for the company across different states and we are acquiring land and starting off, at least in some small way, making sure development is done of the land and we start planning for additional capacities, because FY25 is just around the corner and post that FY26 will be staring at us, we require at least six to nine months to develop any capacity for usage. So yes, so this growth will continue for 5 to 10 years for sure.

As I always said, what we do today, what we perform today is a result of something that we did in the past, maybe one, two, three years ago. So now we have to work for a life beyond this five years’ time. So we have to set in motion processes and diversifications in different types of categories, so that we can sustain this growth in a, let us say in a nice way. The nice way is to maintain all your profitability and all your other objectives. At the same time, making sure that the company size grows and scale of influence grows.

My last question to you is 40% to 50% growth is a very high growth. The kind of numbers you are telling us, means we are looking at about Rs 400-450 crore of profit by FY26.
Jairam Sampath: Not giving you guidance, but it is doable.

You are confident that you will be able to extend your capacity, you have got all necessary clearances, you will have no problems in terms of technology transfer, you are not worried about that?
Jairam Sampath: Yes, I do not think that is a worry. Like I have said earlier too, today the job of companies such as us and other peer groups who are also growing at a high speed becomes not only achievement of production targets for the year, but also look at coming years and then make sure that your capacity formulation is there. It is not as if it is very easy to get business or something, but that is something that we have figured ut and we have a process in place. It is the project execution that other skills that companies like us have to learn in order to grow to larger numbers.

What could go wrong? Could competition come back? Could there be a new technology which could threaten your existing order book? I am just trying to understand that every business has a risk. What is the risk for you?
Jairam Sampath: Yes. Yes. And I am glad you asked this question because one of the things that keeps us awake is the fact that, okay one thing is that the view looks very positive and sometimes you can even say it is too good to be true, right. So obviously there is somewhere lurks a few challenges. One of the challenges which we are trying to address through our OSAT plan as well as the high density interconnection board is technological changes which forces these micro-miniaturization of boards so that the salience of assembly comes down. So that we are kind of addressing by making sure that technologically we are ready to add value even if such a situation comes wherein the micro-miniaturization of the board happens and then the number of components to be sold for a particular application comes down.

The other risk which in today’s world has become well in present is the risk of global supply chain disruptions. So let us put it this way. These disruptions are minor in the sense they are one month, two month kind of disruptions. So in our kind of business, if you plan it well, we can make sure that we do not get too much affected. Yes, some one month, two months we could have some little difficulties. So I do not expect these global disruptions to be of that nature.

The last point which is really always a challenge is to get the required talent, because now it is not only another two-three years’ time, we will not just be one product or one manufacturing system company, right. There will be OSAT, there will be PCB boards and who knows some more. And what ends up happening is that we have to make sure that all the talent, proper talent for execution of these projects and then making sure that operations are done, that has to be put together and retained and so on.

We are making a lot of efforts. That is also the reason why we are also launching newer, let us say subsidiaries etc. so that we give enough leadership bandwidth to people. One way of growing talent is to grow leaders and that is what we are focusing on. We are onboarding people who then will obviously grow their teams etc. So talent growth is one issue. Otherwise, the other things are all challenges which can be addressed. These are challenges which we need to work on right now so that after three-four years’ time, we are able to kind of get a handle on these problems.

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