Ami Organics has announced it foray into the semiconductor space. Company has acquired majority stake in speciality chemicals maker Baba Fine Chemicals (BFC). BFC is engaged in the business of manufacturing specialty chemicals used in the semiconductor and electronics industry.
Naresh Patel, Executive Chairman and Managing Director at Ami Organics shared some insights on the acquisition and the growth potential of Baba Fine Chemicals in an interview with CNBC-TV18.
“This acquisition is in-line with our strategy to enhance our fine chemical portfolio and both BFC and Ami Organics has a very good product profile and that will make us grow in future,” he said.
Notably, BFC has reported revenue of around Rs 47 crore in financial year 2023, Rs 36.6 crore in financial year 2022 and Rs 26.4 crore in financial year 2021.
According to Patel, the revenue can be higher by 5-6 times in the next few years. Patel also mentioned that the margin for the acquired asset is around 40 percent, which is quite attractive.
“Revenue can be easily go up to 5-6 fold in next three, four years and margins will be little suppressed, will remain around 40 percent,” he said.
Patel further stated that Ami Organics plans to increase its stake to 100 percent in Baba Chemicals, which is a net debt-free company.
“In the near future, that is the plan. Currently, we are happy with the controlling stake and sooner or later we will go to have a better positioning in the company,” he added.
He believes that the acquisition of Baba Chemicals will help Ami Organics expand its presence in the high barrier semiconductor industry.
The semiconductor industry is known for its high barriers to entry due to its complex processes and high capital requirements. However, Patel believes that Ami Organics is well-positioned to enter this market with the acquisition of Baba Chemicals.
Patel also highlighted that the main customers for semiconductor chemicals are in the US market. However, he believes that there is a significant growth potential in other markets such as Korea, Taiwan, and Japan. With Baba Chemicals' expertise in the semiconductor industry and Ami Organics' strong presence in the specialty chemicals market, the company can target these markets and grow its business.
For more details, watch the accompanying video