00:002024 is the year of IPO. Many big companies have launched IPO and are now listed.
00:06Hello and welcome. My name is Shruti Sarkar and you are watching Good Returns.
00:10And today we have with us Ramakrishna Kamujana, full-time director and CFO,
00:15and Rajinikanth Balaraman, full-time director, Unimake Aerospace.
00:20My first question, rather I would want to congratulate you first on the IPO launch.
00:31First, we would like to know about Unimake Aerospace, your company,
00:37what kind of business you are in and I know you are based out of Bangalore.
00:43We know a lot about HAL from Bangalore, but I think you know, please tell us more about the company.
00:51First of all, thank you Shruti for bringing us on this show.
00:56We started Unimake in 2016 and we are an aerospace, we have two offerings,
01:07we are a complete engineering solution providers and manufacturers of aero-tooling,
01:17which includes aero-engine tools and airframe tools.
01:22And the other category is Christian parts and complex sub-assemblies.
01:29In this, we cater to aerospace, semiconductor, defence and more importantly nuclear energy.
01:37Thanks for that. Now, my second question is, you know, as per my knowledge,
01:41you guys, you know, you started with Rs. 66 lakhs and you have built around,
01:47I think 35-100 crore valuation of the firm right now in 8 years.
01:54So, the viewers probably would want to know a little bit more.
02:02You know, in the past 8 years, how was the journey?
02:13Other than that, we have three other founders.
02:17One is Anil, Anil Puthan, Kumar Krithan, Mani Puthan, who is also the older brother of Anil
02:25and Krithan Shimoga, who is another founder.
02:29So, all three actually come from very strong mechanical, manufacturing and engineering background.
02:38Ram is a CA, CS and I come from a computer science engineering background.
02:45So, all of us have, you know, been professionals working for two startups,
02:51multinational companies and large, you know, manufacturing companies as well.
02:56And, you know, having work instincts like managing director, CFO, running a whole practice.
03:05After doing that, we felt, you know, this might actually be a good time to start our own.
03:12During this time, you know, Anil, who is the CEO, he jumped onto the entrepreneurship bandwagon,
03:20started a consulting firm called Unimech Consulting, which was engineering,
03:26which is providing engineering services to both domestic as well as international customers.
03:32And as part of that, two years in, we had one of a European customer who said,
03:40anyway, you're doing manufacturing engineering, why don't you do manufacturing also for us?
03:46This is kind of where Unimech Aerospace was born.
03:50And we've had strong bonds between all five of us.
03:55We've known each other, like I've known Mani and Anil since childhood.
04:00Ram and Mani used to work in the previous company that they worked with,
04:04which is Rolls-Royce and HAL Joint Venture.
04:07As you can hear the name, these are, you know, big aerospace companies.
04:12And even Anil and Pritam used to work for Rolls-Royce through an engineering consulting firm.
04:21And, you know, this was kind of how it started.
04:24And we got into this high mix, low volume kind of manufacturing.
04:29As you can see, engine tooling or aero tooling is high mix, low volume.
04:36Just to give you a number, our engine has anywhere between 1,200 to 1,500 different tools
04:43that are needed to assemble, disassemble, transport, inspect, and calibrate the engine.
04:50Similarly, you know, aircraft also has similar number of tools.
04:55So you're looking at a high variation of tools and volumes anywhere ranging between 1 to 20, right?
05:02So it takes a certain skill and a certain handling operation complexity in terms of scale to run a business like this.
05:13And these, the five of us were having complimentary skill that we were able to actually take off.
05:19And we've been fortunate that all our hard work, sweat and tears have basically come to a point
05:27where we've been able to raise some free IPO funds as well.
05:32And at least I can represent the whole founding team and say that we're just getting started.
05:38Sounds very, very interesting.
05:41Let's talk a little more about businesses, Rajni.
05:46Your two manufacturing units are already there in Bangalore.
05:52What is the capacity and what is planned next?
05:57I might actually answer this question.
06:00Okay.
06:01So, yes, we have two facilities in Bangalore.
06:06Two facilities focusing on two different business segments.
06:11The segment number one is aero tooling segment.
06:15Segment number two is nuclear.
06:18Less precision parts business also we are going to start in a new facility.
06:24We are using the second facility only, but eventually a new facility.
06:29Now, coming to the capacity utilization or capacity side.
06:35Our capacity, from the member perspective, is machining capacity, I can say.
06:42But always high complex, high mix segment, the capacity is not just machine hours.
06:50It is a combination of end-to-end manufacturing of different activities,
06:56such as engineering itself, one important activity.
07:01Higher value addition in terms of revenue side, pricing side.
07:05Second is machining, which is machining in terms of hours.
07:10I would like to explain anyway.
07:12Third, fabrication, which is welding, high-end, high-class welding aspect.
07:18Fabrication is very important in our segment.
07:21Then assembly, where again human interference is very high.
07:26So the capacity is different in terms of manpower.
07:29When I say capacity, it is a mix of everything.
07:33Having said the machining side, we are right now around 100 machines we are using.
07:411,70,000 hours of machining capacity.
07:47Plus the capacity, this is what I mentioned in-house capacity.
07:55We also use external capacity, which is called subcontracting vendor.
08:00We have a strong vendor ecosystem, which is needed to manage lead time.
08:07And the objective of Unimech is to get complete assembly of the tool.
08:16Not just a part of that.
08:18So that is where I think managing end-to-end activity, including machinery,
08:23the top-class machining is within our facility.
08:27The low-end machining is managed by others.
08:30In terms of capacity managed by others, we have more than 40 vendors,
08:34who have more than 100 machines used for Unimech to meet the capacity requirement.
08:42Broadly, this is the capacity story.
08:47Let's move on from the capacity story.
08:51My next question to you is, what kind of revenue are you seeing in the next 5 years?
09:02Well, I think considering the constraints we have from the CBI,
09:08I might not tell the numbers, but I can give the feel.
09:12It always translates the importance to the revenue.
09:16So right now, the last year, the 100th year, and before that 100th year,
09:22the growth that you see, back from late years, except living through COVID,
09:29where our revenue journey is always more than 100% CAGR growth.
09:35Every year, we are doing that.
09:37And why this revenue growth is coming?
09:40Because there is a compounding effect, which viewers need to be aware of.
09:44Compounding effect, in a simple language, is like any business, any company,
09:50which has multiple customers getting added every year.
09:57And each customer penetration, in terms of more uproar, is happening year on year.
10:01Then the revenue that each customer gives, and multiple customers give in each segment,
10:08will have a compounding effect, and the revenue growth will be high.
10:13And in our case, exactly that is happening.
10:16We started with one segment, which is Marvel tooling, Aero tooling.
10:21Within that, engine tooling we started.
10:24Engine tooling with one customer, and eventually moved to 6, 7 licenses.
10:30And then started airframe companies, eventually moved to a couple of customers.
10:34And then one segment, we added another segment.
10:37We are focusing on high sunrising and high demand industries,
10:41such as nuclear and semiconductor industries,
10:46which expect the exact skill that we have,
10:49which is high mix, high complex, and low volume category of focus.
10:54Which in fact, when China is not there in that,
10:57we are fortunate that we are focusing on that.
10:59Such segments we started, and their customer arm is there.
11:03If you see, the journey is like, more segment, more customers added,
11:08and who are giving compounding effect in each year.
11:11That's why 130% CAGR has happened,
11:14and which will continue in the next decade.
11:18And towards that, the CapEx expansion is happening.
11:21More missions are adding.
11:23In the last 3 years, 3 times CapEx expansion happened,
11:26and next we are going to do 2 times CapEx expansion happening.
11:30This is exactly towards this journey.
11:32Right.
11:33We talked about CapEx expansion and revenue expectations.
11:39Let's hit the elephant in the room now.
11:42We would like to talk about your IPO.
11:45Can you please tell us the size, price band,
11:48any other details that you would like to add on the IPO front,
11:53which is, I think, the most interesting part of this conversation.
11:57I think, now the issue size is 500 CR,
12:00consists of OFS and 50% offer for sale, 50% fresh ships.
12:06And the shares are going to be listed in both BSE and NSE exchanges.
12:11The price band is 745 to 785 rupees.
12:15And retail and HRI is going to be a proportion,
12:18they can participate in that,
12:20which is going to be in the newspaper as well.
12:22Yeah, so this is broad information,
12:25we are eager to see the next big journey as well.
12:31Well, I wish you guys all the best.
12:33And before I let you go, I have a quick last question.
12:36And if Rajiv could answer that, you know, and Ram too.
12:40What is your overall view of your company in the long run?
12:46Where do you see your company?
12:48In one sentence, I would like to say,
12:50our aim is to become a preferred tier one, you know,
12:55strategic supplier for all top OEMs,
12:59who we are working with,
13:01both airframe as well as engine segment, you know, and their licenses.
13:04So we want to be their specially preferred, you know,
13:07supplier in high complex, high mix category of business,
13:11what they are looking for.
13:13We want to be like, you know, make a big difference
13:17and want to be a big player in this game.
13:20Global.
13:21Rajiv, do you want to add something?
13:23Just I think Ram covered very nicely on the tooling side of things,
13:27but what I would say is also on the efficient parts and subassembly
13:31is exactly the same thing.
13:33We would want to be among the top supplier for nuclear semiconductor
13:39and other industries that we are targeting on these commodities
13:43of efficient parts and turnkey subsystems.
13:47Right.
13:48Lovely.
13:49Thank you so much for joining us today.
13:51Thank you viewers for watching us.
13:53That was a leadership team from Unimech Aerospace.
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