“The sky is not the limit for our growth opportunities”, says Anil Kumar P, CMD, Unimech Aerospace & Manufacturing Limited, a global high-complex, high-precision, global engineering solutions company, specialising in making complex products. The start-up is a key link in the global supply chain for aerospace, defence, semiconductor and energy OEMs and their licensees for the supply of critical parts like aero-tooling, ground support equipment, electro-mechanical sub-assemblies and other precision engineered components.
Founded eight years ago by five professionals from different fields, Unimech (for Universal and mechanical) has come a long way to emerge as a front-runner in an industry, which has high entry barriers. It took one year for the five-men-team – comprising Anil Kumar P (technology), Ramakrishna Kamojhala (finance), Rajanikanth Balaraman (software), Mani P (operations) and Preetham S.V. (leadership) – to come together. Unimech has set up two manufacturing facilities, spread across an area of over 120,000 sq ft. Unit I in Peenya, Bengaluru, is over 30,000 sq ft, while Unit II in Devanahalli, 90,000 sq ft in area, is situated in a Special Economic Zone (SEZ) near Bengaluru International Airport.
Unimech’s key clients include top global airframe and aero-engine OEMs and their approved licensees. Unimech is in an IPO mode and, hence, cannot name its clients due to compliance issues. Its top 10 customers include Hydro Systems GmbH & Co, Nuclear Power Corporation of India and Rhinestahl Corporation.
“Our ability to efficiently make even single units of a particular SKU (stock keeping units) provides us with the flexibility to optimise pricing and maintain high profit margins,” says Kamojhala, CFO, Unimech. Between 2021-22 and the six-month period ended 30 September 2024, Unimech has manufactured 2,999 SKUs in tooling and precision complex sub-assemblies category and 760 SKUs in the precision-machined parts category, supplying to more than 26 customers across seven countries. The company started with the founders’ contributions of Rs60 lakh and subsequently invested over Rs160 crore, raised from banks. In July this year, it allotted 3,667,090 equity shares and raised Rs250 crore from marquee investors, such as ValueQuest SCALE Fund (a scheme of ValueQuest Alternate Investment Trust), Evolvence India Fund IV and Steadview Capital Mauritius for investing in inorganic opportunities.
Unimech’s revenue from operations increased by 121.71 per cent to Rs2,08.77 crore for 2023-24 from Rs94.17 crore for 2022-23, primarily due to the increase in its total annualised capacity and number of purchase orders. Meanwhile the profit after tax increased by 154.83 per cent to Rs58.13 crore for 2023-24 from Rs22.81 crore for 2022-23. “The company recorded the highest revenue growth with a CAGR of 139.7 per cent between 2021-22 and 2023-24, making it the fastest growing company and achieving one of the highest EBIDTA and PAT margins amongst the listed peers,” says Kamojhala. “For 2023-24, it recorded the highest RoCE and RoE amongst the listed peers”.
Timely delivery
Precision-engineered components (PEC) are parts designed and made with low tolerances, typically measured in microns (one thousandth of a millimetre). These are used in applications like aircraft engines, turbine components in the energy sector, automotive engines, fuel injection systems and nuclear power plants. This level of precision is achieved using advanced technologies and techniques, including computer numerical control (CNC) machining, micro system technology and precision engineering machines. The production of these components involves careful consideration of various factors, such as the positioning of features, type of tooling used and load limits, to ensure long-term stability and performance. “We focus on timely deliveries of our products,” says Mani P, whole-time director, operations, Unimech.
“Our systems and processes ensure efficient order fulfilment and on-time delivery,” explains Mani. “As on 30 September 2024, our order in-hand was Rs80.75 crore, with a delivery timeline ranging from four to 16 weeks. We work with our clients in product designing, by adhering to specifications and descriptions of their requirements. For the products we make under this capability, we align with the expectations of our clients in terms of requirement of product functionalities, to deliver a satisfactory product experience to our customers. Our manufacturing capabilities include machining capabilities such as turning, milling, double column milling, electro discharge machining and grinding. Our turning capabilities include vertical turning of up to 1.50 metres, horizontal turning up to the diameter of up to 0.7 metres and length of up to 2.00 metres and turn mill up to 200 mm. Our milling capabilities include five axis of diameter of up to 600 mm, three axis machines of length up to 1.50 metres, four axis of diameter up to 600 mm”.
“Unimech is well-positioned in both aerospace and defence ground support tooling equipment (GSTE) and precision component manufacturing in India, catering to global OEMs and their approved licensees,” says a Frost & Sullivan India (F&S) report. The Asian (Asia-Pacific and China) region is poised to witness the largest fleet expansion, with 11,925 aircraft slated for addition by 2042, reflecting the region’s status as a global aviation powerhouse. In the energy sector, there is a growing focus on renewable energy sources like solar and wind. The government is actively promoting renewable energy projects. In addition to this, the government is adding capacity into the nuclear power generation sector.
There are about 22 operational nuclear reactors in India, with another 11 nuclear stations expected to be commissioned – with a cumulative capacity of 8,700 MW. India is an emerging market in the precision components for chip manufacturing industry, says an F&S report.
“Our engineering expertise and technology-driven manufacturing processes have enabled us to deliver our products to our customers in accordance with their designs and specifications, in a cost-effective manner without compromising on quality,” says Anil Kumar. “The company deploys a range of digital manufacturing systems, which integrates the complete process from origination to delivery of orders”, says Rajanikanth Balaraman, whole-time director, IT, business development & growth, Unimech.
Our engineering expertise and technology-driven manufacturing processes have enabled us to deliver our products to our customers in accordance with their designs and specifications, in a cost-effective manner without compromising on quality
“Our digital manufacturing system captures all inspection requirements and measurements underpinning our commitment to the high standards of quality,” adds Balaraman. “We developed an in-house ERP system which plans and tracks every step of the product manufacturing process, from inception to completion, including the movement of all components to external vendors, thereby assisting in timely delivery of our products”.
High entry barrier
“Given the complex production process and lengthy approval process from clients, it is difficult for a new entrant to set up the facilities for manufacturing of products supplied by the company”, adds the F&S report. And, once the customer has onboarded, a vendor fulfilling their requirements, it becomes difficult for customers to shift to another vendor, which poses a high entry barrier for competitors or potential new entrants. Establishing relationships with OEMs and onboarding them is a time-consuming process, often taking several years. Winning bids requires technical expertise, competitive pricing and adherence to stringent quality and delivery standards.
Scaling operations in our high-mix, low-volume manufacturing environment is complex and demands a skilled workforce, robust infrastructure, and consistent execution. Maintaining this balance, while ensuring high quality, is a significant hurdle for new entrants, F&S says.
“Thus, we have established ourselves as an approved supplier for various industry leaders in aerospace, defence, semiconductor and energy sectors,” says Anil Kumar. “We have a potential to further evolve our facilities to cater to all the specific and changing needs and requirements of the customers with respect to the products we make and for the industry we supply products to, allowing us to provide customized and tailored solutions. Getting it right the first time is crucial to maintaining our reputation for excellence and reliability in high-mix, low-volume manufacturing. It minimises costly rework and delays, ensuring timely delivery to our clients. This ‘right first time’ on precision-manufacturing improves lead time and operational efficiency,” he explains.
Unimech has emerged as a leading exporter of aerospace components, with over 90 per cent of its sales coming from export to global OEMs and their licensees with the global customer base spread across the US, Germany and the UK. “Our vendor ecosystem consisted of 42 vendors with 118 machines in total, as of 30 September 2024, each selected to meet our quality and performance criteria,” adds Mani. The company has established a sub-contractor ecosystem with vendors who undertake aspects of our manufacturing process with limited complexity. “This enables us to concentrate on critical aspects of the manufacturing process,” he says. Its team of over 20 supply chain management employees plays a crucial role in this process, managing, training, and fostering the growth of the subcontractors.
Growth in aircraft fleet
With its vast expanse and diverse economies, the Americas host a wide array of airlines catering to domestic and international routes. The robust fleet size underscores the region’s demand for air transportation services. In the Americas, 4,545 aircraft are slated to be added to the fleet, reflecting sustained demand for air travel in the region by 2040.
Eurasia attracts millions of passengers annually, driving demand for commercial aviation services and contributing to the region’s sizable fleet size. Eurasia is set to see the addition of 4,720 aircraft, driven by economic recovery and increasing passenger volumes by 2040. The Asian (Asia-Pacific and China) region is poised to witness the largest fleet expansion, with 11,925 aircraft slated for addition by 2042, reflecting the region’s status as a global aviation powerhouse, F&S report says.
The Asia-Pacific region is the largest chip manufacturer in the world, accounting for about 66.5 per cent of the global semi-conductor production during 2024-28. India is an emerging market in the precision components for chip manufacturing industry, with the government of India adding capacity to the nuclear power generation sector. There are about 22 operational nuclear reactors in India and another 11 nuclear stations are expected to be commissioned with a cumulative capacity of 8,700 MW.
Regarding the MRO (maintenance, repair and overhaul) market, F&S says it is matured in regions like North America and Europe. The increase in demand for MRO in APAC is driven by an increase in the aircraft fleet. The high growth in Asian markets like India and China can be attributed to an increase in travel, which in turn increased the demand for air travel. The Asian region accounts for about 33 per cent of the global fleet. These aircraft average at about 11.6 years and the need for MRO of these aircraft open new market opportunities for MRO suppliers in Asia. There are no international engine MRO players in India; however, with the growth of fleet, major engine manufacturers like SAFRAN are setting up their engine MRO facilities in India.
One of the drivers of our market penetration strategy is the establishment of local MROs in India
“This is a huge opportunity for the companies in the GSE MRO tooling market,” informs Preetham S.V., whole-time director, Unimech. Also, there are no other licensees in the Asia-Pacific region creating a larger market opportunity for the GSE tooling companies in India, as per F&S report, he adds. Tapping this gap in the market, the establishment of local MROs will enable Unimech to expand its service offerings, including comprehensive repair solutions, parts replacement, and technical support. “One of the drivers of our market penetration strategy,” according to Preetham, “is the establishment of local MROs in India and this diversification will strengthen our value proposition and help capture additional wallet share from existing customers. Proximity to MROs will also facilitate market expansion by enabling us to enter new geographic regions more effectively. By building relationships with local MRO providers, we can tap into new markets and establish a stronger presence”.
MRO services typically encompass a wide range of activities, including scheduled maintenance checks, unscheduled repairs, component replacement, and overhaul services. The engine MRO market is expected to grow at a CAGR of 4.5 per cent and is the fastest growing market, says the F&S report. The increase in fleet numbers and entry of new airlines are expected to be the key drivers in the Indian MRO market. By partnering with OEMs who are setting up local MRO facilities, Unimech can offer tooling for repair and aftermarket services of products manufactured by it. Being closer to the end-users is a big advantage, Preetham says, as it will reduce transportation costs and lead times, making the services more appealing to customers.
Going forward, Unimech is looking at inorganic growth as well – in the US, in particular. Acquiring an existing facility provides immediate access to established infrastructure, a skilled workforce and local market knowledge, enabling the company to integrate into the US manufacturing landscape quickly, Kamojhala feels. “Alternatively, building our own facility from the ground up, while more time-consuming, allows us to design a facility tailored to our specific needs and standards, implementing the latest technologies and processes from the outset,” he observes.
“Europe stands as the second-largest market for aerospace products, notably in the aero tooling sector and our approach emphasises product innovation, process refinement and customised engineering solutions to meet the diverse requirements of our clientele across various geographies,” remarks Balaraman. “We recognise the immense prospects in the aerospace, defence and energy sectors and believe we are well-positioned to seize emerging opportunities. By implementing our market development strategy, including establishing a manufacturing presence in the US and expanding our reach in Europe, we are poised to enhance our global footprint, deliver superior products and services and drive significant business growth,” he affirms.
“Our growth strategy also rests on forming strategic alliances with both global and local manufacturers to enhance our manufacturing capabilities and expand our market presence,” says Anil Kumar. “Partnering with global leaders provides access to advanced technologies and industry insights, enabling us to integrate technological solutions into our operations and reach a broader customer base. These collaborations are crucial for driving innovation and staying competitive in a rapidly evolving market”.