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Murugappa Group's CG Power and Industrial Solutions Ltd on Thursday got the Union Cabinet's nod for setting up a semiconductor unit for specialised chips at an outlay of Rs 7,600 crore.

CG Power, in partnership with Renesas Electronics Corporation, Japan and Stars Microelectronics, Thailand will set up the semiconductor unit in Gujarat's Sanand.

Renesas is a leading semiconductor company focussed on specialised chips. It operates 12 semiconductor facilities and is an important player in micro-controllers, analogue, power, and System on Chip ('SoC') products.

The CG Power’s semiconductor unit will have a capacity to make 15 million chips per day for consumer, industrial, automotive, and power applications.

On February 8, CG Power had announced that it had signed an agreement to form a joint venture company to set up an outsourced semiconductor assembly and testing (OSAT) facility. As per the agreement, CG Power, Renesas, and Stars are to subscribe in one or more tranches, subject to satisfaction of conditions precedent, up to $205 million, $15 million, $ 2 million respectively, towards equity capital of the JV company to be formed representing approximately 92.34 per cent, 6.76 per cent, and 0.90 per cent, respectively.

Meanwhile, CG Power, in a regulatory filing, said it has received a tax demand notice for Rs 188,78,91,580 from the Income Tax Department in respect of Assessment Year 2022-23. "The Company is in the process of filing an appeal against the disallowances/additions made in the Assessment Order, and also an application for rectification of the mistakes apparent in the Assessment Order," it said.

At the bourses, the CG Power share on Thursday closed at Rs 443.85 after opening at Rs 428.70.