·
About The Company
It is a technology-focussed engineering and design company engaged in turnkey electronics manufacturing services (“EMS”), specialising in precision manufacturing for diverse end-use industries, including industrial appliances, automotive, healthcare, consumer products and IT industries. According to the F&S Report, among the large bouquet of EMS players in India, it is one of the fastest growing Indian-headquartered ESDM companies. The Company has a track record of technical innovation which involves working with the engineering teams of their marquee customers, and over the years, they have evolved to provide integrated services and solutions to OEMs, from the initial product concept stage to volume production through concept co-creation and product realization. Their manufacturing infrastructure enables them to undertake a high mix of products with flexible production volume requirements. They are leaders in high mix low volume product management and are present in most industrial verticals. Further, they are one of the leading PCBA manufacturers in India, supplying to various OEMs and assemblers in the market. The Company is also amongst the top key global manufacturers of custom RFID tags.
· Strengths
Ø One of the leading
design and electronic manufacturing services companies.
Ø Focus on quality
and customer relationships.
Ø Consistent track
record of financial performance.
Ø Diversified and
continuously evolving and expanding product portfolio and service offerings
catering to customers across various industries, backed by strong R&D
capabilities.
Ø Established
relationships with marquee customers across various countries.
Ø State-of-the-art
manufacturing capabilities supported by a global supplier network, with a focus
on vertical integration.
Ø Experienced promoters supported with senior management team with proven track record of performance.
· Products
Ø PCBA
A circuit board prior to assembly of electronic components is known as printed circuit board (“PCB”), and following the soldering of electric components onto it, the board is called a printed circuit board assembly (“PCBA”). The PCB assembly process is a step-by-step guided process consisting of several automated and manual steps. Depending on the specific type of PCB assembly, such as ‘through-hole’ and ‘surface mount’, the steps involved may vary slightly. It has capability of manufacturing various types of PCB, ranging from flexible PCBs to 28-layer PCB.
Industry applications: The PCBAs are used in products manufactured in the automotive, medical, industrial, IT and consumer products industries. These include head & tail lamps, fuel dispensing controllers, EV – BCU, ECU, BMS (all of which are used in the automotive industry), CPU board, DO Generic, electronic interlocking systems (all of which are used in the railway industry), LED display modules (which are used in the power industry), processor module (IAF), radar target tracker (all of which are used in the defence industry). Apart from this, it also has other applications in cars, tractors, X-ray machines, computers and laptops, telecommunication, networking, power supply, electric mobility, among others.
Ø RFID
Radio Frequency Identification (RFID) is a form of wireless communication that incorporates the use of electromagnetic or electrostatic coupling in the radio frequency portion of the electromagnetic spectrum to uniquely identify an object, animal or person. Their main applications are in asset tracking and authentication procedures. Pursuant to recent developments, its application has extended to include near field communication for proximity sensing for tracking and authentication. There is also an emerging trend towards hybrid tags that combine two of the above capabilities for improving the performance. Each RFID type can be either active (powered), passive (un-powered) or semi-passive (battery-assisted). They are also categorised based on their frequency, i.e. low-frequency (LF) RFID tags (30 KHz to 300 KHz), high-frequency (HF) RFID tags (3 to 30 MHz), and ultra-high-frequency (UHF) RFID tags (300 MHz to 3GHz).
Industry applications: Its RFID products are used in products manufactured in the shipping, healthcare, manufacturing, retail and fintech industries. It has various applications, including pet and livestock tracking, inventory management, asset tracking and equipment tracking, inventory control, cargo and supply chain logistics, vehicle tracking, customer service and loss control, and access control in security protocol requirements.
Ø ELECTROMAGNETIC
AND ELECTROMECHANICAL PARTS
The company manufactures standard electromagnetic components like chokes, inductors, magnetic filters, transformer as well as high volume manufacturing assemblies. The manufacturing process involves winding a copper wire on a core or bobbin. The winding is done manually or through machines. Once the winding is done, the leads are trimmed, varnish is applied and the product is tested. Additional high voltage testing is also conducted to check test for breakdown of the insulation. The magnetic components are checked for a variety of parameters like inductance at different frequencies, leakage inductance and inductance at different DC bias. They also manufacture through-hole and SMT transformers.
Industry applications: Its electromagnetic and electromechanical parts are used in products manufactured in the automotive, industrial appliances, consumer appliances and healthcare industries, among others and are used in power supply products, DC converters, chargers etc.
Ø OTHER PRODUCTS
They manufacture a variety of information technology related products, including motherboards, DRAM modules, SSD and USB drives. The manufacturing processes for these products are similar to the processes undertaken for the PCBA described above. In addition, these products undergo extensive testing, which include stress tests, burnin test and reliability / compatibility tests. They also have software that have been developed in-house for failure diagnostics in respect of these products.
Industry applications: These products are used in manufacture of computers, laptops, video games and data storage devices.
Ø MANUFACTURING
FACILITIES
The company has 11 manufacturing facilities spread across five states namely Tamil Nadu, Karnataka, Himachal Pradesh, Haryana, and Uttar Pradesh.
Ø RESEARCH &
DEVELOPMENT
They have three dedicated R&D facilities, two of which are located in India at Chennai, Tamil Nadu and Gurgaon, Haryana respectively, and one is located in Stuttgart, Germany. Our R&D facilities are equipped with state-of-the-art research and development infrastructure. They have a dedicated team for engineering and R&D comprising of 106 full time employees, including 100 experienced engineering graduates and one doctorate holder, as on March 31, 2022.
Their R&D facilities responsibilities include, among others, (i) collaborative design from concept to completion, (ii) evaluating suitable technologies, (iii) benchmarking similar products in the market, (iv) preparing specifications, (v) research on suitable materials and components, (vi) innovation with new approaches and processes, (vii) design of product architecture, (viii) failure mode analysis, (ix) development of firmware, hardware and software, as required, (x) design simulation, (xi) prototype sampling (xii) design validation, (xiii) regulatory compliance testing, (xiv) product certification, (xv) safe launch pilot build and market readiness testing.
Ø FINANCIAL ANALYSIS
Low Debt-Equity
Ratio.
Operating Margin
for F.Y. 2021-22 stands at 11.34%.
PAT Margin for
F.Y. 2021-22 stands at 6.04%.
ROE and ROCE for
F.Y. 2021-22 stands at 13.58% and 19.14% respectively.
Basic EPS for F.Y. 2021-22 stands at 5.20 per share.
Ø OUTLOOK
Global Electronics Manufacturing Services (EMS) Industry and Outlook
Global EMS Market Break-up by Select Countries
Global EMS Market Break-up by End-user Applications
Key Drivers for the growth of Global EMS industry
• Greater Emphasis on Vehicle Electrification
• Technological upgrade of facilities
• Product development activities
• Technological advancements and acceptance of smart
home devices
• COVID-19 induced pent-up demand
INDIAN GOVERNMENT’S INCENTIVES AND PROGRAMS TO SUPPORT ELECTRONICS INDUSTRY
The government of India has been proactively building a base for electronics manufacturing in India and it has launched numerous incentive schemes, which have allowed manufacturing growth, reduced dependence on the imports, and promoted the exports. The GOI has launched numerous policies over the last few years to increase the innovation, protect the intellectual property, and develop the best-in-class electronics manufacturing set-up to build a favourable environment and invite the investment in the electronics hardware manufacturing. India’s production of electronics has more than doubled in the past five years in between the time period 2015 to 2020 depending on such favourable incentive schemes. Some of the key schemes / policies include: Product Linked Incentive (PLI) Scheme, Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS), Modified Electronics Manufacturing Clusters Scheme (EMC 2.0), Merchandise Exports from India Scheme (MEIS).
INDIAN ELECTRONICS INDUSTRY – HISTORICAL TRENDS AND OUTLOOK
INDIAN ELECTRONICS CONSUMPTION
Electronics Domestic Consumption Market, Value in ₹ Billion, India, FY18-FY26E
INDIAN ELECTRONICS MANUFACTURING
Electronics Manufacturing Market, Value in ₹ Billion, India, FY18-FY26E
CONTRIBUTION OF ELECTRONICS PRODUCTION TO INDIAN GDP, IN %, INDIA, FY18-FY26E
The success of the PLI scheme for the electronics segment in encouraging large-scale manufacture of electronics products is being viewed with great confidence. Similarly, the National Policy on Electronics (NPE) aims to make India a global hub of the electronic system design and manufacturing and has fixed some aspiring targets: manufacture of 1.0 billion mobile phones by the year 2025, valued at USD 190 billion including 600 million mobile phones (approximately USD 110 billion) for export purpose. The electronics industry is the foundation of all other manufacturing sector. Diverse sectors have dissimilar incentive schemes.
In FY21,
the electronics production in India contributed to 3.9 % of the nominal GDP (at
current prices), which is expected to increase to around 7.9 % by FY26. The
Government’s objective is to provide domestic manufacturers with
a better facility to make them competitive with imports into the industry by
simplifying the tariff system, simplifying the procedures, giving incentives,
and improving the infrastructure.
Note: This blog
is only for sharing my personal opinion for educational purpose. This is not an
investment advice so please consult your financial adviser before investing.
Source: RHP filed by the company.
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