Encouraged by govt initiatives to boost manufacturing, SEL plans to expand its business

With a modest beginning in 2000, Smile Electronics Ltd has witnessed continuous growth over the years and is striving to become the strategic and preferred manufacturing partner of major OEMs through its one-stop solutions and continual support.

By Nitasha Chawla

Monday, May 13, 2013: Starting as a printed circuit board assembly company with just five employees in 2000, Smile Electronics Ltd (SEL) has grown multi-fold in a span of 12 years to become one of the major electronics contract manufacturing and design services providers located in Bengaluru. From a turnover of Rs 1.4 million in the first year, it has now achieved a turnover of Rs 750 million in 2012-2013, moving ahead at a CAGR of 25 per cent YoY.

The company’s name is also reflected in its motto of bringing a smile to its customers’ faces through its quality products and services. Today, it has a workforce of 400.

SEL began its journey when its current managing director, Mukesh Gupta, who was then a merchant banker and a stock broker, quit his job in the late 90s and ventured into the electronics sector.

Recalls Mukesh Gupta, “I owned a company that was into merchant banking. In 1998-99, there was a global upheaval in the finance market and I decided to quit finance. However, being associated with the stock market, I had the pulse of the industry and since I was based in Karnataka, which is the Silicon Valley of India, electronics was a natural choice. I wanted to go for something which was asset-based rather than intellectual property rights (IPR)-based. Therefore, I decided to enter into the field of electronics hardware.”

In 2000, Mukesh Gupta took over the facility of Digital Equipment, a company owned by his friend, along with its entire team. He then developed the core team and invested his savings in buying quality tools for the company. “When I formed SEL, I had no technical knowledge. I had followed the advice of my friend, who sold this facility to me. Therefore, I learnt electronics from scratch, working closely with my core team. I also ensured that I gave the team members the opportunity to grow and learn in the company,” he shares.

A complete turnkey solutions provider
SEL began its EMS journey as a small ‘job work’ company before graduating to a complete turnkey manufacturing firm in 2006. With a capability of 4000 components per hour (CPH) in 2000, to 220,000 CPH in 2012, SEL is today one of the top five firms among the tier II EMS companies in India.

The company supports high-mix as well as low and medium-volume businesses with a specialised proto shop. It has some of the best and latest equipment at par with globally accepted standards for dispensing of paste and placement of components.

Says Mukesh Gupta, “For the first five to six years, we had focused on establishing our credentials with major players by doing only job work. Thereafter, we began offering complete procurement and assembly of PCBs and got into testing.”

SEL has now added design capabilities like design for test (DFT) and design for manufacturing (DFM), besides component engineering and end of life (EOL) management. “Today, we have a substantial number of 232 satisfied customers. We are proud of our quality and streamlined processes that meet customer timelines,” he adds.

Key strategy for growth

SEL attributes its success to the way it has been able to ensure customer satisfaction and win more and more loyal customers each year, even without a marketing department but only through its excellence in design, manufacturing and repair solutions. However, it is now in the process of setting up a marketing team to leverage the growing demand in the electronics industry. SEL’s management has a policy of continuous 360-degree upgradation, to meet customer and global quality requirements. Its growth has been customer-driven with forward and backward integration to enable it to provide a one-stop shop to its customers. According to Mukesh Gupta, today’s PCBs are customised as the end users demand more flexibility, lower costs, 100 per cent on-time delivery, along with quality and service. Therefore, there is no other option for the company but to reduce the cost of assembly by increasing value-added activities and eliminate those that do not add value.

With this in mind, SEL offers value-added services like PCB design, assembly (including testing), value engineering, reverse engineering, system/box assembly and testing, warehousing and third party logistics.

Its major customers include Tejas Networks, Tata Group, chip companies like Texas Instruments, Marvell Technology Group, Bharat Electronics Limited (BEL) and Hindustan Aeronautics Limited (HAL) in the defence sector. The company has worked closely with around 200 design houses and defence establishments like the Defence Research Establishment (DRE) and the Aeronautical Development Establishment (ADE).

Shares Mukesh Gupta, “I am proud of the work we have done for some of the companies like Tejas Networks, which has been our anchor customer and today we are its No. 1 EMS provider.

For Tata Power, we manufacture flexible PCBs. We are one of the first companies in south India that attained the capability to handle flexible and semi-flexible PCBAs.”

Its key strength

Infrastructure and its workforce are SEL’s key strengths. SEL began in a 371.61sq m shop floor and has expanded into a 3716.1sq m integrated manufacturing and test area. The company also has a focused procurement office in Singapore and at Fremont in California to enable access to materials of the best quality and right specifications.

SEL’s facility is equipped with state-of-art machinery and it has ESD-compliant flooring, certified through an ESD audit as per ANSI/ESD S 20.20-2007 specifications and by ASTM 257 test methods. It also has an environmental control shop floor, certified by an ISO 14001:2004 audit. Its facility is also certified for ISO/TS 16949:2009 to meet automotive customers’ specifications and is certified for AS9100:2009 to meet aerospace customers’ specifications.

The company is also certified for RoHS processes through an RoHS directive certification audit and has qualified for OSP process applications. “I have always focused on investing in quality tools; therefore, our manufacturing facility is globally competitive. It can handle products which have the latest global applications. Our latest machinery can handle components of sizes as small as 0105 which even a majority of companies in the US and Europe can’t handle,” says Mukesh Gupta.

SEL has developed a strong core team in areas of procurement, process control, manufacturing, quality and testing, and an efficient warehouse for support. Mukesh Gupta attributes the success of the company to its efficiency in different areas, which includes supply chain management, warehousing, procurement, process management, testing and quality, and manufacturing, which are all backed by a qualified team of professionals. As he puts it, “We call ourselves the SEL family. All our staff members are trained to multi-task and bringing a SEL on their faces is like providing a SEL on the face of the customer. I believe it is essential to have a happy staff in order to build a successful company. I have delegated authority to all the departments, and we work towards developing ownership among our people so that they are able to lead their teams in the future. I only get involved when we need to troubleshoot. There are day to day problems which I am intimated about and we try to solve it as a team.”

One of the policies of the company with respect to its human resource is that it picks up only freshers and trains them in SEL’s culture. According to Mukesh Gupta, it is easy to train a new talent rather than making experienced people unlearn and then adopt a new culture. In order to keep its employees motivated, SEL rewards them from time to time based on their contribution to the company.

What lies ahead

Moving ahead in line with the market trends, SEL is now working with MNCs which are into chip manufacturing to design India’s first indigenous tablet. The company now wants to exploit the fastest growing sector of IT by increasing its presence in products categories like tablets. SEL has already started working to achieve this goal by setting up a marketing department that will help it increase its presence in the industry. It expects to scale up its revenues to Rs 1 billion in 2013-14 and Rs 2 billion in the subsequent years.

Also, Mukesh Gupta feels that the time is now perfect to think about the expansion of their business activities as the government is bringing in favourable policies to promote manufacturing. “We plan to graduate into a multi-location, globally-acceptable EMS provider helping India put itself on the electronics manufacturing map of the world. The government policies announced in the past few months would help us in this endeavour. Till now, the manufacturing policy was inverted and manufacturing in India was more costly than importing components. However, now that the government has given an impetus to manufacturing, I think the components that were being imported till now, will start getting manufactured here,” he concludes.

Electronics Bazaar, South Asia’s No.1 Electronics B2B magazine