The government should simplify the process of setting up manufacturing plants in India

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Manoj-Pansari_CEO-Astrum-Holdings-Ltd

India’s consumer electronics market is highly competitive, with big and small players entering the domain regularly. Yet, India has barely touched the tip of the iceberg in terms of domestic manufacturing. Manoj Kumar Pansari, chairman and managing director, Astrum, speaks with Baishakhi Dutta of the EFY Group about the challenges and expectations of an ACE (appliance and consumer electronics) player who is ready to start manufacturing in India.

EB: What’s your take on the current consumer electronics manufacturing scenario in India?
The Indian consumer electronics market has gone through dynamic changes in 2018. Manufacturing of electronic goods is increasing at a faster rate in India. There has been a revolutionary change in technology, leading to the launch of innovative products; also, global competition is increasing. This has made it necessary for brands to focus on continuous improvements in order to stay ahead of the curve.

The Make in India and Digital India initiatives are also driving the Indian electronics industry. Many companies are being encouraged to set up innovation and R&D centres in India (not just manufacturing). Overall, the scenario is challenging, yet very exciting.

EB: What is the main challenge that ACE players face in India, with regard to design and manufacturing?
The design and manufacturing industry is experiencing a resurgence of sorts. Some key challenges in manufacturing include the lack of quality control, inadequate skills and talent, lower productivity and an inadequate supply chain.

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EB: Is there any proper policy or regulation to promote manufacturing?
Sadly, there is no strong policy, as such. Policies and regulation are a must to aid manufacturing in India. Everything—from terminology, symbols and packaging to marking and labelling—needs to follow a certain policy, which will streamline the process. So the policy framework needs to be pretty strong.

EB: Where is your manufacturing facility and what is its production capacity?
We are establishing our first manufacturing facility in Tirupati, Andhra Pradesh, with an investment of ₹ 1 billion. It is spread across 16,000sqm. Initially, the manufacturing unit will start making power banks at a rate of approximately 100,000 pieces per month for the first few months, after which it will increase to 300,000 per month.

We have tied up with LKKER Innovation for our upcoming Innovation and Design Centre at Tirupati. Going forward, we aim to start manufacturing other products focusing on the smart technology category in India.

EB: Give us some insights into your in-house manufacturing facility.
At our Tirupati plant, we are not only setting up a unit that will assemble SKD (semi knocked down) and CKD (completely knocked down) goods, but also a production facility for total manufacturing.

We are also constantly expanding our product categories —we recently revamped our entire range of audio products. We are adding quite a few products to our smart category with the key vision being to think smart and work smart, and challenge the norm by creating high quality products that are innovative and serve the purpose of enhancing the way people live. We have invested ₹ 1 billion on the manufacturing plant in Tirupati.

EB: From where do you import your SKD products?
We don’t use the term SKD—we refer to these products as spares or components that are imported from China or Taiwan, depending on the requirements and the feasibility.

EB: What are the biggest challenges in setting up a manufacturing plant in India?
One of the biggest challenges was selecting the location. We needed a place from where products could be imported and exported easily. Other factors included government support, licences, labour, etc.

EB: How many offices do you have in India? What kind of operations do you carry out from your India based offices?
We have a presence in almost 15 cities in India, among which some strong touch points include Lucknow, Delhi, Jaipur, Mumbai and Bengaluru. We are constantly working to increase our presence across the length and breadth of the country. We follow the distributors’ networks across India via which the products are passed on to the retailers and then to the end consumers. So, basically, the kind of operations that we carry out from our India based offices are sales, service and marketing.

EB: How long have you been in the Indian market and what is your market share right now?
We made a strong entry in India last year. We are still exploring ways to establish a stronger foothold in the Indian market. We are striving to achieve the goals and mission that have been set by the company.

EB: What challenges do you face in India? How are you solving them and what changes in the local electronics ecosystem would you like to see to make things better?
One of the biggest challenges that we face is the fierce competition. Technology is the sector in which the established giants thrive on innovation and price points. So, staying ahead of the competition with innovative and quality products is a must.

Another challenge is winning the customers’ trust. Since we are new in this market, we do see some resistance. The market very recently had witnessed an influx of newer brands, many of which have been unsuccessful, which has influenced the consumers’ mind set too. Having said that, we are looking at ways in which we can overcome these challenges and emerge as a trusted technology partner in India.

EB: Tell us about your partner ecosystem.
Our partner ecosystem works around distributors, retail partners and e-commerce. For a retail partner, we have joined hands with Poorvika Mobiles in Chennai and Celekt in Hyderabad. Poorvika Mobiles has almost 300 retail stores in Chennai, while Celekt has around 50 stores. For an e-commerce partner, we have partnered with Olympia.

EB: What market share do you target in the next five years? What are your strategies to achieve that share?
We are looking at achieving a double-digit market share in the next five years, focusing on our strengths and on our diverse portfolio. We will be aggressive in both new and existing markets. The consumers today need something more—basically, a reason to buy the product and only great quality isn’t going to help. That’s where our pricing strategy helps —which is why we have been focusing, with all our energy, to bring about a balance between the two. To achieve this, we are constantly focusing on innovation, strengthening our relationships with customers and following smart hiring practices.

EB: Are you looking to expand your distribution channel here? What are your criteria for selecting distributors?
Yes, we are working at a very aggressive distribution channel. We recently empanelled distributors for Bihar, Gujarat and Karnataka. For us, the criteria for selecting distributors include the scale of the distributor’s operations, the reputation, sales volume and growth, warehousing capability, transportation capability and customer mix. Overall, we look out for long-term partners who understand brand value and not just the price point. We tend to get onboard with someone who knows how to distinguish between what’s good and bad for a brand. We tend to partner those who see a future with us and tell us what we should do next to make our brand grow further.

EB: Do you have any plans to increase the number of your offices and units in India?
Yes, we are in talks regarding this, and it is very much in the pipeline.

EB: What will be your message to the government as an immediate call to action, for promoting India’s manufacturing ecosystem?
The government should simplify the process of setting up manufacturing plants in India. It should also have a strong policy to incentivise exports so that companies can reach the global market, which will in turn attract FDI and can create employment in the country.

EB: From where are you expecting your major sales— online or offline?
Currently, we work with a distribution network which is offline; so the major focus is offline. But we are also looking at ways in which we can strengthen our online sales too.

EB: Are there any plans to export your products in the future?
Yes, we will start exporting our products from April 2019.

EB: Have you applied for any government incentives?
We are part of an EMC,
which gives us a range of advantages.

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