“We are also diversifying into robotics and solar production machines”

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Tatsuyuki Shimizu, deputy general manager of Sojitz Corporation (the parent company of NMTronics India Pvt Ltd)

As the demand for SMT machines increased in India, various businesses entered the market—especially SMT equipment distributors. Tatsuyuki Shimizu, deputy general manager of Sojitz Corporation (the parent company of NMTronics India Pvt Ltd), in an interaction with Baishakhi Dutta of the Electronicsforu.com Network, explains how the company planned its strategy to make an impact in the fast-evolving India market.

EB: How did NMTronics come about?
We started our business in India in the ’90s. At that time, we were a local agent and the market was very small. Back then, some of the customers had just started using SMT machines.

As time passed, we decided to set up our own team within the India branch of Nichimen (our predecessor company which merged with Nissho Iwai to form Sojitz in 2003) and eventually set up NMTronics in 1999. It was a very small setup at that time with only three employees. Also, the sales and service were not that great back then. Though some people had started using SMT machines, they could not afford to buy brand new machines and therefore preferred second-hand machines. So NMTronics acted as a broker for such second-hand machines and provided support to customers who bought them. This was the initial business model of the company.

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During 2004-2005, the market strategy changed as some customers started looking for brand new machines because of technological advances. At that time, we had just launched the NXT machines, which is still our flagship range. That was a major turning point for the organisation. Another good opportunity for NMTronics to expand its operations was when in 2006, Nokia set up a big factory in Chennai. At that time, Nokia bought a lot of our machines for the new plant.

Based on the changes, we decided to change our business model and make NMTronics more independent so that the business is based on the distributor model and not on an agent model. This has happened since last year, as the SMT market has seen quite a boom since then.

EB: What is the reason behind choosing to be in such diverse segments such as machinery, aerospace and defence?
Sojitz has a long relationship of over 40 years with Fuji. It diversified into the SMT domain in the 1980s. Based on this relationship, Fuji asked Sojitz to work with it to jointly penetrate the Indian market.

Our corporation first started operating in South East Asia. We were the primitive machinery business department of Fuji and worked with this company to penetrate the overseas markets. That was the starting point.

At that time, India was still a very small market. So we did not go through the typical joint venture model; rather, we established the business ourselves.

Based on the demand from the local market, we keep changing our business strategy. Initially, we would find local agents in an area and then appoint them as our exporters to Japan.

EB: Since you are representing Fuji (they being the SMT machine manufacturer), and wanted to promote their products in India, you chose a distributor service over here, right?
Yes, because Fuji has its factories mainly in Japan. Currently, it has a factory in China which is a small setup, but the majority of the production is still done in Japan. Fuji basically expects just a sales and service organisation to be set up in various places. To address that need, we work with Fuji.

EB: How has the business been in the past few years? You did mention that the demand for the SMT machines has increased.
In the past few years, the business has been fairly good. It has increased in the Indian market when compared to 2017-2018. There has been immense support from the government through its various policies and incentives like MSIPS, etc. This government policy has encouraged a lot of foreign investors to come into the country recently. It is also a good opportunity for local companies to create a joint venture with Chinese companies and start local production. So we are trying to take advantage of this opportunity as much as possible.

EB: How much does the Indian market account for in your global revenue?
The contribution from the SMT domain in the Indian market is around 10 per cent. Earlier it was only a few per cent. But recently, that has been growing and has now come to around 10 per cent, which indicates significant growth over the last few years.

Our corporate target grows every year by 10 per cent. But I expect NMTronics to go further as the Indian market is also growing fast.

EB: Going forward, how much growth do you predict?
It is difficult to estimate that. Around 50 per cent of the equipment is sold to the Chinese market. The rest of the 50 per cent goes to the US, Europe and other Asian countries (except China).

Some of the companies have started thinking about transferring production from China to South East Asia or to the US. Of course, India can also be a major market. The recent move by the smartphone manufacturers to start production in India has nothing to do with the ongoing trade war, but is purely based on the local demand.

EB: How many subsidiaries do you have across the globe, and are you exclusively representing Fuji?
Currently, we have a total of three global subsidiaries—in China, South East Asia and India. And we have some shareholder partners in Brazil for the SMT business. In South East Asia and Brazil, it is a joint venture with Fuji. In China and India, we do not have a joint venture, but 100 per cent direct shareholding. There are some differences in the shareholding structures. Depending on these, our business model is slightly different. For example, Fuji Machine Asia is a joint venture. But NMTronics is an independent distributor. Of course, Fuji is one of our main principals, but the company has diversified into another range of products too.

EB: Talking about the SMT market, do you think that the Indian industry is investing enough on SMT equipment or is there still a deficit that needs to be bridged?
I think Indians take a lot of time to make decisions. But once they decide, they act very fast. The Chinese are different in that they decide very fast. The amount of money they spend on machinery is also very different. The size of the Indian market is slightly different compared to that of the Chinese. Also, the cycle of investing is slightly different here, than what we see in China.

EB: Online sales have picked up momentum recently. Do you think that is affecting the SMT distribution market?
For the main equipment, online sales are quite difficult because a lot of technical discussions go on to understand the customer’s specifications. So it is not easy to take the SMT machine business online. It has to be an offline sales model. But maybe, in the near future, online sales might happen. In fact, Fuji is planning to do online sales.

EB: Have you used some of the latest technologies such as AI or IoT in your business, be it for warehouse or inventory management?
Yes, we are leveraging IoT to generate correct production data that will be fed to the machines and other products. As a result, we are ensuring accuracy in our machinery.

EB: Do you think that the Indian market has matured enough to adopt the complete M2M solution, or is it still evolving?
I think India has still a long way to go, to catch up with other parts of the world. Our machines are ready to provide that type of solution. But it is up to the customer to adopt it.

EB: How do you plan to take your business forward in the next two to three years?
NMTronics aims to provide advanced sales and service to its customers. SMT is, of course, one of the core business segments, but we are also diversifying into robotics and solar production machines. We are also aiming to expand the range of equipment for smartphone production. We plan to reach out to a larger market—as long as our customer base belongs to the electronics manufacturing domain.

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