Playing to its strengths, EOS Power surges ahead

The economic meltdown that compelled EOS Power to expand its business portfolio was indeed a blessing in disguise, leading the company to cash in on its experience and capabilities in the EMS sector. With a Rs 543.39 million turnover in FY 2011-12, it is today ranked among the top EMS companies in the country.

Richa Chakrabarty

Tuesday, January 8, 2013: EOS Power India Pvt Ltd, formerly known as Celetronix Power India Pvt Ltd, was established by the Tandon Group in 1985. Later, Jabil Circuits, one of the largest global EMS companies acquired the company. However, in 2007, EOS Power parted ways from Jabil Circuits and today is privately held by German investors. EOS is among India’s largest power supply manufacturers and exporters. Its major strength has been in designing and manufacturing AC-DC power supplies. Till 2009-10, EOS Power did not project itself as a typical EMS company, though its core competence was in manufacturing.

The year 2006 witnessed the entry of major global EMS companies like Jabil Circuits, Sanmina, Flextronics, Elcoteq, etc,. These firms started their EMS operations in India and many Indian owned EMS companies were also set up. At that time, EOS was comparatively smaller in size and focused on power supply design and manufacturing; so there seemed no point in venturing into the EMS business with all the risks associated with it. It was in 2009-2010, during the economic meltdown, that EOS was forced to go beyond its traditional business portfolio and become a total solutions provider, thus taking the plunge into the EMS sector. It began to offer value added manufacturing services to its existing power supply customers. The services included manufacturing and assembling of other PCBA assemblies, along with power supplies. Additionally, magnetic filter assemblies, cable harness assemblies, and mechanical or plastic accessories became a part of its total solutions concept. Since then, there has been no looking back for EOS Power.

Since entering the EMS domain had proved successful, EOS kept on strengthening its value adding capabilities, which it called value added electronics manufacturing services (VAEMS). Today, customers look at it as a one stop shop for their total supply chain solutions. Currently, EOS has over 5000 end customers globally, and this figure is constantly increasing every year. Since 2007, EOS’ strategy has been to design and release at least two new power products or platforms every year, and then build up a product portfolio around it. It offers various modifications and customised value added solutions for products that suit its customers’ applications. “Today, close to 60 per cent of the company’s revenue comes from value added services and customised product solutions. From component procurements to design, manufacturing and testing, EOS offers the complete supply chain solution to customers, and also provides design engineering support for modifications and sustenance,” says Vijay Gujarathi, VP, Operations and director, EOS Power India Pvt Ltd.

Unique business proposition

Its associations with Jabil Circuits and Celetronix helped EOS gain enormous experience in EMS activities. It now has the inherent capabilities with regard to technology, manufacturing and machinery for an EMS environment. With all these factors working in its favour, EOS made a strategic entry into the EMS sector. The company decided that instead of competing with already established Chinese and Taiwanese suppliers, it would focus on the niche market segments, where product quality and reliability were more important than lower costs. “EOS conducted market research to understand the specific needs of the Indian customers. This indicated a huge demand for power supplies and related products in the domestic market but the supply chain was dominated by Chinese and Taiwanese companies, who offered very competitive prices. EOS could not match those prices due to its internal supply chain and operating costs. Hence, EOS decided to focus on a few market segments, where the price was a secondary determinant factor, with quality and reliability being the critical factors influencing the purchase decisions of companies,” adds Vijay Gujarathi. Today EOS sells approximately 20 per cent of its products in India compared to 0 per cent in 2009. This has helped the company achieve the objective of reducing its dependence on the existing export customers and mitigating long term business risks.

EOS has a four-stage product design and release process, which is very unique. Every product has to go through these ISO documented steps before getting into production. This ensures that product quality is built-in at the design stage itself. Informs Vijay Gujarathi,“There are key inputs at all four stages, which results in cost, quality, form, fit and function criteria that are evaluated by each functional head of the organisation before moving to the next step. This unique manufacturing design and performance evaluation of the product provides significantly higher cost savings and design flexibility compared to typical industry products from our competitors.”

In view of global competition and to reduce the time to market for new products, EOS has also established a regulatory compliance lab in its manufacturing facility, which supports all global regulatory compliance testing. This drastically reduces the product design cycle period. Also, in line with green manufacturing concepts, the products and the manufacturing lines at EOS are Restriction of Hazardous Substances (RoHS) as well as Registration, Evaluation, Authorisation and Restriction of Chemical substances (REACH) compliant. The manufacturing facility in Mumbai is ISO 9001 and ISO 14001 certified.

Overcoming hurdles, EOS continued its journey
Parting ways from Jabil Circuits and big brands like Apple and Dell had affected the confidence of EOS’ customers as well as suppliers. It saw a decline in its customer base and revenues, resulting in dissatisfied suppliers. EOS managed to survive this phase by taking adequate timely steps to expand its product portfolio, adopt newer technologies and manufacturing processes, expand the geographical base of its customers, etc. “Back then, suppliers were demanding advance payments or cash on delivery, as they had no guarantee of getting paid in the absence of the backing of big brands. Both customers and suppliers being the lifeblood of the supply chain, we could not ignore them. But EOS’ management took the risk of continuing in the segment. Consistent negotiations and meetings with suppliers and customers brought back the required confidence within the supply chain,” reminisces Vijay Gujarathi.

The company then shifted its focus from Tier I customers and broad based its customer profile to cover Tier II and III customers as well. The goal was to increase the customer base and to avoid depending on just a few big customers, which could prove to be a huge business risk in the long run. EOS also implemented new technologies in power solutions and, hence, leveraged its position in the market. This enabled customers and end users to reduce the size of their end applications and cut the cost of the product. Also, time to market was reduced with innovative methods and advanced technologies.

During the global economic meltdown, the company’s revenue dropped 50 per cent. It was then that EOS developed its business in India. It also expanded its operations in other Asian countries to lessen the impact of the recession in the US and Europe. It diversified its product offerings to cover medical and healthcare products. It also forayed into fuel dispensers used in petrol pumps, and audio and video products. As a result, it won considerable business from prestigious domestic customers.

Strengths, weaknesses and achievements

EOS’ main strengths are value engineering new products for niche customers; its product design with cutting edge technology; R&D capabilities and test facilities for regulatory and safety compliance testing; and its manufacturing lines that have the flexibility to accommodate high mix low volume and low mix high volume requirements. Also, its excellent product traceability software allows customers to get data related to every product, starting from the components used for manufacturing, till the final product. It also provides the complete manufacturing history of the product.

The company deploys the Kanban, Kaizen and Poka-yoke concepts to ensure overall business efficiency. Its overall equipment effectiveness (OEE) is always monitored in the plant.

EOS has succeeded in not only bringing back its lost customers but has been winning accolades in the industry as well. It has consistently won awards since 2008. The company won the ‘Excellence in Quality’ and ‘Excellence in Environment’ awards from Dun & Bradstreet in 2008 and 2009, respectively. For its performance in manufacturing operations, Frost and Sullivan awarded EOS with the ‘Excellence in Manufacturing’ award in 2009. EFY, along with ELCINA, awarded EOS for ‘Excellence in Exports’ and ‘Business Excellence’ in 2011 and 2012, respectively. Shares Vijay Gujarathi, “Recognition for excellence in various business processes from agencies like ELCINA, EFY, D&B and Frost and Sullivan has played a pivotal role in building up the EOS name, and now we are seen as an established brand in the electronics industry.”

Business strategy
EOS is focused on designing leading edge low to medium power, AC/DC power products for the global medical, industrial and communication markets. The product designs are robust, high quality and flexible to allow modifications and value added engineering with minimum cost to end customers. “If one wants to be competitive in the EMS market, one will have to specialise. There are many EMS companies offering manufacturing services at cut-throat prices,” says Vijay Gujarathi.

To stay ahead in competition, EOS has been investing in designing green power products which reduce the standby power requirements for end customers. It has also been adapting technological advances in its new product designs which have a high efficiency with low footprint. Till 2008, EOS Power had technologies that could support 40 to 60 watt power in 10.16×5.08 cm but now, EOS has new products which can deliver up to 150 watt power available in the same size. Also, EOS has new product designs in 12.7×7.62 cm with 300 W output power which could earlier support only 80 W output power. Besides being at the forefront of technology, flexibility is its core competence. Modifications and even delivering fully customised power supplies enable the company to get into markets where big manufacturers are yet to make an entry.

Infrastructure

EOS’ product design centre and manufacturing facility is based in the SEEPZ-SEZ, Mumbai. It is manned by over 450 highly skilled team members. EOS’ facility has a very strategic location in the export processing zone, which is about 10 km from the airport and 30 km from the sea port. This 4645 sq m (50,000 sq ft) facility is ISO 9001 and ISO 14001 certified, and the products and manufacturing lines are compliant to RoHS and the environment is ESD safe.

EOS has three SMT lines capable of 200,000 components placements per hour, two box build and wave soldering lines, and magnetics assembly lines with a capacity of 5000 assemblies per day. Its dedicated product design centre has highly skilled design engineers for power design, PCB and mechanical designs. The centre is equipped with a sophisticated proto lab and test equipment. It also has a safety and regulatory compliance lab accredited by UL and NEMKO. In-house supply chain and logistics support is also available.

Expansion plans
Since its inception, EOS has gradually moved ahead both in terms of size and business portfolio. The core management team of EOS has been with the company for over 20 years. While the company registered a revenue of Rs 543.39 million in FY 2011-12, it is aiming to expand its revenues to Rs 1000 million, almost a 100 per cent growth, by year 2015. This will come through both organic and inorganic growth, and will include the addition of new products in its portfolio.

“EOS is also planning to open its sales offices in the US and Europe to focus more on those markets and to support strategic customers. EOS is looking forward to appointing distributors in Brazil and other upcoming economies to spread its geographical reach,” concludes Vijay Gujarathi.

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