“DML is planning to enter into a JV with a Chinese company”

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K 06818January 24, 2015: Delta Magnets Group (DMG) is among the few companies that has been engaged in manufacturing and supplying soft and hard ferrites for more than three decades. Established in 1984, DMG grew to expand its business to three geographically dispersed units including Delta Magnets Ltd (DML) in Nasik, MMG India Pvt Ltd in Chennai and MagDev Ltd in the UK. The company had partnered with TDK Japan for technology transfer to manufacture magnets in India. Going forward, the company plans to enter into a joint venture with a Chinese rare earth magnet manufacturer. In conversation with Richa Chakravarty of Electronics Bazaar, Abhilash Sunny, CEO, DMG, talks about the company’s marketing strategy and its future expansion plans.

EB: Delta Magnets Ltd (DML) has been manufacturing hard and soft ferrites for almost three decades now, so could you throw more light on the evolving market trends in the industry with respect to the products you manufacture?

With the advances in technology, there has been a major shift in the preferences of customers, who now focus more on smart, compact and miniaturised products. Today, magnets of milli micron dimensions are used with the same efficiency as those with larger dimensions. This has been possible because of continuous R&D to find newer materials in the magnet family like Ndefb, high permeability materials like nickel zinc, etc.

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Another factor that we have observed is the consolidation of the procurement process. Consumers today prefer Indian companies over Chinese manufacturers. Not only are Indian players capable of offering good quality products but they also do so at reasonable prices and with more value addition to the customers. The design and development capabilities in India are very strong and we have observed that many companies/customers are setting up their R&D centres in India. Hence, local players can participate with the ODMs (original design manufacturers) and become the OCM (original contract manufacturer). We can capitalise on this opportunity by partnering with the design houses of our customers as well as with independent research houses doing business in India.

EB: So do you manufacture the complete product in India or do you import parts or outsource production?

Apart from sourcing the raw material, all other operations are done in house for both our soft and hard ferrites division (our manufacturing companies are called MMG and DML). A subsidiary of ours, called MagDev, operates out of UK. It is solely involved in trading activities—of magnets and other such products across the globe.

EB: In terms of technological advances, what are the latest changes that have taken place in the industry in the past five years?

There has been a sea change in customer requirements. The market is currently moving from mega sized devices and appliances to their nano sized variants. This trend has in fact been a challenge in our product category. We have had to further fine tune our grades to meet the customer expectations. Because of this, there was a sudden increase in the use of rare earth magnets instead of ceramic magnets. The former are functionally very powerful and can be designed smaller in size, yet function more efficiently under higher/lower temperatures. Prices of rare earth magnets have shot up dramatically as China has the largest deposits of this material and most countries import their requirements from China. The world’s dependence on China for this valuable raw material has created some panic in the West and lent urgency to the task of finding a higher grade alternative for rare earth magnets.

Presently, all the magnet companies are investing in research to come up with higher grade ceramic magnets which can match the properties of rare earth magnets. Another trend is that today, clients are keen on assembled units rather than standalone products. This has enabled manufacturers to add value to what they offer their clients. The major changes are in the value and number of units.

EB: Is the Indian market in sync with the latest trends and technological advancements in the global market?

Indians have always been leaders when it comes to understanding the technology and its applications, however we’ve always lacked the capital. We are yet to catch up with concepts like green energy, which covers electric cars, solar energy, LEDs, etc. However, many global purchasers are now looking at India for procurement as it has predominantly better quality to offer than neighbouring China, which has been garnering large market share primarily due to its low manufacturing costs.

EB: Which application areas or segments do you see the maximum demand for ferrites coming from? And what are the new segments opening up in terms of applications?

Presently, automotive, lighting and consumer electronics are leading users of various ferrites. Further, renewable power generation equipment, defence, food processing, medical equipment, etc, are the promising segments boosting the demand for ferrites.

EB: Do you also export your products to other countries? What percentage of your business comes from exports?

We have a strong division catering to export markets. Currently, 45 per cent of the revenue generated by our soft ferrite team, in terms of value, comes from foreign traders and buyers. There is a new segment opening up globally for ready material, in terms of hard ferrite markets. At the moment, this is at a nascent stage, hence it is too early to comment on it.

EB: How do you maintain an edge over your competitors?

We are a company that is constantly engaged in product upgradation activities through in-house and consulting R&D centres. This is further communicated to our marketing team members, who in turn spend considerable valuable time with various clients and their R&D teams to enable smoother integration and to ensure repeat orders. We also strive to improve efficiency and the yield of the batches. We work with key clients to ensure zero complaints or at least reduced error, each month. Our major advantages, compared to our competitors, include our capacity to fulfil customer requirements (100 per cent customer schedule adherence), quality at par with international standards, full-fledged infrastructure and an R&D setup to develop products, providing magnetic solutions and customised magnets as per consumer requirements, robust manufacturing setup for development and uninterrupted supply.

EB: What are your strategies to capture new markets in India and globally?

We use a four pronged strategy to expand our business. This includes the concept of ‘existing customers; existing products’ which means increasing our share of business from our existing customers’ new products, and selling existing products or new products to existing customers. We also approach new customers whom we identify through various exhibitions, business visits, etc, with our existing products.
Finally, we look for new customers with new products, hence developing new products for those whom we have identified

Along with this, we partner in the R&D activities of probable clients and work on products in tandem with their development teams, both in India and abroad. While we are working on new projects that we hope will define the future for various product applications, we are also engaged in product diversification, apart from our regular supplies to the automotive and electronic equipment sectors. Presently, the production capacity of our hard ferrite division is twice what we are actually producing currently and the new plant for soft ferrites will increase capacity five times over. This will of course mean an increased client delivery over the coming months. We will also be participating at various international conferences and seminars to build a stronger base globally.

EB: Do you have an R&D centre in India? What are the current R&D activities you are involved in? Are you planning to launch any new products in the near future?

We have an in-house R&D facility, apart from using consulting R&D services from leading institutes like IIT Bombay for developmental activities. We are currently developing a new cutting edge technology based product that I cannot reveal too much about. The industry will have to wait and watch this space for updates shortly. This product is already being manufactured globally by a few manufacturers and we will be the first Indian company producing high grades under this product category.

EB: What are your future plans? Any joint venture or expansion plans lined up?

We constantly strive to grow and develop. We are always open to learning and hence always look out for a suitable expansion/partnering opportunity. In the near future, we are looking to increase our effective capacity while stepping up the grades of hard ferrites in the market. Simultaneously, we are developing new products for changing markets. We are also investing in the expansion and upgradation of our existing facilities.

We have recently invested in a new plant for our soft ferrite division. This plant has more than five times the capacity of our existing plant. We have also moved our winding division to a separate plant near the facility, because we believe this will help this vertical to achieve more focussed growth.

As discussed earlier, we are in the advanced stage of concluding an association with a Chinese rare earth magnet manufacturer for setting up a joint venture in India. This will help us stay ahead in the industry, enabling us to offer all the products in one basket. We have also given our mandate to a few investment bankers to shortlist suitable target firms for acquisition, which we believe will propel our growth story forward.

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