Established in 2007, Sagar Switchgears Ltd (SSGL) is a leading manufacturer of electrical equipment with a good presence in overseas markets like Europe, Asia and Africa. Belal Khan of Electronics Bazaar caught up with Kiran Patel, technical director, SSGL, to know about his expectations from the ‘Make In India’ initiative
EB: Could you tell us something about your company and share your growth plans with us?
Sagar Switchgears Ltd (SSGL) was founded in 2007 in Vadodara (Gujarat), India. It is a leading manufacturer of triple insulated wire, Teflon wire, bare silicon wire, enamelled PVC flexible wire and submersible wire. We also offer round and rectangular copper and aluminium wire that’s paper covered, fibre glass covered, cotton covered, Kapton covered, Nomex covered and Mica covered for use in the electrical power equipment and appliances industries. We have a reputation of supplying quality products to reputed OEMs of electrical equipment and have a good presence in overseas markets as we export to various countries in Europe, Asia and Africa.
SSGL plans to shift its ‘centre of gravity’ towards higher growth segments while enhancing competitiveness and lowering risk, particularly in its power systems division.
The company aims to build on the three focus areas of profitable growth, relentless execution and continuous innovation. It will keep building on its innovative and quality product portfolio.
EB: How do you view the Indian electronics industry?
The Indian electronics market is one of the largest in the world and is anticipated to reach US$ 400 billion in 2022 from US$ 69.6 billion in 2012. The market is projected to grow at a compound annual growth rate (CAGR) of 24.4 per cent over the period 2012-2020.
Total production of electronic hardware goods in India is estimated to reach US$ 104 billion by 2020. The communication and broadcasting equipment segment currently constitutes 31 per cent of the market, which is the highest share of the total electronic goods manufactured in India in 2013, followed by consumer electronics at 23 per cent.
Electronic exports from India witnessed a CAGR of 27.9 per cent over the period 2007–2012. Technological improvements and cost effectiveness are the main drivers for the demand of Indian electronic products abroad.
The government of India has set up Electronic Hardware Technology Parks (EHTPs), Special Economic Zones (SEZs) and brought about a favourable climate for foreign direct investment (FDI). It has also relaxed tariffs to promote growth in the sector. In addition, the government gave its green signal to the Modified Special Incentive Package Scheme (MSIPS) under which the Central government will be offering up to US$ 1.7 billion in benefits to the electronics sector in the next five years.
The growing customer base and the increased penetration of the consumer durables segment has provided enough scope for the growth of the Indian electronics sector. Also, digitisation of cable television could lead to increased broadband penetration in the country and open up new avenues for companies in the electronics industry.
EB: How do you view the ‘Make in India’ initiative?
It’s an ambitious programme launched by PM Narendra Modi and a very positive move indeed towards making India a global manufacturing hub. I would like to highlight a few points here.
We fare very badly with respect to the ease of doing business, with a dismal rank of 134 among 183 nations; this programme will certainly erase that stigma by removing all the bottlenecks and red tape involved with doing business in India. It will address the frustrations of investors who otherwise see India as a very lucrative market but are sceptical to invest in it.
The programme targets 25 sectors that include important ones like automobiles, IT, electronics, pharmaceuticals, chemicals, railways, defence, tourism and mining.
The FDI caps on railways and defence have already been lowered and a lot of moves facilitating investors have already been taken, like setting up a dedicated cell and an investment portal, and instructing states and the Ministry of Home Affairs to facilitate the investors.
This will certainly help to garner a lot of investment and help create millions of job opportunities. It will also directly or indirectly complement the other schemes like the development of 100 smart cities, the Swachh Bharat scheme, the development of infrastructure, and could also attract some companies to contribute in CSR activities.
The ‘Make in India’ initiative will also help the consumers as it will bring in more competition into the market, with more choices, better services and improved quality available. The indigenous companies will also benefit, as they can now involve foreign companies in partnerships and share technology and other new ideas as well as be competitive.
However, for all the benefits to accrue, the prime thing is to attract more investors. This requires a lot of convincing, marketing skills and incentives for investors. As of now, the government looks very determined and poised to do that, but we have to wait and see how much of the targets are actually achieved.
EB: What are the challenges and opportunities in the Indian electronics market?
There are a number of challenges at the moment. The infrastructure needs to be improved at the earliest, foreign investment procedures need to be eased (a process that’s currently going on), and the government tariff that now makes domestically manufactured goods more expensive than imported goods with zero tariffs, should be restructured.
Other problems hampering the growth of the Indian electronics industry are:
Lack of world-class infrastructure
Lack of a clear-cut government policy for the industry
Very little expenditure in R&D
Power of marketing not harnessed to the maximum.
However, while the electronics sector in India is currently small, there are several advantages that the country offers that can be effectively leveraged to achieve higher growth. These can be categorised under three heads—manpower, market demand, and policy and regulatory support.
Domestic electronics production accounts for around 45 per cent of the total market demand. Therefore, in order to reduce the import bill, the government plans to boost the domestic manufacturing capabilities and is considering a proposal to give preference to Indian electronic products in its purchases. The consumer durables market in India is characterised by low penetration in various product segments, such as 1 per cent in microwaves, 3 per cent in ACs, 16 per cent in washing machines, 18 per cent in refrigerators, etc. Higher disposable incomes have led to the realisation of the penetration potential in various product segments, especially in rural areas.
EB: Do you feel that the government can do more for India’s electronics manufacturing industry?
India is considering a proposal to make it mandatory for the strategic sectors of defence, space and atomic energy to use ‘Made in India’ chips in an initiative that will meet not only national security needs but also kickstart the domestic semiconductor manufacturing business that has been struggling to take off.
Sources indicate that preliminary talks on the matter have already taken place, and a meeting that included top government representatives from the strategic departments of space, atomic energy, information technology and defence research took place recently.
At the heart of the issue is the setting up of two semiconductor fabrication facilities in India that were cleared by the UPA government in 2013, but have still not taken off given a lack of direction and government support for the very high investment units.
Officials say that the government is aware that ‘Made in India’ chips and electronics are necessary in the national interest, given India’s current dependence on imported products, which can be rigged and bugged.
EB: How do you ensure that you keep your existing customers and also add new customers to your portfolio?
First, begin by bidding low. Let me give an example. Let’s say you’ve built up a nice collection of designs for your local salon and flower shop. With those experiences under your belt, maybe you want to venture into working with other types of businesses, such as web designing. A great way to get that new business (and expand your portfolio in the process) is to offer your services at a reduced price.
Remember, that when you’re placing a bid on a project, you’re competing against any number of other designers. Whatever bid you submit needs to be low enough to stand out from the rest of the crowd. Bear in mind that in order to get the business, you need to improve your portfolio; you may need to settle for earning less than what you want. There are challenges with offering a low bid, however. First, be wary of offering a price that’s too low. You don’t want to shortchange yourself and make the new project something that doesn’t allow you to at least make a small profit. Second, offering a really low price may set the client up to think that future work will also be offered at that low price. This also makes it more difficult to charge your actual rates for future work with that client.
To get around these concerns, make it clear that you’re offering a ‘first time’ discount that’s a one-time-only thing. Another great solution would be to just be honest and say to the client, “I’m working on improving my portfolio and this particular aspect of your project is something that I want to showcase so I’m giving you a special one-time rate,” Another good idea is to offer bonus features at no charge. For example, you could offer to throw in an ‘About’ page or provide basic SEO services for free. By offering to work at a discounted rate, you’ll have many more opportunities to expand your portfolio and demonstrate to potential clients your increasingly large range of talents and services.