“We Plan To Merge Both Our Facilities Into A Single One In Electronic City, Increasing Our Manufacturing Capacity By The End Of 2024 Or Early 2025”

In a recent conversation with Nitisha Dubey from EFY, Vishnu Vardhan Reddy Devasani, Co-Founder of RioSH Technology, detailed the company’s evolution from a product design specialist to a full-service provider.

Q. What services does RioSH Technology currently offer?

A. RioSH Technology began as a product design company specialising in electronic product design. Over time, we expanded our services to include production support, from prototype to mass production. We can design the product, create prototypes, assist with certification, and support mass production if your clients have a concept. While we started as a design company, we have evolved into an electronic manufacturing services (EMS)company, with design as a core support for our EMS operations.

Q. What is the process for developing and manufacturing a project?

A. We take up projects based on client’s needs and present their requirements for a designed project, which we then discuss to determine feasibility. For instance, a basic tracker provides technical proposals based on the clients’ needs. If the client accepts the proposal, we begin designing the project. Once designed, we develop two or three prototypes and hand them to the client for testing. If the prototypes meet performance expectations, we proceed with regulatory testing, such as CE and FCC compliance. Upon successful testing, we move to mass manufacturing.

Q. How does RioSH Technology source components for prototypes and bulk orders?

A. For prototypes with quantities of less than ten or twenty, we source components from online suppliers like Mouser and Digi-Key to validate the design. For bulk orders, components are typically purchased through authorized distributors. Nordic Semiconductor components, for instance, are procured through their authorized distributor, Millennium Semiconductor. Most of our components are sourced from Indian distributors, but if specific components are unavailable locally, we also source them from abroad. When it comes to manufacturers, 100% are from abroad. For distributors, approximately 40% are local, and 60% are from international markets, primarily Taiwan and China. All our rigid PCBs are sourced within India, mainly from Gujarat and Mysore. However, the Indian market is not yet saturated with flexible PCBs, so we primarily source these from Taiwan.

Q. What is RioSH Technology’s standard component verification process?

A. We have an essential checklist for verifying every component. Upon receiving a component, we conduct a visual inspection and trial check. If we need to manufacture 1000 boards, we initially produce only one or two boards to check their complete functionality. Once verified, we give the go-ahead for the remaining boards. This is our standard process. For more scientific verification, such as when an IC is suspect, we can fetch and open it to inspect it internally. However, most clients cannot afford this in-depth process. Therefore, our primary method involves mounting and testing two to three boards, checking all functionalities, and proceeding with the full production run.

Q. Do government policies and regulations impact the import of components?

A. Currently, no semiconductor components are being manufactured in India. Therefore, we need to import most components from abroad, either from China or European countries. However, importing these components involves several checkpoints in customs clearances. Recently, two more checkpoints have been added to address environmental issues, requiring additional registration before importing components. Previously, customs clearance took only three to four hours, but now it takes two to three days to submit all necessary documents. If components come from China, the process can be delayed by one or two weeks.

Q. How can the government influence local manufacturing?

A. We support the production of ‘Make in India’ products. However, there are currently no high-quality semiconductor products being manufactured in India. Establishing a stable supply chain will take at least two to three years for the India-based semiconductor manufacturing companies. In the meantime, companies can leverage import policies. The import tax on PCBs has recently been increased to 20-30%. We welcome this change as it encourages local production. However, no components are currently manufactured in India, so there should be some flexibility for importing these components. We believe that any product manufactured locally should be, and higher taxes should be applied to those imported from abroad to support local industry.

Q. How does the company’s client selection strategy ensure growth?

A. We are a standard service company, but our client approach is unique. Instead of targeting all potential clients, we focus on specific clients who can provide us with recurring vertical projects. We evaluate a company’s vision to determine if it needs more services. Let’s say a company may need 1000 boards this year but 2000 boards next year. This selective approach has enabled us to achieve nearly 100% progress year over year.

Q. Which market do you primarily cater to?

A. We have primarily supported the South Indian market and have a limited presence in North India. Based in Bengaluru, we predominantly serve clients in Chennai, Hyderabad, and Bengaluru. About 90% of our domestic clients are from South India. The remaining business involves exporting to international markets.

Q. Are you planning to cater to any other sectors soon?

A. Our presence is limited to automotive and supports only prototypes. With the boom in electric vehicles, it is crucial to follow specific regulations before entering the market. We are currently working on meeting these regulatory requirements. Once we receive all necessary approvals, we will start serving clients in the EV segment.

Q. Why are you hesitant to focus on the EV segment right now?

A. Currently, we are slow in the EV segment because R&D is not up to the mark and remains fluctuating due to most of the designs being bought from China and do not have control for customisation. This is similar to the world phone trend from 2010 to 2015 when phones with multiple SIM cards were popular. The EV segment is currently at a similar stage. Consequently, we are not focusing on the EV segment for delivering boards for repairs and service. However, we are trying to identify promising segments and suppliers within the EV market to target in the future.

Q. What specific criteria or qualities are you looking for in potential EV partners and markets for future targeting?

A. First, we focus on the regulatory aspects, specifically safety and compliance. Once we solidify that part, we will start taking on clients. We observed numerous issues, particularly in the battery and power segment. Improper handling of batteries can lead to significant safety concerns for both employees and the facility. Therefore, we want to ensure everything is to build confidence before fully launching the facility and accepting EV clients. Currently, we have some clients, but they are not very promising. We are dealing with motor drivers, controller boards. However, these boards often come back for servicing soon after deployment. Although we offer a six-month warranty period, the designs are not yet mature. When these boards are deployed in the field, they frequently encounter issues and return for servicing. We can support this once or twice, but beyond that, it becomes a financial burden.

In contrast, our industrial automation products have a much lower return rate. Out of 1000 boards, only two or three might come back for servicing even after two to three years. However, in the EV segment, the design quality is not yet up to par. Many designs are sourced from China and manufactured here, often leading to higher failure rates. This situation makes us hesitant to fully commit to taking on EV products at this stage.

Q. How do payment terms and procurement strategies vary across different client projects?

A. The process varies from client to client and depends on the interactions between the client and our sales team. Most of our work involves design projects. We usually require 50% of the payment in advance, with the remainder due upon delivery. For material procurement, the terms depend on the order volume. For orders exceeding a billion, we sometimes invest the full amount ourselves and collect the funds from the client upon dispatch. However, some projects are critical and require substantial funds. In these cases, we seek client support for procuring components, starting with a 20% advance. Payments are then made at different stages, such as after PCB fabrication and component procurement.

Q. What are the capabilities of RioSH Technology’s manufacturing facilities?

A. We have a design team and a manufacturing team of over 40 members. We operate two facilities in Bengaluru: one in Electronics City and another on Kanakapura road. The Electronics City facility is a medium-level facility capable of supporting prototyping and medium-level production, handling around 10000 to 15000 boards. The Kanakapura road facility features two high-speed, automated lines producing over 100,000 monthly boards. Both facilities have fully automated lines, starting with stencil printing and ending with automated optical inspection (AOI). We have both fully automatic and semi-automatic printers. The fully automatic printer feeds PCBs, prints the stencil, and passes them to the pick-and-place machine. Our Yamaha machine has a capacity of 95000 components per hour, placing components on the PCBs. After placement, we perform a manual inspection before reflow soldering. Our reflow oven has both top and bottom zones, and the components are soldered before being passed to the AOI machines. Boards that pass inspection proceed to cleaning and packing. If there are minor issues, they are corrected on the spot. Through-hole components are manually assembled if the board is mixed; otherwise, complete through-hole or SMT boards are handled automatically.

Q. What are your plans for expanding manufacturing capacity?

A. We have two manufacturing facilities in Bengaluru, one in Electronic City and the other on Kanakpura road. We plan to merge both our facilities into a single one in Electronic City, increasing our manufacturing capacity by the end of 2024 or early 2025. Currently, we offer assembly services, but not full-fledged assembly. We aim to expand our capabilities with the new facility, particularly in the automotive segment, due to its high-volume potential. While industrial automation products rarely exceed 10000 boards, automotive products can reach up to a million. Additionally, we want to strengthen our presence in the defence segment. We aim to implement more automated assembly processes for industrial automation to boost production capacity.

Q. How do you manage and recycle minimal waste from PCB assembly processes?

A. For any order we receive, we have partnerships with third parties who handle our waste. Most of the waste we generate comes from PCB manufacturing rather than PCB assembly, as we only handle the assembly in-house. Typically, this waste includes extra or broken connectors, amounting to less than 100 kilos per month. These third-party companies take and recycle this waste, usually at no cost to us. Our wastage level is less than 1% of the sourced material, often even below 0.5%. Most of the materials can be reused, or we sell them to third parties for recycling.

Q. How do you handle excess inventory?

A. We procure the exact inventory required if we receive an order to manufacture 10000 devices. However, in some cases, if the order gets cancelled, we are left with the inventory. In such situations, we can utilise the excess inventory for upcoming projects with other clients. We inform them about the available inventory and its date code, ensuring it is not too old. If the clients agree, we use these components in their projects. However, some clients may not accept this. In those cases, third-party companies purchase the excess inventory at discounted prices, allowing us to sell it off.

Q. How does your collaborative approach with clients and vendors benefit the end clients?

A. Our relationships with clients and vendors are built primarily on collaboration. We do not treat them merely as vendors or clients; it is more of a win-win situation. This collaborative approach has been key to our growth. Over the past three years ,we have been working with Millenium Semiconductor and SM Electronics , treating them more as partners than vendors. From day one, they are involved in the design process and stay informed about the project’s progress. This involvement leads to a better understanding of production volumes, motivating them to offer better prices. Ultimately, this benefits the end clients significantly.

Q. How does your company ensure flexibility and maintain high standards of quality and deliverables in your work culture?

A. Our design team primarily prefers candidates with an electronics and communication engineering background. However, we also consider candidates without this specific background for manufacturing. In manufacturing, we prefer at least diploma holders, as handling roles with qualifications below this level is quite challenging. A diploma is essential for understanding electronics and other components to ensure quality. Regarding our work culture, we do not have a strict policy on leave; employees can take leave anytime by simply informing us without needing formal approval. Our work environment is flexible, with a strong emphasis on deliverables. We prioritise the quality and delivery of work over physical presence in the office. It does not matter whether employees work from the office or home or arrive at specific times as long as the project deliverables meet our standards.

Q. What measures have you implemented to ensure the security of company data and prevent unauthorised information transfer?

A. One crucial factor is trust, which we strive to maintain with our employees. Additionally, all company computers and laptops issued to employees are fully secured. These devices do not allow external devices to connect, preventing unauthorised information transfer. Employees are also restricted from taking these laptops home. We implemented these stricter measures after encountering some issues a couple of years ago, which a client highlighted. Since then, we have ensured that our design data and information remain secure.

Q. How do security risks and mitigation measures differ between EMS and design companies?

A. This issue is more pertinent to design companies than EMS companies. EMS companies typically deal with limited information, such as Gerber files and bills of materials (BOM). If shared, the risk is mostly to the hardware. However, design companies face a greater risk since their code can be easily transferred to a third party, even a competitor. Despite a project lasting three to six months, the entire code may be less than 10MB and could be taken on mobile phones or pen drives. To mitigate this risk, we implemented strict restrictions. Since then, we have not experienced any incidents of employees taking files unauthorised.

Q. How do you manage laptop security and trust issues in your design teams?

A. In EMS companies, only the CAD team typically has laptops, while other teams do not. However, in design segments, laptops are essential for designing and coding. This makes control more challenging due to the need for access to USB ports and external hardware for debugging. While we implement various agreements to manage this, ultimately, if someone intends to cheat, they may find a way. We focus on closing potential gaps. Since COVID, we have not faced any issues. Before COVID, we had a situation where an employee took design files and approached the same client. The client notified us, and we resolved it quickly. Now, every new employee signs a personal non-disclosure agreement, which remains in effect even after they leave the company.

Q. How do you foresee AI and ML impacting productivity in the electronics manufacturing sector without fully taking over the manufacturing processes?

A. In the next two to three years, the industry may experience significant changes similar to those in the software industry. I have noticed that some products are being developed with AI capabilities, which can automate various design processes. My primary focus right now is on manufacturing. While AI and ML can increase productivity in manufacturing, they cannot fully take over the manufacturing process. AI and ML are more suited for design and process optimisation than manufacturing. I foresee substantial changes in software-related segments, particularly design and development, but AI and ML will enhance productivity in manufacturing without replacing the manufacturing processes entirely.

Q. Do you cater to startups, or do you only work with established companies?

A. It is not about being a startup or running a large company; it is about understanding their vision. When we receive a requirement, we focus on their vision, looking for at least a one-year plan. Only then do we proceed if it is a design or manufacturing project with a promising product that has market potential. During the initial meeting, we assess this potential, and if it doesn’t meet our criteria, we end the conversation early.

Q. What sectors contribute to RioSH Technology’s business revenue?

A. Over 80% of our business comes from industrial automation, with the remaining portion coming from the medical sector.

Q. What are your growth expectations for the next two years?

A. From 2020 to 2021, we achieved a 30% growth. From 2021 to 2022, our growth was just under 20%. However, from 2022 to 2023, we experienced a significant increase of about 60%, nearly doubling our growth. We anticipate even stronger growth due to acquiring several new manufacturing clients. While design orders typically generate one to two million, a single manufacturing order can exceed one to thirty million. This year, we have secured two to three clients focused primarily on manufacturing, which leads us to expect more than 100% progress.