From the complexities of manufacturing and sourcing components to testing processes that drive innovation, know all the exciting dynamics shaping this ever-evolving industry in an exclusive conversation with Nitisha Dubey from EFY and Abhishek Malik of Calcom Vision Limited.
Q. Could you provide insights into Calcom’s presence and impact in the Indian market?
A. Calcom is a 48-year-old company founded in 1976, began as an electronics manufacturing service (EMS) provider. Our first product was a computer developed by our founder, a passionate electronics engineer, but it struggled to find a market in India, where computer awareness was minimal. We then focused on calculators; our name, derived from ‘Calcom’ (calculators and computers), reflects this history. Unlike ordinary calculators, we pioneered scientific programmable calculators, becoming the first in India and the third globally, after HP and Texas Instruments, to do so. Notably, we exported 10,000 calculators to NASA and 2000 to the Russian space programme, a significant achievement.
In 1982, we diversified into manufacturing televisions and, quickly, became the largest TV manufacturer in India producing over 1 million units annually.
Q. What specific products and services does Calcom provide to its customers?
A. Our primary business currently lies in the LED lighting industry, operating under an original design manufacturer (ODM) model. We manufacture a complete range of LED products covering indoor and outdoor lighting. For indoor use, we produce bulbs, battens, downlights and panels. Our offerings in the outdoor lighting segment include streetlights, floodlights, solar streetlights, bulkheads, and high bay lights. We handle the entire process, from design to procurement, and deliver the product as a complete solution to the customer. While we make minor adjustments based on customer requirements, the design is primarily ours. However, as the lighting industry evolves, we explore the EMS model for high-tech products. allowing customers to bring their designs, which we then convert and customise to meet their needs.
Q. Which markets have you entered with your recent client collaborations?
A. We design and develop products for leading brands in the lighting industry, including Panasonic, Bajaj, Osram, Usha, Amazon, Flipkart, Reliance, and more. Recently, we began working with Polycab as well. With an extensive client list, we also export some of our products to the USA.
Q. What sets your brand apart from your competitors?
A. We are a comprehensive solution provider; fully integrated to eliminate reliance on third-party vendors. Everything is done in-house beginning from design and development to final assembly and testing, supported by our R&D department. Our commitment to quality is paramount, reflected in our 48 years of industry presence. We prioritise long-term business relationships, evidenced by our 18-year partnerships with Philips and BPL in the television industry, ongoing collaborations with Osram for over 12 years, and Panasonic for five years in the lighting sector. Our focus is on delivering high-quality products and fostering enduring partnerships.
Q. Do you source your components domestically or from international suppliers?
A. We import most components from China. About 40% of our bill of materials (BoM) is imported, while 60% is sourced domestically. Most mechanical parts and packaging are produced locally, but all electronic components, including LEDs, are imported from China. We are now also focusing on developing domestic sources to reduce our dependence on China.
Q. How will your in-house capabilities impact pricing and competitiveness in the market?
A. We have invested significantly in backward integration, including in-house plastic moulding, plastic extrusions and a tool room for producing dies and moulds. Currently, we are in the process of setting up aluminium die-casting and powder-coating capabilities. Bringing these processes in-house enhances our ability to offer competitive prices to our customers.
Q. Could you share details about your manufacturing facility, machinery, and other special features?
A. We operate from our manufacturing facility in Greater Noida, strategically located near the upcoming freight corridor and close to Delhi, providing us with logistical advantages. Our plant covers 3.25 acres with a 100,000-square-metre covered area. Our facility is fully equipped, starting with an in-house tool room featuring a complete setup for producing moulds and dies, including CNC and lathe machines. We also have our plastic moulding machines for creating components and housings and plastic extrusion lines. Our production process includes several advanced surface mount technology (SMT) lines and automated final assembly lines, including three automatic LED bulb manufacturing lines followed by automatic laser marking and packaging lines. As we expand into solar products, we invest in in-house manufacturing equipment to assemble and test battery packs. Additionally, our facility houses a comprehensive approbation lab, fully equipped with integrating spheres, high-voltage testers, surge testers, EMI/EMC testers, and a THB chamber, ensuring all our products meet rigorous quality standards.
Q. How many SMT lines are currently operational?
A. We currently operate ten SMT lines, with two more in transit. By the end of the year, we will have 12 fully automated SMT lines running 24/7. While they primarily serve our LED lighting business, they will also support our other EMS ventures in the future.
Q. What is new or different about the two additional SMT lines?
A. We are now focusing on using existing machines for EMS, including high-end machines capable of handling various products beyond just lighting. These machines are designed for more advanced products with narrow pitch sizes and compact designs. The process is mostly automated, with only manual tasks loading PCBs and reloading component reels. In other words, loading and unloading are manual, but everything else is fully automated.
Q. How do you handle product returns and ensure customer satisfaction?
A. All our products come with a manufacturing warranty. In case of any issues, we offer repair or replacement solutions, depending on the product and the nature of the defect. Our return rate is exceptionally low such that under 1% for LED lighting which is one of the lowest in the industry, as confirmed by our customers. While some returns occur, they are typically due to customer misuse, manufacturing defects, or design-related issues. When such issues arise, we thoroughly analyse the problem to provide a satisfactory resolution. We have agreements with our customers, offering a standard one-year warranty. We provide a free replacement if a product is returned within the warranty period.
Q. How do you ensure the quality of your products and the reliability of the components you use?
A. Our approach is rooted in two key factors: experience and stringent standards. With 48 years in the electronics industry, we deeply understand the components required for quality products. Additionally, our customers often specify certain manufacturers and brands for components, and we adhere strictly to these preferences. Beyond that, we implement rigorous internal testing and validation procedures, with multiple quality control levels, to ensure that our products consistently meet high standards.
Q. What types of quality tests do you conduct on products?
A. When our components are imported, we conduct an inward quality inspection to ensure the received materials meet the specifications provided to the manufacturer. This is the first level of quality control, happening before the materials enter our factory. Following this, we perform 100% quality inspections after each major process. For example, after SMT, we verify all parameters, followed by 100% testing after manual insertion and again after final assembly. Additionally, our quality team randomly selects samples from the production line daily for thorough testing. If any issues are identified, we hold the entire lot. We have also invested in a 3D automatic optical inspection machine, which is not typically required in the LED lighting industry but reflects our commitment to going above and beyond in ensuring quality. Moreover, we continuously improve our designs through value engineering to enhance efficiency, improve quality, and reduce failure rates.
Q. How does the 3D testing method differ from traditional testing methods?
A. As products and components continue to shrink in size, it has become increasingly challenging to visually inspect them. Now, sophisticated cameras and high-end X-rays are needed to provide a comprehensive view of the product and its quality. What was once done manually through visual inspection is now performed by computers using advanced cameras and lasers.
Q. What are your production volumes, delivery timelines, and payment cycle terms?
A. Our primary product is LED bulbs, offering a full range from 0.5W to 60W. We have a monthly production capacity of 8 million LED bulbs across this range. Additionally, we produce LED battens with an installed capacity of 1 million units per month. For new customers, our standard lead time is four to six weeks. If it involves an entirely new development, we require about 10 to 12 weeks. As an MSME, we must be paid within six to seven weeks. We also utilise bill discounting through banks and third-party financing when necessary.
Q. How do you manage and minimise waste effectively?
A. We generate two types of waste: electronic and mechanical (such as plastic or aluminium). By law, electronic waste must be recycled through government-approved e-recyclers. We have contracted companies to handle this recycling, paying them to ensure proper disposal. Similarly, approved recyclers handle plastic and metal waste. Our waste and field return rates are below 1%, and we improve our designs to reduce the return ratio, ensuring fewer products come back to us and minimising waste.
Q. What percentage of your turnover comes from exports?
A. At present, exports make up less than 5% of our total turnover, as we only recently began focusing on this area. While exports currently contribute less than 5% of our annual sales, our goal is to increase this to 50% within the next five years. This is the direction we are actively working towards.
Q. Which regions are your key markets, and where are you expanding exports?
A. Our primary market is India, which is significant for our business. We also export to neighbouring countries like Nepal and Sri Lanka. In the past two years, we have expanded our exports to the USA and some countries in the Middle East.
Q. Do you have plans to expand your business into other verticals beyond the lighting industry?
A. We are expanding into new areas, such as BLDC (brushless direct current) fans, where we have partnered with a Korean company specialising in BLDC motors. This collaboration combines their motor expertise with our electronics, while the joint venture company handles the final assembly. This technology offers improved energy efficiency. Additionally, we are entering the solar lighting sector, with development underway and production expected to begin in the third quarter. Another expansion area is EV chargers, which are currently in development, with production slated to start next quarter. Our backward-integrated infrastructure fully supports these EMS ventures.
Q. What are your plans for expanding into other EV-related segments?
A. Our core strength lies in electronics design and manufacturing, which extends to our work with EV chargers. Initially, we are focused on designing and manufacturing EV chargers for third-party companies rather than directly for automobile manufacturers. We are collaborating with major brands in this field. Starting with two models, we will offer a wall-mounted EV charger with 11.2kW capacity and a portable charger suitable for both two-wheelers and four-wheelers. We are also open to exploring other related segments as we progress.
Q. Are you attracting investors or seeking funding to support your business expansion?
A. Our cap table includes prominent investors such as MIT (Massachusetts Institute of Technology) and Old Bridge Capital, among others. With a strong set of investors, we believe this decade is India’s time to shine. It is an excellent opportunity for investors to focus on electronics manufacturing, as India’s electronics sector is growing rapidly, making this the decade for investors to engage.
Q. Are you planning to establish a new manufacturing facility for additional products?
A. For now, we will continue operations at our current facility. While we plan to expand to a new location, I cannot provide further details now. We are considering a new plant in a different state and evaluating options, including government PLI schemes. We expect to decide within a few months and will share more information then.
Q. How do you recruit employees, and what facilities and roles are provided?
A. We prefer hiring employees from the local area around our factory to avoid transportation and commute issues. Fortunately, a nearby town with a population of about 500,000 provides a steady talent pool. We begin by offering a training programme lasting three months, depending on skill levels. During training, we provide a stipend and issue a certificate upon completion. If trainees perform well and wish to stay, we offer them positions within our company. If they choose to leave, they receive the stipend and certificate and can seek employment elsewhere. This approach also aligns with our CSR efforts, as we provide education and training to individuals from underprivileged backgrounds. Additionally, we offer benefits such as ESI, provident fund, and medical facilities for our employees.
Q. What safety precautions do you implement to protect your employees?
A. We provide comprehensive training that includes safety protocols and precautions. Employees receive appropriate safety equipment, such as dark glasses for those working directly with lights and gloves or helmets for tool room staff. We adhere to all safety protocols to prevent accidents and mishaps. Additionally, we offer medical support on campus, with a medical facility available within 10 minutes and a doctor on call who can arrive promptly if needed.
Q. Do you work with startups, and how do you accommodate their smaller volumes?
A. We prefer working with large companies because we value long-term associations, and larger companies typically offer greater credibility, better payment terms, and more reliability based on experience. While we do work with some startups, they often lack the experience of dealing with OEMs like us. My preference for larger companies stems from two key reasons: their scale and the ease of managing payment terms, which come with added credibility. That said, we collaborate with brands of all sizes, both big and small.
Q. How does India’s position enhance its competitiveness against China and Vietnam in exports?
A. India is well-positioned to compete with China and Vietnam for two key reasons. First, India’s proximity to Western markets like the USA and Europe offers a significant freight advantage, reducing shipping costs and delivery times. Second, India maintains strong relations with Western countries, which benefits trade. Considering geopolitical uncertainties, many countries, including the USA, want to reduce their dependence on China and have imposed heavy import duties and tariffs on Chinese imports. For instance, import duties on Chinese products can be as high as 100%. In contrast, Indian exports to the USA face 5% to 10% duties. Additionally, India is finalising a free trade agreement with the UK, further enhancing its export potential. While government subsidies for exports are currently limited, there is potential for increased benefits. Lastly, India’s lower labour costs compared to China and Vietnam give it a competitive edge, making it an attractive alternative for manufacturing and export.
Q. How can India reduce its dependence on China for electronic components and build a self-sufficient ecosystem?
A. We need to establish an ecosystem in India that reduces reliance on essential raw materials. While we may have a cost advantage in terms of manpower, relying on Chinese raw materials undermines our competitiveness. The government must take the initiative to build this ecosystem, as seen with the development of semiconductor fabs. However, this alone is not sufficient; it needs to be supported by a comprehensive ecosystem to ensure India’s leadership in this area.
Q. How did your last fiscal year perform, and what are your expectations for the next two years?
A. Over the past five years, we have experienced a 40% CAGR. However, in the last year, there was a stagnation due to significant technological shifts in lighting, leading to a nearly 50% price reduction. Although our volume has more than doubled, the value has remained constrained. Consequently, there was no growth last year. We are targeting a 75% growth over the previous year this year. With the addition of new product verticals, we anticipate continued similar growth moving forward.
