Discussing the electronics manufacturing sector, Srinivas Parikshith, Co-founder of Auckam Technologies, talked to EFY’s Nitisha Dubey about their expansion plans to set up a drone components unit.
Q. What does Auckam Technologies specialise In?
A. Our company, established a decade ago, operates across three key divisions: product development and services, printed circuit board (PCB) manufacturing and assembly, and drone product development. Our specialisation includes in-house capabilities for electronics and offering mechanical and industrial design services through partners. We are currently revamping our PCB assembly unit. Having utilised a leased line, we are transitioning to our own production line to enhance manufacturing capabilities. Recently, we launched a competitive drone product line, marking our first venture into product development beyond design and manufacturing.
Q. When will the new assembly unit become operational?
A. The necessary machines have already been ordered, and our new factory is expected to be ready by July or August.
Q. What sectors are you currently catering to?
A. Our primary focus is on the home automation and appliances sector. We are also expanding into the highly productive drone electronics and healthcare sectors. However, the main emphasis remains on home automation and appliances, for which we have major manufacturing customers.
Q. What equipment is included in your current assembly plant?
A. We have a surface-mount technology (SMT) pick-and-place machine and a complete SMT line, including Yamaha pick-and-place, reflow wiring, an AOI machine, and a stencil printer. We operate a single line right now, and our expansion involves implementing a more advanced single line. Additionally, we have a through-hole reflow system and all necessary approvals in place.
Q. Do you handle complex mechanical assemblies?
A. We specialise in PCB and box-build assembly, focusing on minimal and straightforward enclosures. Currently, we do not undertake complex mechanical assemblies.
Q. How do you handle component sourcing?
A. When a customer orders 1000 units, we procure all necessary parts. Through our vendor partners, we acquire PCBs, mechanical parts, and injection-moulded parts. We then assemble, test, box, and ship the final product to the customer.
Q. Do you offer box-building services?
A. We assemble the PCB, allowing the client to either ship it directly to their end customer or receive the fully assembled material in a cardboard box for shipping. This is one of our contract manufacturing services. While EMS services typically focus on PCB assembly, we also offer box building. However, we only handle simple assemblies and do not work on complex mechanisms involving gears or cycles now.
Q. What steps do you take from the initial concept to the final delivery?
A. From concept to product delivery, we manage prototypes, revisions, and new product development (NPD). We provide design for manufacturing, pilot production, and, once approved, full-scale production. Our core strength is in design, backed by nearly nine and a half years of experience. We have been manufacturing for three years, supported by a dedicated 15-member design team.
Q. What percentage of your PCB components are imported?
A. Domestic components for PCBs are minimal, with the majority being imported or sourced locally from suppliers who import them. In some cases, even the PCBs are imported, particularly if they are complex or budget-sensitive commercial products, often coming from Taiwan or China. Overall, around 90% of components are imported, while only 10% are domestically manufactured.
Q. How many regular manufacturing projects do you manage?
A. We have over 15 customers with ongoing design projects. In terms of manufacturing, we manage six mass-production projects. Additionally, we handle quarterly and other periodic manufacturing projects. Although not all projects are continuous, we consistently maintain six regular contracts.
Q. Do you offer your services to both existing and new clients?
A. We offer our services to both existing and new clients without restrictions. However, new clients tend to prefer us more. Once clients are settled with a manufacturer, they rarely switch, making it challenging for us to attract existing clients.
Q. How do you ensure confidentiality with your clients?
A. First, we sign a non-disclosure agreement (NDA) to ensure confidentiality. Following that, we discuss pricing and assess potential wastage based on our pilot production experience. We then determine lead times and may optimise the bill of materials (BOM). Occasionally, customers come to us with an existing design, and we help optimise it to reduce costs before moving forward with manufacturing. Once the price is finalised, we begin production.
Q. What is your payment cycle for assembly services?
A. Our payment cycle includes a net 30-day grace period for assembly services. Initially, we require 100% upfront payment for materials. After four or five months of consistent production, we may extend a 30-day credit for materials as well.
Q. What are the phases of the design process?
A. Design typically occurs in three phases. The first phase, ‘clarifying unknowns,’ involves our design team addressing uncertainties, such as working with a new chipset or sensor. We conduct a proof-of-concept (POC) by purchasing development boards or finding quick ways to validate the sensor or application’s performance. When a customer presents an idea, we discuss its feasibility and determine if a POC is necessary. For familiar projects, like GPS devices we have handled multiple times, we may skip directly to the prototype phase. During this phase, we build a board with additional components, possibly testing different sensors for performance comparisons. This prototype is usually slightly larger than the final product. Once the hardware and firmware are validated and we are satisfied with their performance, we move to the engineering prototype phase. Here, our factory team reviews the design for manufacturability, cost optimisation, and error reduction during production. After finalising the engineering prototype, we conduct a pilot production and provide samples for validation. We also perform compliance testing through third-party partners, including EMI and EMC tests. Once everything meets the standards and the customer approves, we sign a separate manufacturing contract and proceed with monthly production.
Q. What are your primary areas of expertise in design?
A. We have a core specialisation on the Internet of Things (IoT) and are now expanding into artificial intelligence/machine learning (AI/ML). While our foundation is in IoT, we are increasingly working on AI projects, such as voice recognition toys. Our expertise encompasses healthcare equipment, industrial controllers, toys, home automation, and commercial products, which are our primary design focuses.
Q. How will you leverage your experience to meet Indigenous drone content demand and attract venture capital funding?
A. Over the past two years, we have observed a growing demand for drones from various companies and conducted preliminary research on the industry. The drone sector has seen substantial growth both in India and globally, bolstered by government initiatives such as import substitution policies and production-linked incentive (PLI) schemes to enhance local production. Our research and discussions with 15-20 drone companies revealed that many firms import electronics from China or Taiwan and assemble the drones locally, especially for the defence and agriculture sectors. The defence market, in particular, now mandates a minimum of 60% Indigenous content, presenting a significant opportunity. Leveraging our decade of experience and manufacturing expertise, we have decided to enter this burgeoning market. We secured an initial investment of 20 million rupees in pre-seed funding from a startup team supported by the Tamil Nadu government. Currently, we are seeking additional funding from venture capitalists to further expand in this promising sector.
Q. How will your integrated design approach improve drone efficiency and performance?
A. We focus on designing rather than manufacturing imported components. Our process involves creating the product, manufacturing it internally, and supplying it to customers. Initially, we are launching with three core components for drones: the flight controller, motor drivers, and smart battery packs that integrate with the flight controller. These products address essential functionalities like drone control and power management. In our pipeline, we are developing additional components such as cameras, power distribution boards, and application-specific drones for sectors like agriculture. This approach aims to enhance efficiency and performance compared to using disparate components sourced from different vendors.
Q. How will you ensure the quality and reliability of your drone components during the transition from prototyping to full-scale production?
A. We have begun manufacturing drone components, with flight controllers and motor drivers currently in the prototype phase. Production of smart batteries is now underway, with completion expected by June for the flight controllers and motor drivers and by September for the smart batteries. After distributing samples to customers in Chennai and other locations, we will initiate beta testing before scaling up to full production.
Q. Which sectors are your drones designed for and intended to serve?
A. We do not restrict ourselves to any particular sector. Alongside our standard drone components, we provide customisation options. Larger manufacturers, for example, might need specific modifications like firmware adjustments or unique functionalities in flight controllers. Our expertise and drone technology research enable us to deliver tailored solutions across various industries.
Q. How will you balance contract manufacturing and expanding drone business growth effectively?
A. While our primary revenue stream presently stems from contract manufacturing, we are strategically positioning our drone business for significant growth over the next one to two years, aiming to establish it as a major revenue contributor. We intend to run both ventures concurrently, with plans to launch a dedicated drone manufacturing line as the business expands and demands more focus.
Q. What measures are you taking to ensure seamless integration and efficiency with the new SMT line and equipment?
A. Integrating AOIs for enhanced process optimisation and Gerber file compatibility, our next step is setting up a semi-automatic wave soldering machine. Initially, 30% of production will focus on drone components and 70% on contract manufacturing, with a new production line targeted for completion by September.
Q. How many PCB units do you sell per month?
A. Manufacturing capacity varies with component size and count. For instance, a cell phone-sized PCB with 1000 components can be produced at 1000 units daily. Our machines handle around 30,000 components per hour, expanding to over 60,000. Home automation products can be produced at 1000 units every day.
Q. What advantages do the newly acquired machines bring to your production process and overall efficiency?
A. We are launching a new production line with newly acquired machines. The process begins with a stencil printer to apply solder paste onto the PCB, followed by an SPI machine to inspect the paste application. The pick-and-place machine then places the components, and the reflow oven bakes the entire PCB. After collection and assembly, we typically conduct this process online, but we have chosen an offline setup to manage multiple projects daily. AOI is used separately. For through-hole components, we employ wave and selective soldering machines. After soldering, we build a project-specific testing jig, test the PCB, and complete the process.
Q. How will you overcome local raw material quality and cost challenges?
A. The cost and quality of raw materials in our region are less competitive compared to China, where materials are cheaper and of higher quality. During our recent visit to China, we toured various factories, including PCB manufacturing, assembly facilities, and SMT machinery producers, and observed significantly lower raw material costs and superior quality. Conversely, our materials face quality challenges, and the learning curve for refining our processes has been steep, taking about two and a half years due to our relative newness in the industry. Initially handling less complex projects, we gradually improved through internal experimentation. As first-time entrepreneurs, our team faced a high learning curve, but our strong design background helped us understand the nuances and achieve perfection more easily.
Q. How was your performance in the last fiscal year, and what is your revenue generation plan for the upcoming years?
A. We have three revenue streams: design services, PCB assembly services, and newly initiated product development. Last year, our turnover was 20 million rupees, but it dropped to five million this year as we reduced production to focus on establishing a new factory. Despite this dip, we anticipate turnover reaching 40 million rupees next year with the new product line and the manufacturing unit coming online. Additionally, we have started securing orders for contract manufacturing.
