“Our strategy for sustaining business includes reinventing our customer base”

The ISO 14001-certified Frontline Electronics Ltd, an Indian embedded design and EMS company, is spearheaded by managing director, Meghnad Sudhirchandra Shah. A first generation entrepreneur from a traditional business family, who initially ventured into the terrain of automotive electronics and has now diversified into EMS, speaks to Jesus Milton Rousseau S of Electronics Bazaar about Frontline Electronics and its success

Tuesday, 7 April, 2009: EB: What made you establish an EMS business in India? Did you face any challenges?

In September 2000, during the ‘Globaltronics 2000’ in Singapore, the gigantic surface mount technology (SMT) machines/lines at the Philips and Siemens stalls really fascinated me. Since then, I only dreamed of SMT machines and the electronics manufacturing services (EMS) business and hence, commenced the EMS journey of Frontline Electronics Ltd.

The major challenges I faced were the lack of a godfather in the manufacturing industry, dearth of committed customers, scarcity of experienced employees due to continuous pressure on salary outflow, rapid changes in product mix and the constant need for upgradation of manufactural setup to stay in the race. All the while I struggled to maintain high profits by staying lean and mean. Ironically, these challenges were also the route to the complex, but exhilarating solutions.

The biggest challenge and the turning point of our business was in 2001, when we lost our most prized customer, who contributed to 93 per cent of our sales/business. We laboured hard to convert our small customers to collectively comprise 93 per cent of our business sales within the same 12 month period.

EB: What is your position in the EMS business market in India and what kind of services do you offer your customers?

As per the latest Electronics Bazaar survey, we are positioned at number 13 in the Indian EMS business.

We mainly focus on automotive, telecom, medical electronics and appliance controls. We provide EMS services for populated printed circuit board (PCB) assemblies, box build of electronic products, embedded design and manufacture for 8-bit consumer applications/products for existing customers and redesign of PCB layouts.

EB: What are the advantages and disadvantages of manufacturing in India? Do you think the government policies here are conducive to business?

India’s advantages are its technically qualified staff and the command over the English language possessed by its people. The most conspicuous disadvantage would be its fragmented and small customer base.

The inverted duty structure rewards import of products and one can import many products at zero duty. The point that the government fails to see is that why would anyone take the trouble of manufacturing products in India, if there is zero duty being levied?

EB: What is Frontline’s current production capacity? What was the revenue of your company in the last fiscal? Which countries does your company export to?

We have a production capacity for a million boards of SMT and through-hole in mixed applications, for both RoHS and tin/lead products. Our revenue in the financial year 2007-08 was Rs 160.70 million. We are a zero debt company with assets worth over Rs 200 million. At present, we export to the Netherlands, USA and Germany.

EB: What are your future plans?

Our future plan is to amplify the engineering EMS business and to launch products designed by our company’s embedded design team. Our strategies for sustaining our business include reinventing our customer base, upgrading to the latest technologies in manufacturing and scouting for new avenues in exports.

“There is want of a modern component industry in India. Even though all components are available at zero per cent customs duty, the cascading effects of countervailing duty, surcharges and auxiliary duty finally result in price escalation to the tune of 20 to 22 per cent (in case of octroi addition)! Are the bureaucrats citizens of India or of China? They seem to have more sympathy for them than for their Indian brothers. The government has certainly made things strenuous for us, business-wise”

Electronics Bazaar, South Asia’s No.1 Electronics B2B magazine