Incap Contract Manufacturing Services Pvt Ltd has expanded its manufacturing operations to India in June 2007 with a view to provide its customers with local services in the Asian market. Incap’s acquisition of the contract manufacturing unit of TVS Electronics Ltd has facilitated it to have modern manufacturing facilities in Tumkur near Bangalore. Jarmo Kolehmainen, managing director of the company, speaks to Jesus Milton Rousseau S. of Electronics Bazaar about its success.
Friday, February 18, 2009: EB: What made you start an electronics manufacturing services (EMS) business in India? What was the business scenario at that time?
The growing demands for EMS in India from within India and from the North American and European regions, coupled with the availability of trained and skilled workforce and the distinct price advantage we get in India helped us start this business in India. The business scenario was buoyant and continues to be the same now. But, the forecast looks bright.
EB: What are the challenges encountered in your business? Have you been able to overcome them?
The biggest challenge is the thin margins with which we have to operate. This is because of many reasons, such as foreign exchange (Forex) fluctuation, stiff competition and high overheads during the initial years of operation. We are trying to overcome these difficulties and have made a significant progress so far.
EB: What was the turning point in your business?
Within the first year of starting the operations here, we have been able to sign up six new customers, which would give us about 5 to 7 million euros of business annually. Some of them are already in the ramp-up stage.
EB: What is the USP of your company?
We specialise in high-mix and lowmedium volumes. We are flexible and quick in decision making, which is easy for the customers. We have an experience of a couple of decades in India. We acquired TVSE plant with the machines and personnel, which has given us the fillip. We focus on high quality and cost-effective contract manufacturing services in India.
EB: What are the services available in Tumkur unit?
Tumkur unit has the following services: Customised product designs, design for manufacturability (DFM), design for testing (DFT), design for metal and plastic enclosures, electronics manufacturing services, in-house tooling capabilities, reliability testing standards for components and products, automated testing for all product lines, flow-line manufacturing, conformal coating, product integration and final assembly.
EB: What is your position in EMS business market in India?
We are a mid-sized company with a very clear focus on the market segments that we address. We specialise in high-mix and low to medium volumes. We are growing at a rapid pace and we will be a force to reckon with in near future.
EB: What services do you offer your customers?
We work across the entire product lifecycle, starting from design, going all the way up to mass production. We undertake reengineering, feature enhancements, new product introduction and also ramp-down of the product. We specialise in box-build products. However, we also undertake printed circuit board assembly (PCBA) work for some of our large customers.
EB: What are the verticals that you focus on?
We address three verticals—energy efficiency, medical electronics and emerging business (automotive, telecommunications, etc).
EB: What is the sustainability of your business in India?
We see a bright future for the EMS industry in India and with experience of three decades in the business in Europe, we are confident of sustaining the growth and profitability that we envisage.
EB: What are the advantages and disadvantages of manufacturing in India?
The advantages are the growing demand, availability of skilled manpower and cost. The disadvantages are competition from within India and, of course, from China. Of course, the biggest challenge is the thin operating margins.
EB: What about the government policies?
We feel the taxation policy should be uniform across India, for e.g., the tax holiday and excise duty waiver for the electronic industry are available only in some states.
EB: Which countries does your company export to?
We export to many countries in Europe, North America and parts of Middle East.
EB: What is the current production capacity?
We produce about 1,50,000 to 2,00,000 units per annum, comprising of different box-build products and PCBAs.
EB: What is the revenue of the company?
Incap Contract Manufacturing Services Pvt Ltd India had a revenue of approximatelyRs 500 million last year. This is for a period of 10 months. (We acquired the unit from TVSE on May 31, 2007.)
EB: What are the various achievements of your company?
We have been able to sign up six new customers in the first year of operation and the funnel looks promising. This is a good award for us!
EB: What are the various certifications received by your company?
We have received ISO 9001 and ISO 14001 certifications. We have got the TS compliance done and waiting for the letter of conformance. We have also implemented six sigma processes throughout the company.
EB: What are your future plans?
We are building a new factory and making significant investments in plant and machinery. Our new plant will be in the same premises in Tumkur, about 65 km from Bangalore. It will be approximately 7,000 sq m. We are investing on a new surface mount technology (SMT) line (Siemens) with a speed of about 60,000 components per hour (CPH), with automated optical inspection (AOI).
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