Gift this article
TVS Electronics plans to expand its electronics manufacturing services (EMS) division to bring it at par with its product and solutions division, senior executives from the Tumakuru, Karnataka-based company said in an interaction with Mint. The products and solutions division currently contributes about 70% of its overall revenues.
TVS Electronics plans to expand its electronics manufacturing services (EMS) division to bring it at par with its product and solutions division, senior executives from the Tumakuru, Karnataka-based company said in an interaction with Mint. The products and solutions division currently contributes about 70% of its overall revenues.
Part of the plan to up the EMS business is for the company to start providing services to companies outside the TVS group, the executives said. Plans include catering to both Indian as well as global customers with its EMS solutions, while targeting new customers in Southeast Asia.
Also read | TVS Electronics to diversify product business
To help grow the EMS business, the company will invest ₹50-75 crore in expanding its single surface mount technology (SMT) line to four-six such lines as the business is expected to grow by 30-40% annually. The SMT line is engaged in printed circuit board assembly (PCBA).
Part of customer support
EMS is part of the company’s customer support services division, which includes infrastructure managed services for IT and IT peripherals, and operations and maintenance for solar plants.
Products will also be in focus. The company’s chief financial officer A.K. Vadivelu said the company’s strategy is to look at mid-volume, high complexity products that will have provide high margins. Such products will cater to auto manufacturing, industrial engineering, telecom, pharma and green energy sectors.
He added that this decision will help the company raise its earnings before interest and tax (Ebit) levels to 4-6% from the current 2-3% and its return on capital employed (RoCE) to 15% over the next few years. The current RoCE of TVS Electronics is 0.94% as of March 2024.
Also read | TVS Electronics CEO to quit for personal reasons
The company has committed investing 2-4% of its revenue on long term investments, which will be largely funded through internal accruals.
TVS Electronics offers services such as repair and maintenance of consumer electronics products, and e-waste management, among others. Its products include printers, keyboards, barcode scanners, etc.
It also offers integrated solutions through its own software called TVSE Pay.
For the quarter ended September 2024, the company reported consolidated revenue of ₹105 crore, up 13.4% on-year, with net loss of ₹1.3 crore.
Expanding IT infra
TVS will also look at expanding IT infrastructure and managed services over the next few years, and repair and refurbishment services for PCBAs. “We want to occupy the data centre and cyber security space, and we have made inroads in the last two years. In the next two years, more traction is expected to come from this segment," said K. Srinivasan, vice president of the customer support services business.
“For advance level repairs of PCBAs and panels, investment is already in, and we have couple of customers, with some customers in the pipeline as well," he added.
In its Q2 earnings, TVS claimed an 18-20% share of the product and solutions market, which has an addressable size of ₹2,000 crore. In the customer solutions group, the combined addressable market is about ₹5,350 crore.
Also read | TVS Electronics sells contract mfg unit to Finnish co
According to data from Niti Aayog, India's electronics production market has reached $101 billion in FY23, up from $49 billion in FY17, with annual growth being seen at about 13%. By 2026, electronics exports from India are projected to reach $120 billion.
The local and export markets provide large opportunities for electronics manufacturers like Dixon Technologies, VVDN and others. Dixon Technologies, for instance, has entered into a binding term sheet agreement with Chinese smartphone maker Vivo to make smartphones and other devices in India for the brand.
Catch all the Business News , Corporate news , Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
Get the latest financial, economic and market news, instantly.
{{^adFree}}
{{/adFree}}