What is the difference between outsourcing electronics manufacturing to third parties and sourcing electronics built from scratch from third parties? Ishwar Kumhar, CEO of Brandworks, chats with EFY’s Mukul Yudhveer Singh.
Q: What is Brandworks?
A: Brandworks is a product design engineering, research and development (R&D) company which also provides manufacturing capabilities as a service. The customers reach out to us with RFQs and problem statements. Most of these are focused around hardware but we also help in the software development as a service.
Q: Many will use the same term as contract electronics manufacturing. Is it different?
A: In contract electronics manufacturing, all of the customers have the design and development problems solved before reaching out to a manufacturing partner. They share the ‘bill of materials’ with the manufacturing partner, and the role of the partner is limited to manufacturing. Players like Dixon and Foxconn are the biggest examples of contract manufacturing.
| Registering revenue of Rs 128 crore in the last fiscal year, Brandworks says it will close the current fiscal year at Rs 238 crore. Its projected revenue for the next fiscal year is Rs 1000 crore, and to achieve this, it plans to add four SMT lines to its manufacturing capacity. |
Q: How much of your business comes from the former?
A: We design and develop each and every product that we manufacture. We generate 100% of our revenue from design, development and manufacturing. There are also times when we only design and develop products but do not manufacture them.
Q: Do you also have products selling in the end market under your own brand name?
A: Out of the two verticals we operate in (b2b2b and b2b2c), we use brand names for the b2b2b vertical. Some common examples of the products include sound boxes and POS machines for the fintech industry where our brand is “Audipay”. We have registered many brand names for the same. These names are used for certification purposes .
Q: What happens to IPs here? Do they stay with you or with the brands?
A: There is not much weightage given to IPs in the consumer electronics and wearable domains here in India. The aesthetics part of a product is more important here. We focus on how the different components communicate with each other. In a nutshell, we focus on engineering. IP in India stands for tooling and moulding, and in this process, it remains with us. India’s strength in hardware design is growing, but it is controlled by China at the moment.
Q: Please explain the same using an example.
A: Most of the smartwatches available in India are of the same design. The changes exist in the domain of aesthetics. Some smartwatches will have action buttons of the left while some will house them on the left. Similarly, the location of these buttons are sometimes 2mm near the top corner, while at other times 2mm near the bottom corner.
Q: Are you strongest in B2B?
A: No, consumer electronics and wearables are the verticals in which we are strongest. We have recently started building IoT products as well. Brandworks also works with the government at the state as well as the central level. Apart from that we work with Agritech and the fintech industry.
Q: Who gets to choose the components here?
A: We are not the inventors of a category but we provide solutions to our customer by designing a product in that category . Brandworks has component control over the whole process. The difference in components comes because of the places of origination. For example – some smartwatches come equipped with an USA heart rate sensor, while a lot come equipped with Chinese heart rate sensors.
Q: Are Indian brands shying away from Chinese components?
A: The trend of not using Chinese components has started in India. That said, it is not possible to create an electronic without having some Chinese element in it. Though alternatives to all the Chinese components are available, it is difficult to adopt them because of the higher price points. A lot of government tenders have said no to Chinese components. This is true especially in the case of communication devices. Firmware, in many of these cases, is controlled by the Chinese.
Q: A lot of companies tend to deploy their workforce to monitor the manufacturing at their EMS partner’s facility. Is it the same with you?
A: This happens in the case of the EMS partners because all the components required are brought by the customer. These customers are bound to deploy people to ensure there is no theft of the components or compromise in the quality. In our case, we are the source company for everything involved. The customer come to us only for pre-dispatch delivery.
Q: Many brands say outsourcing manufacturing allows them to focus more on R&D. What are the advantages of using a Brandwork-like model?
A: It is because of the Indian brands that the prices of wearables have become accessible to a larger section of society. However, there is no such thing as R&D happening in the wearables and consumer electronics segments here. The real R&D is done by the chip design companies. R&D in India takes place on the aesthetic side. We are visibly now seeing solutions coming on the software side.
Q: Why not launch your own wearables or consumer electronics brand in India?
A: Its a different DNA. What manufacturers of electronics vs electronics brands do are entirely different things. Our expertise is in designing and manufacturing, and that is where we want to concentrate.
Q: What’s your manufacturing capacity at the moment
A: We have two SMT lines and 35 assembly lines operational at the moment. Capacity is not a challenge. For us, capacity is not a challenge as we can easily set up as many assembly lines as will be required for meeting the demand. we have scale our manufacturing as service to our customer in last 3 years
Q: What is your core focus? Why?
A: We are going to be focusing on IoT, NB IoT for the next two years. By IoT, we do not want to contain ourselves to only consumers but want to expand to sectors like agritech, fintech and govt. Some of the examples include IoT-based irrigation solutions, payment-enabled watches, and more. The majority of our revenue comes from consumer electronics and wearables. By the end of the next fiscal year, we are projecting to have 60% of our revenue from these verticals and about 40% from the IoT.
Q. Where do you see Brandworks in the next three years?
A. We are aiming to develop IoT and NB IoT module manufacturing in India. This will be for for entire spectrum including 4G and 5G. We envisage to have a very strong R&D team and infra which will enable us to make quality innovative products and solutions for the world. Also on the cards is setting up a mega factory which will help and enable our customers to get manufacturing as a service on large scale and get end to end solutions from Brandworks.
