After nearly three decades in distribution, Rajguru Electronics pivoted to manufacturing, setting up a unit for its ADIY subsidiary in Bengaluru. EFY’s Yashasvini Razdan interviewed CEO Dileep Jain to explore the reasons behind the shift and the company’s growth strategy.
Q. What prompted Rajguru Electronics, known for distributing components and development boards, to step into manufacturing?
A. During the distribution of modules and boards in India, we faced challenges due to uncommunicated changes, resulting in customer rejections and product returns. This led to losses as returning products to China was not feasible. However, recognising the need for self-reliance in India, we started receiving orders for locally manufactured products. So, we decided to move into manufacturing to provide Made-in-India products to a wider customer base while remaining cost-competitive. We anticipate establishing a strong presence within three to four years and competing effectively in the market while being capable of mass production in India.
Q. How has the process flow changed since you transitioned to a manufacturing business?
A. We were already importing modules and components for our distribution business. As a manufacturer, we needed to know where to source the components from and which components to use to minimise costs or optimise quality. Initially, it used to take at least 20 days to manufacture 10,000 Arduino boards, but by increasing our staff, we completed 10,000 boards in just five days using a single assembly line. We now have two assembly lines and a larger workforce, and we can produce 10,000 boards in a single shift.
Q. Why not outsource your manufacturing to another company in India, given that there are many other companies that do EMS, PCBA, and development boards?
A. In that scenario, I will have to work as per their demand. I have around 150 different products to manufacture, so it is not feasible for me to plan according to their timelines while ensuring timely delivery and quality. Secondly, when they provide the products, they will add their profit margin and additional costs. I need to keep my costs low in comparison to Chinese manufacturers to compete effectively in the Indian market.
Q. How do you justify such a major capital investment with the demand for the development boards you manufacture and assemble?
A. Rather than making a significant upfront investment and waiting for the outcome, we will continue to invest more based on results and demand. We reinvest all our profits into acquiring more machinery, without taking a big loan, as this approach will yield better results in the long run.
Q. How is your manufacturing business benefiting from your components distribution and development board distribution business?
A. As a components distributor, I have access to raw materials, which allows me to offer benefits such as warranties and a repair or replacement service, if any issues arise. This aligns with the government’s focus on locally made goods, which are also preferred by schools and labs, giving us an advantage in the market.
Q. How do you manage inventory in your business?
A. We have around 10,000 SKUs (stock keeping units) for 150 products, making manual tracking impractical. Therefore, we rely on CRM software to automatically monitor stock levels and alert us when we need to replenish or import more. It helps us identify products to manufacture based on demand. We aim to maintain at least three months’ worth of stock.
Q. For your manufacturing setup, what job opportunities have been created?
A. Currently, we have employed 24 semi-skilled personnel who do hands-on assembly, testing, and quality control, and qualified individuals to operate the SMT machines. They are trained at the ITI level and supported by a local organisation that provides training and assistance.
Q. What is the roadmap for the future?
A. We plan to increase production levels by adding faster machines to the assembly line or acquiring machines to streamline processes and boost output, within the next four to five months.
