EMS is a capital-intensive industry, and hence, with the strongest clashes. Then how is a startup, Karkhana IO, on its way to clock a revenue of ₹1 billion this fiscal? The founders explain!
Reinventing the wheel in the EMS industry is rarely discussed due to high capital costs involved. Thanks to its unique business model, Karkhana IO made ₹200 million last fiscal and aims for ₹1 billion this year. Sonam Motwani, Founder, and Karthik MC, CRO, Karkhana IO, told EFY’s Mukul Yudhveer Singh that their electronics manufacturing services (EMS) startup aims to support medium and small industries (MSMEs) and other electronic product startups on the supply side. “By supply, we mean the supply of manufactured electronics and solutions. In India, the demand for finished electronic goods is more than the supply of the same. This is what we aim to solve,” says Motwani.
Karkhana IO has partnered with over 500 EMS companies. Simply put, the startup connects these companies with customers who have a demand for custom-built solutions. In the process, the responsibility of quality and delivery of solutions is completely that of the startup. However, it does not get involved in any product design level discussions.
“Though our contribution to the customer is limited to manufacturing, we do suggest design changes when we think that the same will lead to better manufacturing prowess. We don’t take any onus on selecting components. In case if a few components are unavailable, we do suggest the replacements for the same. The decision-making lies with the customer,” explains Karthik MC.
Having reported revenue figures of ₹200 million last fiscal, the founders of the company are positive that Karkhana IO’s revenue this fiscal will be in the vicinity of ₹1 billion. For the next fiscal, which they have started taking orders for, they are targeting a pipeline of ₹3 billion. The startup makes margins between the prices it gets the products manufactured at and at the prices it supplies to the companies.
Battery packs, charging infrastructure, IoT-based consumer electronics, medical electronics, drones and aerospace components are the categories that the startup says it is the strongest in.
Increased demand for plug and play solutions is the biggest trend that the founders are witnessing in India’s EMS space. “Initially, we saw a lot of traction for sub-assemblies and component level work. Things are different now,” Motwani says.
For example, the startup is now connecting companies, which earlier partnered with it for battery cases manufacturing, to do complete battery manufacturing.
Motwani adds, “In the four industries we spoke about earlier, we are working with companies generating revenues in the ₹500 million to ₹10 billion bracket. In terms of age, we are working with startups, and also working with companies that are as young as 20 years. The ratio is 45 for startups and 55 for MSMEs.”
According to a report by Mordor Intelligence, the global EMS market size is estimated at US$580.52 billion in 2024, and is expected to reach US$773.22 billion by 2029, growing at a CAGR of 5.90% during the forecast period (2024-2029).
