Jun 22, 2021
In a conversation with YourStory, Sreeram Srinivasan, CEO, Syrma SGS Technology, talks about the impact of COVID on the global manufacturing industry, how they’re supporting startups, and the way ahead. The second wave of the novel coronavirus has hit India hard. The global manufacturing sector is reeling, with the IHS Markit India Manufacturing Purchasing Managers Index dropping to a 7-month low of 55.4 in March 2021 from 57.5 in February 2021. The sector’s growth rate has dropped to -39.3% in Q1 of 2021. However, Sreeram believes the global electronic manufacturing services (EMS) industry is set for an upward tick. Syrma is part of the Tandon Group, a four-decade-old group that’s into electronics hardware manufacturing.
Today, Syrma aims to be a partner of choice for startups to large corporates. It works with Global Fortune 500 companies, and exports constitute over 85% of its sales. The company has also established four satellite plants in Tamil Nadu to promote the employment of rural women and empower them. Syrma is in the process of merging with SGS Tekniks, an equi-sized company, to become an over Rs 1.000 crore entity post-merger to enhance “our geography, capacity, and capability footprints.” CEO since 2015, Sreeram has over 36 years of professional experience and has held leadership positions in companies such as Shanthi Gears Limited, Saint Gobain Automotive Glass business, Rane Group, and Sundaram Fasteners. In the former two, he served on the board of the listed entities. In a conversation with YourStory, Sreeram talks about the impact of COVID-19 and how the EMS industry is changing.
Edited excerpts from the interview:
YourStory (YS): How has COVID-19 impacted the global EMS industry?
Sreeram Srinivasan (SS): First, on a positive note, we have many more positive conversations with our leads among potential global customers as they’re looking at China+1 strategies. Our deft handling of the first wave was also a great confidence-builder among our global customers. A quick end to the second wave may help greatly sustain this confidence in India. On the other hand, global supply chain challenges have multiplied manifold; long lead times for components, logistical delays, cost of shipping (inward and outward), and availability of containers and vessels are setting off alarm bells and don’t seem to subside.
Commodity prices and component price escalations also threaten the already thin margins of EMS companies. Initiatives of the Indian government such as PLI for component and sub-systems manufacturing and Make in India regulations may help, but with a lag of two to five years. India still depends on Taiwan, China, and SE Asia for its components supplies for electronics hardware. Global shortages for ICs, copper, wire and other forms have varying levels of impact on the EMS industry. A sudden surge in investments is also putting a strain on the availability of skilled personnel.
YS: How does Syrma help startups? Which startups does it work with?
SS: Syrma helps startups quickly convert their ideas into high-quality parts by accelerating their product development life cycle. Quick prototyping support is key to startups for proving their designs or prototypes before they refine their products and flag off bulk production. In this, our support to Indian startups and well-established companies is also critical as it allows them to refine their product concepts iteratively. Our co-founder, Sandeep Tandon, is an active angel investor supporting a wide range of startups in India.
Timely support at times of need would be a critical success factor for these startups, in addition to quick support on small volume high-quality electronics. The prototyping phase for startups often means experimenting with small quantities of new parts. We’re working with a couple of big players in the RFID market; one makes toys for the European market, and the other with RFID used in medical consumables. They came to us as startups, and we helped them with our concept of co-creation.
YS: What are the current problems global EMS startups face at present? How does Syrma resolve them?
SS: Most top global contract manufacturers aren’t very receptive to the unique needs of early-stage startups: this is one major problem. Syrma addresses this with a quick turnaround of their parts. These parts can be made within four to six weeks, including procurement of all components. Our concept co-creation initiative rides on our ability to design products for our customers from an idea or concept they discuss with us and give them the first parts for their testing and trials. Once the design and quality are approved, we help them seamlessly transition to volume manufacturing with our high-speed, state-of-the-art production lines.
YS: What can we expect from Syrma shortly?
SS: Syrma plans to increase its geographical and capabilities footprints to leverage emerging opportunities. Investments to expand our design services by expanding our existing teams and strategic acquisitions that add additional capabilities are critical for our long-term sustainability. IoT, smart devices, healthcare, and EV are our focus areas and can take us to the next level in short to medium term. Building a strong talent and leadership pipeline and retaining key talents will be our key challenges to building a sustainable organization. Our senior and top management must invest more time on this in the medium term.
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