Self-reliance still a distant dream for mfg sector
The ongoing debate around India's dependence on China for procurement of raw materials is still intense as Indian enterprises are still confined to mere assembling activities. Jayesh Shah, founder and CEO, Sonam Clock, India's second largest indigenous clock manufacturing brand, tells Bizz Buzz on why the manufacturing capabilities of India are falling short despite of best of policies put in place by the government
When the 'Made In India' initiative was launched in 2017, we did try to expand our manufacturing capacities domestically. So, from producing 5,000 clocks per day, we are now making 50,000 clocks per day. But India's requirement stands at 1,50,000 clocks per day. So, domestically we are still catering to only 30 per cent of the demand
Several companies make commodities like television in India. But in reality, TV makers purchase raw materials from China and then assembles them in India. The technologies which are there in countries like China, Japan or even Taiwan are not here in India
You have established a successful brand in over decades. What is the value of Sonam Clock in India as of 2021?
We started our journey in 1995-1997 and had purchased a land in Rajkot to set up our manufacturing operations. By 2017, we declared Sonam Clocks as public limited enterprise and listed it on the bourses after our IPO. From making 200-250 clocks monthly in 1997 with a turnover of Rs 2 lakh per month, today we have a turnover of Rs70 crores per annual. Last year we had a turnover of Rs 56 crore.
So, how has been the revenue generation of Sonam clocks post-lockdown?
We had an estimate in our mind that the turnovers might be affected post-lockdown. But once the market opened, we witnessed an overwhelming demand from the market. By February 28, we have crossed the turnover of Rs 65 crores. And with the current trend, we are projecting a growth of 30 per cent for our company by the end of this financial year.
How many employees do you have at your manufacturing plant in Morbi, Rajkot? Your workforce consists majorly of women. Is there a particular reason for it?
At present, we have a workforce of 400-450 people and 90-95 per cent of this consists of women. The reason being that clockwork doesn't require heavy duty operation as it is a light weight work. Women are usually better at working with products which are lightweight and delicate in nature. They bring in perfection and it has always been the scenario that clockwork industries generally prefer women. We employee men for works involving dispatch or moulding, but we give equal work opportunity to women also to work alongside men.
There were talks that Sonam wall clocks will also enter wristwatch business as well. What is the status of this ambitious business venture?
Yes, we were planning to enter the wristwatch business, but due to Covid-19, the plan hasn't taken off yet. We are still working on the blueprint for this venture and we have collaborated with Lexy wristwatches brand to kickoff our entry in the market. We are making approximately 10,000 watches for the brand on a monthly basis.
Speaking of raw materials that are used in clockworks, such as plastic, metal or copper wiring, how much is your company dependent upon on the overseas market for the procurement?
We get raw materials from within the country as well as from China. Some items come from Saudi Arabia and South Korea.
So, has the PIL scheme by the central government helped you in expanding the manufacturing capacities within the country? What kind of dependency does your company have on China?
The wall clock movement (manufacturing and raw materials) is still 80-90 per cent still dependent upon China. So, when the Made In India initiative was launched in 2017, we did try to expand our manufacturing capacities domestically. So, from producing 5,000 clocks per day, we are now making 50,000 clocks per day. But India's requirement stands at 1,50,000 clocks per day, so, domestically we are still catering to only 30 per cent of the demand. Post-Covid, the feeling of pushing Atmanirbhar Bharat echoed throughout the manufacturing sectors in India, and we reduced the dependency on procuring raw materials from China to a certain extent.
So, over the time, we have increased our capacities to 70 per cent manufacturing in India. But let me tell you, we still need overseas market to fill in the remaining 30 per cent demand void. We lack that technology in India to make us 100 per cent self-reliant. Today, we make commodities like television in India. But in reality, TV makers purchase raw materials from China and then assemble them in India. The technologies which are there in countries like China, Japan or even Taiwan are not here in India.
Has the customs duty made anything difficult to import raw materials?
Not at all. The 18 per cent customs duty for the raw materials hasn't changed in a long time. We are still able to purchase components from overseas. In fact, the China is witnessing an influx from Indian manufacturers, due to shortage of products from overseas, the prices of raw materials have gone up.
Speaking of demand surge in India, what trends are you witnessing for your sector post-lockdown?
The lockdown in 2020 for three to four months was only felt in Tier-1 cities. Tier-2 and Tier- 3 cities remained oblivious to Covid-19 since the pandemic did not penetrate into the lesser-known parts of the country. The demand from Tier-2 and 3 remained the same. The demand was not created from metropolitan cities like Mumbai, it came from villages of Maharashtra.
What do you think of the manufacturing capabilities of India?
The homegrown brands, domestic manufacturers are plenty in India, but I think we need to give a greater push to incentivization to small-time producers. Only then we can achieve the vision of making India a manufacturing hub to the world.
Are you planning to expand your manufacturing units? Any plans to collaborate with new brands this year?
We have recently purchased an additional four acres land to expand the operations, now, we have a total of 6.25 acres of land for our current plant. We are not planning to set up a new plant in any other state.
How much are Sonam clocks exporting annually?
We are mainly exporting to countries like Africa and Middle East. They are our biggest overseas market. Through export, our monthly revenue generation is of Rs1.25 to 2 crores approximately.
Post declaring the company as private limited (IPO listing), how many shareholders do you have as of 2021?
Right now, we have 500 shareholders with a total equity of Rs10 crores.