Finland-based Salcomp, a global leader in the mobile phone charger market, has been present in India with its facility in Chennai for several years now. The company was supplying to Nokia phones when it had a manufacturing facility in Sriperumbudur, Chennai. When the Nokia facility shut down a few years ago, Salcomp maintained production at its own unit and also started manufacturing at two more plants in India. In an interaction with Gireesh Babu, Salcomp’s President and CEO Markku Hangasjärvi dwells on India’s role in the company’s global business and future expectations. Edited Excerpts:
What are the latest trends in the charger market and how is Salcomp gearing up for them?
Fast-charging and wireless chargers are the emerging trends and their emergence is a very positive thing for companies like Salcomp. Last year, we sold over two times more in terms of revenue than four years ago, while still selling the same number of chargers. Fast-charging is more complex and has more components, and fetch a higher selling price. We have seen this trend already in China and are expecting it to come to India. With the same volume, we expect to double the revenue here in India as well.
Wireless-charging and fast-charging are around 20-25 per cent of the total business globally. We believe that will grow to around 35-40 per cent in the next three years. Around 10-15 per cent of Salcomp products go to other applications related to connected devices such as voice assistants in the smart home technology space.
What is India's contribution to your global business?
Globally we have about 15 per cent of the charger market. The next competition has about 7-8 per cent, so in mobile phone chargers we are number one globally. When Nokia, Ericsson and Motorola dominated the market ten years ago, we used to have almost 30 per cent market share, but those days are now over. The market is so crowded today. We achieved a revenue of $700 million last year, growing from $550 million in the previous year. We will continue the double-digit growth in 2018.
India is about 15-20 per cent of our total sales today, and we certainly expect it to take a bigger share. It is realistic to expect India to become about 20-25 per cent of our total sales by 2020. By 2025, it would be even higher. We have invested over Rs two billion in India in the last few years and the plans are to at least double, if not triple, that amount by 2020, depending on the risks and returns of the business.
How are you gearing up for this growth in India?
We have opened two new factories in the past 18 months, apart from our facility in the SEZ in Chennai. We have opened one in Noida and another one in Chennai. We have three factories in India now. We are looking at the possibility of a fourth unit and have set our sights on Tamil Nadu Nadu at the moment, but are open to other opportunities also. We employ around 7,000 people in India, mostly females. We hope that we can surpass the 10,000 mark in terms of headcount in India in future.
At the moment we can manufacture 150-200 million chargers a year, depending on the type. We are exploring expanding production to another 50-100 million pieces with the new facility, and are looking at both the Indian market and exports through the expansion.
What is the quantum of exports from India currently?
Our exports from India are close to 40 per cent in terms of value. We can increase them by 20 per cent. We produce certain products in India and certain products from China. If there are incentives to exports from India, we will look at exporting more from this country. We are already exporting to these countries (India and China), and could export to some other countries as well. We export to some extent to China, which has potential to grow. We are not importing from China for the local market in India.
What policy measures do you expect from the Government of India?
The policies are in the right direction. The investment and export subsidies are supportive and the Tamil Nadu government has been very co-operative and the speed in licensing and permitting has been helpful. Goods and Services Tax (GST) has helped us avoid certain add-on cost in selling from one state to another in India. However, a lot still remains to be done. For instance, increasing exports would need add-on subsidies. The government needs to build policy measures to encourage manufacturing for the component industry. I can’t say they aren't there, but they aren't as expansive as they should be.