VVDN applies for Centre incentives, eyeing $100 mn local PCB, display bets

The 18-year-old company sees an opportunity for exponential growth due to the scale of the Indian electronics market and hopes to increase its portfolio in the country as a result, Vivek Bansal, co-founder and chairman of VVDN Technologies, said in an interview on the sidelines of the India Mobile Congress on Wednesday.

Bansal said the company has already applied for component subsidies to the Centre’s electronic component manufacturing scheme (ECMS) and this will make a significant difference in terms of returns on the capital expenditure it plans to make.

Bansal said, “We have full-fledged plans to start bare printed circuit board (PCB) manufacturing in India as well as display manufacturing locally. In the long run, we also plan to manufacture capacitors, resistors and other similar components – India is still dependent on imports for these. Eventually, our aim is to enable backward integration or to locally source the entire electronics value chain rather than just low-margin, low-value assemblies.” to produce.” he said. Mint.

Classified as an original design manufacturer, Haryana-based Manesar-based VVDN Technologies currently assembles telecommunications and enterprise technology infrastructure such as network switches, radio access networks, routers and Internet of Things (IoT) devices and also manufactures some components locally.

On April 18, the company unveiled a new assembly line for Taiwanese brand Asus that will locally assemble enterprise-class laptops and expand into a new category.

The company generally considers contract manufacturers Dixon Technologies, Syrma SGS and Kaynes Technology as its closest competitors. Bansal said that they are planning to go public in the near future.

Need for scale

“Each of the component manufacturing plans we have will need significant capital investment to scale. Without scale, there is no profitability or market-wide impact,” he said. “For example, for a bare PCB manufacturing facility to reach scale, we will need to invest at least $10 million upfront and $100 million (excluding incentives). We need capital for this and once we get approval for the Centre’s incentives, we will accelerate our IPO plans in the next 18-24 months.”

India’s reported $2.7 billion ECMS spend in April received a warm response from the industry. On October 2, union IT minister Ashwini Vaishnaw said that on September 30, the first deadline for the scheme, the Center had received 249 applications with proposed investments of $13 billion, up from the government’s initial estimate of $6.7 billion. Vaishnaw confirmed that nearly 90 percent of the applicants were from India. Bansal confirmed that VVDN is one of them.

The company’s focus on local component production comes as the Center embarks on a joint initiative to increase the percentage of parts sourced domestically; this is a move that will increase India’s net earnings from manufacturing devices for the world.

“We are also seeing a slow but steady increase in localization across network hardware. For example, in an enterprise network router, until three years ago, domestic value generation from its assembly was less than 14%. Today, this is already over 40%. This represents a huge market within India itself, where the IoT hardware market such as smart electricity meters represents a huge revenue opportunity for us as a manufacturer,” Bansal added.

revenue growth

VVDN’s latest financial data, obtained through data analytics firm Tofler, showed that the company had net income so far: ₹2,145 crore ($242 million) in FY24. On November 22, corporate rating firm Crisil said in a client note that VVDN has already expired ₹Revenue of Rs 1,874 crore ($211 million) was generated in the first six months of FY25 and was on track to rise to that figure ₹3,800 crore ($428 million) as of March 31 this year. The company is yet to report FY25 earnings.

“We are also running joint ventures in North America and the Middle East and currently our revenue share between domestic and international markets is 50-50. There is unlimited growth opportunity here and we expect our revenue to even triple in the next five fiscals,” Bansal said. he said.

Industry stakeholders said the company maintained its strong fundamentals. According to them, the production of components for telecom equipment, networking and electronics will attract intense investor attention and government support in the next few years due to many factors. The biggest of these is the size of the Indian market, which is underpenetrated in terms of localization of components.

“As this increases, all stakeholders of the electronics ecosystem are likely to gain greatly, including those like VVDN who have been in the industry for a long time,” said Ashok Chandak, president of the Electronics and Semiconductor Association of India.

Harshit Kapadia, vice president of brokerage firm Elara Securities India, added that VVDN’s approach is on the right track.

“Local component manufacturing is something that all companies, including large listed companies, will be involved in, and each will look for incentives from the Center as it will help increase their margins. Currently, most EMS operations consist of assemblies that do not add much local value. Companies will also find use across sectors and will also gain from making components such as displays and circuit boards that will not be constrained by seasonal demand,” he said.