30 Advance Technology Devices - Time For Equity

border="0" hspace="2" vspace="2"> PARTNER: ML Tandon ‡ PRODUCTS AND SERVICES: Peripherals ‡ START-UP YEAR: 1986 ‡ EMPLOYEES: 1669 ‡ QUALITY CERTIFICATION: ISO 9002 ADDRESS: 59, SDF-II, SEEPZ, Andheri (E), Mumbai 400096 height="8" alt="https://img-cdn.thepublive.com/filters:format(webp)/dq/media/post_attachments/9cfd9e00d46b35dd196e8b35946c9d1acd61f0e73133c8d2c8f22a81a6071220.gif (272 bytes)"> TEL: 8290306 height="8" alt="https://img-cdn.thepublive.com/filters:format(webp)/dq/media/post_attachments/9cfd9e00d46b35dd196e8b35946c9d1acd61f0e73133c8d2c8f22a81a6071220.gif (272 bytes)">  FAX: 8291176 PERFORMANCE HIGHLIGHTS l Fall in revenue by 32 percent from Rs 151.2 crore to Rs 101.8 crore l Rise of 12 percent in units manufactured in 1997-98 l Fall in employee strength from 2604 to 1669 l Increase in productivity from Rs 5.8 lakh to Rs 6.1 lakh per employee hspace="2" vspace="2" align="left">

The company was started in 1986 by ML Tandon of the Tandon Group, with a vision

to make the country a manufacturing base for world-class IT products. With short-sighted

and restrictive policies of the Government, limiting the number of products manufactured

in an export organization, Tandon created four different IT product companies. Advance

Technology Devices was the company created to make Hard Disk Drive (HDD) heads, head

gimbal assemblies and voice coils.

In the past, this Tandon company used to export components to IBM, Xerox, Matsushita

and Mitsubishi. However, in the highly volatile markets of present-day IT manufacture,

with inventory, order bookings and deliveries fluctuating on a daily basis, even a client

list cannot be regarded as static. Currently, the list includes Seagate, Western Digital,

Syquest and Iomega. Looking at the financial performance in the last year, revenue fell

from Rs 151.2 crore in 1996-97 to Rs 101.8 crore, a drop of 33 percent. The number of

units exported rose to 1.89 million, a growth of 12 percent over last year.

The manufacturing plant, spread over 60,000 square feet in Santa Cruz export processing

zone, manufactures HDD heads for the capacity range 2 to 6 GB per platter. For this

product range, it uses the latest magneto-resistant technology. The plant also

manufactures the older technology, double-metal insert gap heads, which support platters

in the 1 GB range. The plant has an ISO 9002 certification rating and claims its

clean-room standards are equal to the best in the world.

At the surface level, with a substantial export turnover and a reasonable market-base,

the company appears to be placed in a comfortable position. However, the reasons for its

inconsistency in growth and turnovers cannot be ignored anymore. The ranking of the

company, in the DQ Top 200 list, has fluctuated from #18 in 1995-96 to #19 in 1996-97 and

is now #30. The turnover has risen to a high of Rs 151.2 crore in 1996-97 and then fallen

to a low of Rs 101.8 crore in 1997-98. The number of employees in 1997-98 has been slashed

to the level in 1995-96.

The primary reason for the wide fluctuation in 1997-98 and other financial performances

has been its tenuous link with the global market scenario. With the strategy of all

revenues from one product and market segment translating into a weakness, the company has

become particularly vulnerable to volatility. The other weakness the company faces is the

lack of any contract manufacturing alliances. The need to continuously invest in acquiring

the latest manufacturing technologies with little research and development infrastructure

is probably another weakness.

When comparing this Tandon company with other global manufacturing companies, one

detects a definite need to strategically reorganize the company. An effective way of doing

this would be through inviting minority equity investment from a global major