PARTNER: ML Tandon
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