TANCOM ELECTRONICS – Survive With A JV

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CEO: ML
Tandon * PRODUCTS AND SERVICES: Peripherals, Components
* START-UP YEAR: 1982 Ø EMPLOYEES: 1484 * QUALITY CERTIFICATION: ISO 9002 * ADDRESS: 60, SDF II, SEEPZ, Andheri (E),
Mumbai 400096
* TEL: 8290658 * FAX: 8290242

PERFORMANCE HIGHLIGHTS

  • l Fall in revenue by 35 percent from Rs 150.4 crore to Rs 97.6 crore
  • l Rise of 37 percent in units manufactured in 1997-98
  • l Fall in employee strength from 2743 in 1996-97 to 1484 in 1997-98
  • l Increase in productivity from Rs 5.5 lakh in 1996-97 to Rs 6.1 lakh per employee in
    1997-98.

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The company was started in 1982 by ML Tandon of the Tandon Group, to manufacture
precision peripheral components. This was a common group vision, which led him to create
other companies including Modular Electronics, Advance Technology Devices and Kollmorgen
Tandon. Since then, the company has seen fluctuating market performances depending on the
global market scenario.

In 1997-98, revenues fell by a worrying 35 percent, with a drop from Rs 150.4 crore in
1996-97 to Rs 97.6 crore. However, the total number of units grew by a respectable 37
percent in 1997-98 over the previous year. In 1997-98, the slump in global demand levels
for HDD peripheral products affected the draw of components from manufacturing suppliers
like Tancom Electronics.

This resulted in reduction of production levels and negative value growth.

In the past, this Tandon company used to export components to IBM, Xerox, Matsushita
and Mitsubishi. Currently, the customer list includes Seagate, Western Digital, Syquest
and Iomega. The ISO 9002 manufacturing plants spread over 50,000 square feet are based in
the Mumbai, Delhi and Chennai export processing zones. Tancom Electronics manufactures
hard disk drive (HDD) heads, double MIG head gimbal assemblies and voice coils for
exports.

In the absence of any contract manufacturing alliances, the company is vulnerable to
fluctuations in market volatility. Another weakness is the relatively slow pace used to
keep up with technological changes, due to limited investment in research and development
facilities. Looking into the future, with healthy growth rates in CD-drive shipments, the
company plans to invest in manufacture of CD-drive components.

However, procedural delays in obtaining clearances to import technologies and export
products are still rated by the company to be major irritants. Most of the regulations to
monitor and streamline exports, reduce productivity levels rather than benefit them. With
IT products of tomorrow likely to involve more leading-edge technologies than today, a
joint venture with a global peripheral player may be a necessary survival technique.

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