Rather than wallow around in a dull market, the Chennai-based TVS Electronics (TVSE) has decided to kick-start the market with new made-for-India products, and is also going full speed ahead on becoming a destination for global majors wanting to outsource part of their design and manufacturing. Srikanth R P has the details on TVSE’s remarkable strategy

Living up to the reputation of being India’s largest manufacturer of computer peripherals, TVS Electronics (TVSE) has a challenging task on hand as the PC industry is going through a rough patch. Although the latest IDC numbers reveal that recovery is on the cards, PC vendors are still going forward rather gingerly.

But rather than waiting for the market to pick up, and then follow market trends, TVSE has decided to write its own destiny. The peripherals major has formulated an aggressive three-pronged strategy to capture a bigger slice of the computer appliances and peripherals market.

The first part of the strategy is to tap the Indian retail market, which CII estimates to be worth close to $300 billion by 2010. Says Gopal Srinivasan, director of TVSE, “We feel that there is tremendous business opportunity in India and markets similar to India for what we call ‘e-transactions,’ which simply means automation of all types of transactions. We feel we can exploit this business opportunity with innovative products specifically designed to address the retail sector. For instance, a pilot project with TVS Sprint in the grocery segment in Chennai has been extremely successful. One of the key reasons for its success is that it is language-enabled and a retailer can print bills in both English and the local language (in this case, Tamil). Looking at the product’s success, we are now working on variants of this product and have plans for introducing it in other geographies across India.”

TVS Sprint is a compact box that comes with a scanner, a data storage device, a keyboard, a printer and a UPS. The company is positioning the Sprint as an all-in-one point of sales (POS) retail automation solution. Interestingly, TVSE has been able to offer a language-based solution largely thanks to its stake in Modular Infotech, which is known for its expertise in language-based solutions. Going forward, this stake could prove to be useful in launching other multiple language enabled products too.

TVS Proton
Another product that is being billed as “the-next-big-thing-in-the-Indian-peripherals-market” is the indigenously developed TVS Proton, which is touted as the world’s fastest bill printer, with the ability to print 10 bills per minute. TVSE officials claim the Proton has the capability to print 20 percent more bills than any other printer in its class.
The way the product was conceived and developed is an interesting case study for product managers. Before designing the product, TVSE identified 600 small businesses across diverse segments in different Indian cities, comprising of retail/wholesale players, self-employed individuals, STD booths, educational institutions, hospitals, hotels, banks and various government organisations.

The product represents a milestone in the company’s history since it is probably for the first time that an Indian printer has been developed using feedback from an Indian market perspective. The reaction to this product has been extremely positive and the company is naturally bullish on the future of the TVS Proton.

Says Srinivasan, “TVS Proton allows us to tap into the Indian retail segment, which is one of the brightest opportunities in the world. At current levels of retail automation, the market potential is about 10,000 printers a month, and with a superior product and increasing automation we expect consistent double digit growth.”

Though the product was developed keeping the Indian market in mind, Srinivasan feels the product has the ability to establish a presence in global markets. Trade enquiries for the Proton have already started coming in from overseas markets. But for the moment Srinivasan wants to establish the TVS Proton in the domestic market and then look at making a mark in the global market.

Gopal Srinivasan believes that the decline of the global DMP market may in fact turn into an opportunity for TVSE

DMPs remain key
The company also remains optimistic on the dot matrix printer (DMP) market, which many market analysts feel is on its last leg. Explains Srinivasan, “The belief that the dot matrix printer market in India is declining is misplaced. Yes, the worldwide market for DMPs is declining but not in India. In fact, for several years till 2000 the DMP market in India grew at double digits and only in 2001 did the market decline, in line with the overall downturn in the IT sector. However, the market has already started showing signs of revival—according to the latest IDC numbers—the DMP market in the July-August-September 2002 quarter grew by 9.8 percent over same period last year and by 6.8 percent quarter-on-quarter.”

He goes on to add, “Part of the misconception is due to the perception that inkjet printers are growing rapidly at the expense of DMPs—yes, inkjets are growing rapidly—but DMPs are growing too. This is due to the fact that different customer segments drive their respective growth trends. While inkjet growth is driven by the increasing computer (and Internet) penetration in homes, increasing business, office and retail automation drive DMP growth. Considering that there is still tremendous scope for further office and retail automation across Indian industry, we are very bullish about consistent growth prospects in the DMP market.”

Srinivasan believes that the decline of the global DMP market may in fact turn into an opportunity for TVS Electronics. With no MNC player investing substantially in research and development in DMPs, some of them are looking at cutting costs and some are looking at exiting the market altogether. TVS Electronics stands to benefit from both scenarios. If a global DMP player looks at cutting costs, it can look at utilising TVS Electronics’s manufacturing capabilities to do so. On the other hand, if some market players decide to exit the market, then it may lead to a bigger market opportunity for TVS Electronics.

Contract manufacturing
While the Indian retail market is a huge and emerging one, it is still a long way before the TVS Electronics gets the volumes it is looking for. This is where TVS Electronics’s contract manufacturing business provides the company stability and an assured flow of revenues. The company has invested in state-of-the-art manufacturing facilities and product design capabilities, which give it the ability to participate in the design and development of new products for other vendors.

And being a product company itself, TVS Electronics stands a better chance of winning projects as compared to competitors. Currently, TVS Electronics has already established design competencies in the areas of power supply units, dot matrix printer mechanisms and dot matrix printer heads. Srinivasan feels that this segment will emerge as one of the biggest growth drivers for TVS Electronics.

This strategy has already paid off handsomely as the contract manufacturing business grew 33 percent over the previous quarter. The importance of the contract manufacturing business is reflected in the fact that even though growth in the domestic PC and peripherals market was negative, the company managed to turn in a good performance (an 18 percent growth rate), thanks to its contract manufacturing business.

While there are very few Indian companies manufacturing computer products in India, TVS Electronics’s strategy is perhaps one the rest of the Indian pack should closely examine—which is to de-risk the business model of developing only products, by dividing risk across other areas too. The third and final part of the strategy comes from the company’s eTechnology SBU, which will seek to build on the company’s extensive distribution network by providing third-party technical maintenance services to establish brands.

Way forward
Going forward, Srinivasan wants to project TVS Electronics as a one-stop-shop for providing total outsourcing services to large global customers—from design of products to manufacturing and delivery across the globe. While it is still too early to comment on whether the indigenously developed printers would give TVS Electronics the volumes it is hoping for, the company’s strategies clearly throw up interesting pointers for the rest of the industry to follow.