Mumbai-based manufacturing startup helps small businesses stay on top of their game by innovating with superior components such as precision machine parts, power press tools and special purpose machines.
Travel to any of the 100 industrial clusters across India and SME owners will tell you one thing: “There is a paucity of capital and lack of technology that can make us competitive.”
According to CRISIL, there are 48 million SMBs in India; only 1 million SMEs have a digital presence and are exporting globally. The rest are industrial shops with technology that is neither forward-looking nor productive. These work on a margin where a large manufacturer would outsource production at the lowest cost possible and expect reasonable quality.
Amar Javaji of Trogon Technologies, a SMB which manufactures “displays” for large Indian companies like Titan, says: “The Indian industry has struggled for a very long time and no entrepreneur has realised the potential of investing in the future because they are busy managing their cash in such a low margin industry.”
While people like Amar have invested in design and have been able to work as equals with large businesses, many entrepreneurs don’t know how to go about design.
Enter Mehul Dodia, a 30-year-old manufacturer who is watching his machines precision-shape a gear component for a client in the grease-filled corridors of Marol, the industrial hub in Mumbai.
His startup, Electrocraft Industries, is becoming the bridge for SMEs to become innovators in their industry while manufacturing quality components.
The business offers a wide range of qualitative and durable stamping dies, stamping punches, gears, stamping components, slitters and forming tools. These tools or dies are what make every component that keeps you mobile in a city. The parts go into buses and cars, machines that make chairs and tables, and also door knobs and the WiFi panels in offices.
Before these parts reach the market, an SMB will sit with Mehul and study its metallurgical and structural integrity.
“I started this company after years of working as an intern under my father, an industrialist,” Mehul says, adding that his education was on the shop floor.
With Mehul’s help, SMEs are taking better risks as they are able to tell the manufacturers they supply to that a small company can also make quality components.
As a young boy, Mehul was fascinated with tech toys and cars. His father encouraged him to build products from scratch.
“My father would buy me small battery motors and other required material,” he says. He remembers a summer vacation during high school when his father took him to a components market to buy material to build a go-cart. The entire summer was spent sourcing material for the go-cart, which included tyres, steering wheels, seat, car chassis and - believe it or not - a sugarcane juice winding machine for the engine.
“It was a really exciting process of learning that led me to believe that I had to be in manufacturing,” Mehul says.
Electrocraft began four years ago when he was discussing what ails Indian SMEs with his father. The logical question was to support them in manufacturing metal tools and dies.
Mehul jumped into the business, borrowing from a bank to set up the manufacturing operation.
“When I first thought about it, I was quite nervous as I had to take a bank loan all by myself. The thought was scary as it was a huge responsibility and a risk,” he says.
In August 2013, he began to research the business and met people in the industry who were traditionally into tool making.
“I found that people did not believe in guiding an SME through innovation. Business was very transactional and SMEs did not receive guidance in using tools and dies to stay ahead of the game,” he says.
In 2013 the first client of Electrocraft, a Rs 30 crore in size SME in Andheri, gave the company six months to come up with a stamping die that was efficient. Mehul cracked the deal and gave the company the specific component they were looking for. Since then, he has served 20 clients; his firm generated Rs 60 lakhs as revenues in the last financial year and has so far invested Rs 1 crore in the business.
Mehul says it is still a struggle to convince SMEs to focus on precision manufacturing and quality because most of them want to focus on the next quarter and generate enough to manage their companies.
The biggest challenge was to sustain Electrocraft. Bankers hounded Mehul as the biggest challenge was to repay the term loan. Since there was no fixed or recurring client on board, he had to pay loan instalments every month with whatever he had.
“I had to increase my sales target to at least Rs 5-6 lakh per month to survive and I did that,” he says. He admits that being a manufacturing company was a nightmare initially as bankers were continually calling him for payments while clients would not make payments on time in the first 3 years.
Till 2016, it was family that helped Mehul pull through and kept the company afloat. Now that there is a steady stream of revenues, the company hopes to rope in SMEs across Mumbai and Pune before expanding across the country.
Anbazhaghan, founder of Balaji Alloys, a large SMB in Coimbatore, says: “Being an SMB is hard in India; if banks don’t get you credit cycles and labour forces will.”
That said, SMEs need innovation in dies and tool making. A large automobile company spends at least Rs 1,000 crore on dies and tools for a new product platform launch that will see four or six car types (SUV, sedan, hatchback) coming out of it. With these new investments, the entire chain of SMBs has to invest in dies and tools for new product components that go into the car four years in advance. Those who get signed up are those who can put in the capital and use modern dies and tools.
A startup like Electrocraft can really speed up an SMB’s chance of making the right investments with advice on technology and creating tools and dies that can speed up the product market strategy of the SMB. The competition for Electrocraft are the several small businesses that offer tooling as a service in SME clusters.
Electrocraft can become a large company over the next decade, provided it signs up more SMEs and convinces them to invest in quality tools. Mehul is working towards that goal.