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Elin Electronics Limited
A Business Analysis
About Business
Incorporated in 1969, Elin Electronics Limited is a leading electronics manufacturing services ("EMS") provider. The company is a manufacturer of end-to-end product solutions for major brands of lighting, fans, and small/ kitchen appliances in India, and is one of the largest fractional horsepower motors manufacturers in India.
Elin Electronics Limited manufactures and assembles a wide array of products and provides end-to-end product solutions. The company serve under both original equipment manufacturer ("OEM") and original design manufacturer ("ODM") business models.
The company's diversified product portfolio in EMS includes (i) LED lighting, fans and switches including lighting products, ceiling, fresh air and TPW fans, and modular switches and sockets, (ii) small appliances such as dry and steam irons, toasters, hand blenders, mixer grinders, hair dryer and hair straightener; (iii) fractional horsepower motors, which is used in mixer grinder, hand blender, wet grinder, chimney, air conditioner, heat convector, TPW fans etc.; and (iv) other miscellaneous products.
The company has three manufacturing facilities which are strategically located in Ghaziabad (Uttar Pradesh), Baddi (Himachal Pradesh) and Verna (Goa).
The company also has a centralized R&D centre in Ghaziabad (Uttar Pradesh), focusing on the research and development of all aspects of OEM and ODM models including concept sketching, design refinement, generating optional features and testing.
Business Overview
The company is a leading electronics manufacturing services (“EMS”) manufacturer of end-to-end product solutions for major brands of lighting, fans, and small/ kitchen appliances in India, and are one of the largest fractional horsepower motors manufacturers in India. Based on their overall market, the company are projected to be the largest players in this category, with a market share of 12% in Fiscal 2021. (Source: F&S Report) In addition, company is one of the key players in LED lighting and flashlight with EMS market share of approximately 7% in Fiscal 2021, and are also one of the key players in small appliances vertical with EMS market share of 10.7% in Fiscal 2021. (Source: F&S Report)
Company manufacture and assemble a wide array of products and provide end-to-end product solutions and serve under both original equipment manufacturer (“OEM”) and original design manufacturer (“ODM”) business models. Under the OEM model, they manufacture and supply products basis designs developed by their customers, who then further distribute these products under their own brands. Under the ODM model, in addition to manufacturing, conceptualize and design the products which are then marketed to their customers’ prospective customers under their brands. The company have developed ODM capabilities with respect to lighting products and small appliances.
Company's key diversified product portfolio in EMS includes (i) LED lighting, fans and switches including lighting products, ceiling, fresh air and TPW fans, and modular switches and sockets; (ii) small appliances such as dry and steam irons, toasters, hand blenders, mixer grinders, hair dryer and hair straightener; (iii) fractional horsepower motors, which is used in mixer grinder, hand blender, wet grinder, chimney, air conditioner, heat convector, TPW fans etc.; and (iv) other miscellaneous products such as terminal block for air conditioners, stainless steel blade for mixer grinders, die casting, radio sets. In addition to our EMS offerings, also manufacture medical diagnostic cartridges for use in diagnostic devices, and plastic moulded and sheet metal parts and components, largely for customers in the auto ancillary and consumer durables sectors. The company manufacture and sell fractional horsepower motors in their own brand name “Elin”. The company offer innovative solutions to their customers, which include leading international and national consumer electronics brands. Company's comprehensive solution suite includes global sourcing, fabrication of components and parts, captive manufacturing and assembly, quality testing, packaging and logistics support, which enables them to partner with leading consumer electronics and appliances brands in India. Company's key customers by business verticals include:
Performance Highlight
Opportunity Size
The total addressable EMS market in India was valued at ₹ 2,654 billion (USD 36 billion) in Fiscal 2021, and is expected to grow to ₹ 9,963 billion (USD 135 billion) in Fiscal 2026 with a CAGR of 30.3%. However, the contribution of Indian EMS companies is around
40%, which is valued at ₹ 1,069 billion (USD 14 billion) in Fiscal 2021, which is expected to grow at 41.1% CAGR to reach ₹ 5,978 billion (USD 81 billion) by Fiscal 2026.
The expansion of India’s EMS industry is fuelled by a variety of factors, including an increase in consumer electronics and appliances consumption as well as lighting segment. Other significant reasons driving the growth are raising labour costs in other parts of the world and a trend among large OEMs to outsource manufacturing rather than invest in their own infrastructure. Due to the size, complexity, and high level of competition in the Indian market, OEMs are focusing more on marketing and aftermarket activities, leaving the production to contract manufacturers. EMS companies are better positioned to adapt to frequent technology changes, and economies of scale allow for stringer pricing negotiations with raw material suppliers.
Most brands prefer engaging EMS partners for contract manufacturing, but the ODM model is slowly gaining traction in India, where brands collaborate with ODMs on product development. Many EMS players are gradually expanding to provide complete design services in addition to contract manufacturing/ original equipment manufacturing. Embracing ODM model of partnership with EMS partners coupled with venturing into new product segments is propelling OEMs to pursue EMS engagement. High volumes will influence EMS/ODM to bring in the component ecosystem locally and enhance domestic capabilities of component sourcing thus making the electronics ecosystem stronger.
Indian EMS market break-up by OEM vs. ODM, value in ₹ billion, India, Fiscal 2018-Fiscal 2026E (map not to scale)
Summary of Elin Electronics’ Key Product Segments and Market Position, India, Fiscal 2021 and Fiscal 2026
COMPETITIVE STRENGTHS
Established market position in key verticals including leadership in fractional horsepower motors: The company is a leading electronics manufacturing services (“EMS”) manufacturer of end-to-end product solutions for major brands of lighting, fans, and small/ kitchen appliances in India. (Source: F&S Report) Set forth below is the summary of our key product segments and market position in India with expected growth of EMS production for the period indicated .
With their robust R&D set up, company design, manufacture and sell range of fractional horsepower motors including universal motor, exhaust fan motor, cooler motor, table fan motor, synchronous motor, sub pump and fan blower motor. Customers of their fractional horsepower motors are spread across multiple industries including small kitchen appliances, electric fans and air conditioners. The company have substantial backward integration in manufacturing of fractional horsepower motors which includes press machines and moulding machines to manufacture sheet metal and plastics part which are used in fractional horsepower motors. The company continue to enhance production of fractional horsepower motors by purchase of machinery and equipment. In addition, the company continue to enhance production of metal parts, moulded parts, tools and cartridge assembly, which will result in enhanced backward integration and increased production across their product verticals.
Diversified products resulting in a de-risked business model: The company have a diverse product, product vertical and customer base. Further, they cater to their customers across multiple product verticals. For example, Philips, Bosch and Panasonic are their customers in both fractional horsepower motors and small appliances verticals. The company diverse product portfolio enables them to balance out any impact or risk incurred with respect to any single product, product vertical or customer. The company is also able to develop designs which are customised to customer specific requirements through their ODM capabilities.
Set out below is the revenue proportion of our key product verticals during Fiscals 2020, 2021 and 2022 and six-month period ended September 30, 2022:
Entrenched relationships with a marquee customer base: The company have established and will continue to focus on strengthening their longstanding relationships with well-known domestic and multi-national customers across their product verticals. Out of their top 20 customers as at September 30, 2022, the company have been serving 11 customers for over 10 years, and have been serving 16 customers for over 5 years. Company believe their high customer retention capabilities are due to their one-stop-shop facilities and consistently maintaining high standards of manufacturing quality of products in a timely manner. The company view these customers as their partners and seek to provide them with quality end-to-end product solutions. Company's relationships with them have enabled them to continuously develop, diversify and improve their product portfolio, plan their production in anticipation of demand from retail customers and ensure continuous focus on quality and timely delivery of orders.
The company typically enter into a general purchasing agreement for specific products with their customers which is valid for three years and renewed thereafter. Within this period, products are manufactured and sold on a purchase order basis. Company follow stringent process in customer acquisition and retention for both new and existing products. For example, the process includes submission of product concept to potential customers and approval thereof, submission of functional and aesthetic prototype for customers’ testing and market feasibility, development of product where tools and dies are developed as per customer specification, submission of final product to customers’ quality department for quality check and reliability clearance, preparation of production plans along with customers, conduct of various audits by customers such as financial, quality, engineering and sustainability. This process may take up to 49 weeks till engineering build, depending on the customer and product.
The following tables summarize the revenue proportion of our top customers for the respective period:
Competitive Strength
Company's Manufacturing Facility
Company's Product and Services
Electronics manufacturing services
LED lighting, fans and switches
Small appliances
The following table sets forth the break-up of contribution of revenue earned from key customers in this vertical for the period indicated:
Fractional horsepower motors
The following table sets forth the break-up of contribution of revenue earned from key customers in this vertical for the period indicated:
Other EMS products
The following table sets forth the break-up of contribution of revenue earned from key customers in this vertical for the period indicated:
Management Of The Company
Mangi Lall Sethia - Chairman and Wholetime Director
Kamal Sethia - Managin Director
Shareholding Pattern
Financial Parameters
Profit and Loss
Balance Sheet
Cash Flow
Profitability Ratio
Risk
I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Stocx Research Club). I have no business relationship with any company whose stock is mentioned in this article.
Disclaimer - Not an recommendation as it is only for reading purpose. Source of the data - Company's RHP, respective website and Stockx.in
I am not a SEBI Registered individual/entity and the above research article is only for educational purpose and is never intended as trading/investment advice.
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