The Indian electronics industry is shifting the paradigm as the government of India introduced a $300 billion electronics production vision paper in January, with the goal of making electronics India’s third largest export category. This initiative has opened new doors to the existing players and newcomers in the industry. To shed light on the industry trends, we had an interview with Mr VikasPuri, Business Head, Cosmo Ferrites Limited who has shared his views on the industry trends and growth plan of Cosmo Ferrites and how they are gearing up to encash this opportunity.
1. What is the role of ferrites in electronics and renewable space?
In the electronics and renewable energy industries, ferrite core is one of the most significant component. Cosmo Ferrites manufactures manganese zinc (Mn Zn) based soft ferrites. Ferrites help to lower EMI/ EMC losses and thereby improving efficiencies of electronic products. Ferrites are also used to reduce and dissipate high frequency noise levels created by electromagnetic devices.
Ferrites are also widely used in the industry segments such as Telecommunications, Lighting, Electric Vehicles,White Goods, Automotive, Aviation and Medical .
2. There’s a lot of focus on EV manufacturing at the moment. How does this affect Cosmo Ferrites?
The emergence of e-mobility has caused a major shift in the Indian automobile industry. By 2030, the electric vehicle market is expected to grow at a CAGR of 43 percent. The charging infrastructure is also expected to grow at a similar pace. EVs is gaining popularity with the support of government’s incentives under the Faster Adoption and Manufacturing of (Hybrid) and Electric Vehicles (FAME)-II Scheme, as well as other tax benefits under state EV policies. This will give impetus to the ferrite demand as Ferrite cores are used in wide range of functions in the Electric Vehicle’s system which include energy storage, noise filtering, self-shielding, and conversion.
3. How Is Cosmo innovating in this space? What are its R&D plans?
The company plans to increase Soft Ferrites manufacturing capacity to meet rising demand for ferrite cores. Cosmo Ferrites is strengthening its R&D infrastructure and customizing its ferrite range to cater to this emerging need of industry.
4. What are the key development catalysts in this industry? What role do various policy initiatives taken to promote the electronic industry play in this?
Ferrites are in high demand due to major developing sectors such as electric vehicles, solar panels, 5G, and increased automation and digitization. With the introduction of IoT and 5G technology in India, demand for semiconductor chips has increased significantly. With increased localization, the government’s policy ambitions to make India an electronics hub have tremendous potential for expansion of ferrites manufacturing in India. Moreover, similar trends can be seen around the world as the world moves toward sustainable fuel and power sources, which will increase global demand for ferrites. The world is also considering a China + 1 strategy, and India is in a good position in terms of electronics manufacturing, due to recent policy measures aimed at increasing domestic production. All of this will help India develop a comprehensive environment for electronics manufacturing, boosting demand for ferrites.
5. How was the company’s performance in the last quarter?
The company is doing well in terms of its growth. Due to higher volumes, improved sales realization, and increased sales of technologically complex ferrite cores, net revenue increased by 75% year over year in Q4FY22. Our EBITDA grew by 272 percent. We are now increasingly focused towards expanding at the global level and our aim is to acquire at least 5% of the global market share in the next few years.
6. How environmentally friendly is the production process? How automated are the manufacturing and quality control facilities?
Manufacturing ferrites is a complex process. We make our own powder and then Ferrites. Cosmo has all the necessary approvals and certifications. Our operations are highly automated with state-of-the-art robotics and computerized. We are Quality certified and have 6 sigma practices on the shop floor.
7. How has Startup India, Make in India, Digital India initiatives by the Indian government helped the ferrites industry?
The government introduced a $300 billion electronics production vision paper in January, with the goal of making electronics as India’s third largest export category. This implies the government’s vision to expand exports (electronics) to $120 billion from the current $10.6 billion.
India’s production-linked incentive (PLI) scheme has also generated investment commitments worth Rs.2.34 lakh crore across 14 industries, according to statistics collated by different ministries. The PLI scheme complements the Digital India initiative which is focused on encouraging people to go digital for different aspects and use-cases in life such as payments, administration, and more. While Digital India encourages demands for digital goods, PLI scheme takes care of the supply part by incentivizing production.
Initiatives like Startup India and Make in India helps by contributing to localized production and furthering local supply chains. So, these government initiatives have boosted India’s electronics industry ecosystem development resulting in significant growth potential for ferrites in the country, both for internal consumption and export.
8. In lieu of the supply chain shortages, how has the ferrites industry and Cosmo fared?
Cosmo has been practising forward material planning for N+3 Quarters. This helps to advance alert the system for any spikes/surges, for which Cosmo SCM team works on a contingency plan. Apart from this Cosmo has reduced its dependency on imports by a significant amount. We are further investing into key raw material production on our own.