To temper dependence on China, Taiwanese firm Salom to invest ₹100 crore in Indian unit

KV Kurmanath Hyderabad | Updated on March 02, 2020

Ties up with Amara Raja to set up CKD facility in Chittoor

Call it a fallout of the US-China trade tussle, or the Covid-19 outbreak, China’s disadvantage seems to be helping India.

Here’s an example. Salom, with promoters based out of Taiwan and a registered office in China, has decided to invest ₹100 crore in India to de-risk supply issues. Salom is a major global player in the design and manufacture of power chargers to the makers of laptops, mobile phones, phones and vacuum cleaners.

Salom is entering into a tie-up with automobile battery manufacturer Amara Raja to set up a CKD (completely knocked down) facility at the latter’s Chittoor, Andhra Pradesh, facility. Its registered office, however, will be in Hyderabad.

The firm will replicate whatever it is doing at its facilities at the Xiamen Island, China. From 1 million units a month to start with, it will ramp up its capacity to 10 million in three or four years.

Salom’s clients include Motorola, Philips, Panasonic, Jio, Sony and Lenovo.

Pre-Covid decision

The company’s COO Kiff Wang said Salom had been contemplating setting up a manufacturing facility in India even before the Covid-19 outbreak.

The crisis in China has rattled Salom’s supplies, as its facilities there churn out over 80 per cent of the total. Though it has facilities in Indonesia and Brazil, the scale is not enough to offset the disruption.

The firm is now looking at making its India operations contribute at least 30 per cent of its total production. “However, it (coronavirus) has accentuated the finalisation of the plan,” said Wang, who is here to seal a deal with Amara Raja to open exclusive manufacturing lines.

The high cost of labour in China and raising import duties in India, too, played in favour of Salom’s decision to establish operations in India.

The company, which registered a turnover of $200 million in 2019, expects a 30 per cent drop due to the disruptions in business following the virus outbreak.

A market, too

India is also market for Salom, contributing 5 per cent of its sales. “We are expecting this to increase to at least 20 per cent in the next few years,” AS Rajkumar, Director of Salom Electronics India, said. “Besides making India a production centre, we would also like to tap the potential for our products.”

“The company is going to invest ₹100 crore in the next two or three years. The new manufacturing facility will have 800 employees,” he said.

The firm has also roped in Chanaka Tillakaratna, who heads Salom’s operations in the UK, to drive the market in India.

Published on March 02, 2020

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