Delta Thailand seeks growth in India
Manufacturer sees opportunities in hot demand for telecom power systems
YUKAKO ONO, Nikkei staff writer
BANGKOK -- Thailand-based power supply manufacturer Delta Electronics (Thailand) is stepping up its presence in India, targeting a robust 50% year-on-year rise in sales in 2017 on the back of increasing demand for telecom power systems and industrial automation.
A plant for manufacturing power electronics and automation solutions is expected to be up and running by the end of the year in the southern state of Tamil Nadu. The plant was inaugurated last April. Construction of a new research and development lab in Bangalore is also underway.
"India is a big country with many channels to grow," said Anusorn Muttaraid, Delta Thailand's director, on the sidelines of an investors' briefing in Bangkok on Friday. "The country has a lot of issues in its electricity system. That's where we saw the opportunity."
In 2016, sales in India reached around $180 million, up from $170 million a year ago. The modest increase, which was lower than expected, was due to the abrupt demonetization of banknotes in the country in November, company officials explained to investors at the briefing.
A lack of banknotes resulted in a delay in installations of telecom power systems as the installers could not pay salaries to their workers. Thus, deliveries of systems from Delta Thailand to its clients were delayed.
But sales are coming back to normal, officials said. Moreover, the delayed deliveries are expected to give this year's revenue an extra boost.
India accounted for 15% of Delta Thailand's revenue in 2016, up from 14% in 2015 and 13% in 2014. It has become the second largest market after the U.S.
Sales in the U.S., meanwhile, have been slow, partly because of the uncertainty looming in the country before and since the presidential election. It attributed for 25% of overall sales, down from 28% the previous year.
Anusorn said the company will focus more on India and members of the Association of Southeast Asia Nations in 2017.
The company recently announced sales of its telecom power supplies in Europe. For a total price of $24.85 million, the company will sell off four European subsidiaries to its shareholder Delta Electronics, the Taiwanese electronics component maker. It will buy back shares of the production arm of one of the subsidiaries to maintain global scale of production, but its main focus in the region will be on other businesses such as automotive power supplies.
"The telecom markets in matured countries are saturated while in Asia, even in Thailand, the demand is still growing," Delta Thailand President Dick Hsieh said.
Delta Thailand was originally set up as a cost-effective manufacturing base of Taiwan's Delta Electronics. But over the years, the company has evolved into an independent entity and has been branching out into overseas markets, which have become its main revenue source. The Taiwanese company currently controls an approximately 21% stake in the company.
In 2016, Delta Thailand's net profit came in at 5.516 billion baht ($157.7 million), a 17% decline on the year, on sales of 46.887 billion baht, which was also down 0.1%. Higher R&D expenses and a fall in foreign exchange gains were behind the profit fall.