EWIS Sees Silver Lining in Local Assembly Business
By Ishara Gamage
EWIS Chairman/CEO Sanjeewa Wickramanayake speaks to Ceylon FT
The newly elected government has realised the importance of increasing the number of electrical and electronic goods manufacturing factories / assembly plants to overcome the prevailing foreign exchange crisis in the country.
They have also realised the importance of giving priority to local industries in the government procurement process to promote local entrepreneurship.
Due to prevailing import constraints, our electrical and electronic goods importers are facing severe obstacles when they try to open letters of credit (LC’s) with local banks. Most of them were subject to over 4 month’s import credit. Therefore most of their businesses have stagnated.
Considering the above, the Softlogic Group is planning to set up its own home appliance assembly plant soon, said its Chairman Ashok Pathirage. There is also talk of other participants in the local home appliance market such as Singer, Abans and Damro; holding discussions with their respective global partners to set up assembling plants here.
According to our knowledge, last year, the government procured about Rs 14.5 billion worth of computers and other electronic devices for the public sector alone through tenders, with the emphasis being on foreign goods with no local value addition.
Accordingly, the government has already taken a policy decision to give greater priority to locally owned enterprises in its procurement process. The new Procurement Proposals, which have already been approved by the Cabinet, are yet to receive full State approval and other legal coverage.
Many local industries are expecting tax breaks and other incentives for this through the Appropriation Bill 2021 to be tabled in Parliament in the next few weeks. This is so that they can enter into negotiations with the world's largest brands in the electric and electronics industry to set up joint assembly plants here, a move that would save foreign exchange for Sri Lanka.
Experts in the field also told us that agreements signed with foreign partners will be a great boon to take local electronic products to the world in order to meet the export needs associated with bilateral and multilateral trade agreements. “The benefits to the country through these assembly plants are immeasurable as the country can acquire the world; latest technological knowledge and it will expand local employment opportunities as well,” they said.
Considering the prevailing scenario “Ceylon FT” recently visited Sri Lanka’s one and only computer assembly plant situated in Sooriyawewa in the Hambantota District spanning an area of 25,000 square feet.
As our readers might be aware, this assembly plant is owned by EWIS Colombo Limited, a company belonging to the EWIS Group of companies. The parent company was established in 1986 under the guidance of veteran businessman Nahil Wijesuriya as the pioneer IBM business partner in Sri Lanka. Since then the company has partnered with many global giants in the IT arena enabling business transformation through turnkey solutions and significant Government projects. Accordingly the company has a proven track record of over 34 years in the industry.
In 2013, under the guidance of current Chairman and CEO Sanjeewa Wickramanayake, EWIS Group diversified by setting up EWIS Colombo Limited (ECL), the first ever Original Device Manufacturing (ODM) Plant in Sri Lanka. This venture was entered into after understanding its importance to the local economy and the ICTA industry.
EWIS Colombo Limited stated that their state-of-the art facility was compliant with applicable international standards.
Speaking to Ceylon FT, EWIS Group Chairman and CEO Sanjeewa Wickramanayake explained that they were keen to expand the capacity of EWIS Colombo Limited while increasing the staff by 150 while also expanding the lines to include televisions, mobile phones and consumer electronics.
He said his company faced severe bottlenecks, especially from the previous regime’s investor unfriendly policies. However, with the change of government and the conducive environment it has put in place he said he was optimistic that his company would reach the next level as a pioneering computer Hardware and Software manufacturing company in Sri Lanka.
He also explained that while EWIS products were already being exported to the South Asian market, they were looking at expanding into the African market as well.
Following are key highlights of the exclusive interview we had with visionary entrepreneur Sanjeewa Wickramanayake during our recent visit to the EWIS factory in Hambantota.
What are the electronic components that are assembled at the EWIS Assembly Plant and where are these components sourced from?
A. Our assembly plant provides employment to over 100 youth in the rural area where the factory is located. In the process of operation at inception the value addition was 10% and it has now been increased to 30%.
Our plant has Electrostatic Discharge Protection (ESD), which is the most vital safety element needed for electronic device manufacturing. The current production capacity of the plant is 20,000 units monthly and we are producing components such as computer devices from mobiles, tablets, laptops, All-in-One (AIOs) computers, desktops, POS devices, and other smart devices such as Smartboards etc.
On a daily basis we produce approximately 500 desktops, 700 Laptops, 500 AIO’s, 1000 Mobile’s (Octa) as well as around 20 Smart boards.
Our components are sources from local suppliers including locally designed key electronic components. EWIS Colombo has alliances with many local electronic manufacturers and much of the material is sourced locally while the other components are sourced from Tier 1 globally reputed suppliers.
Our delivery, commissioning and servicing are carried out across the island, through the parent company.
What is your target market? A. Our main focus is to cater to Public Sector Companies such as the Government Sector, Ministries and Government Departments. EWIS holds the highest market share in this segment which includes many large scale banks. EWIS Colombo Limited has provided significant solutions to many leading Private Sector companies too. We recently entered the Retail Sector where affordability and quality are our key differentiation points.
Who are your components partners and for how long are you operating on the basis of long term buying contracts?
A. We have a partnership with TOSS Lanka, a company operating within the Biyagama Export Processing Zone (BEPZ) to fulfill our computer Motherboard requirements. According to our requirement they were ready to cater to our demand via its Biyagama electronic components manufacturing plant. This is the first time in Sri Lanka a local manufacturing company has enabled and signed a MOU to develop and manufacture motherboards locally. Memory components are manufactured for EWIS in our ODM Factory abroad and Intel fulfils our CPU requirements.
Who are the parties to the final standard certification?
A.We have obtained several international and local standard certifications such as DNV - ISO 9001 certification, BMQR - ISO 14001certification, CE - BMQR certification, FCC – UK Certification, ROHS - BMQR certification, SLS certification as well as Sri Lanka sustainable Energy Authority’s relevant certifications and approvals.
EWIS also partnered with the University of Moratuwa to establish a computer and process development research centre located inside the University premises. The intention was to utilise the knowledge of Moratuwa University graduates for research and development of EWIS products, since the university has a reputation for generating exceptionally talented graduates in engineering and technology. Therefore I can say that this partnership is an avenue for knowledge sharing, exchange of data and nurturing of future leaders as well.
How do you define your product quality standards compared to other competing products in the market, especially relating to other global brands?
A. All our products are either comparable or exceed International standards, while giving the priority to local standards such as SLS. In contrast most foreign brands are designed to meet regional standards such as EU or US standards without considering local requirements.
Quality Standard is our key metric and our Product Benchmarking Score is up to global standards.
All our raw materials are manufactured using the Top 10 Ranked Brand Components.
What are the internal and external barriers to competing with the world's well-known brands?
A. Today people tend to have faith in the brand of their choice rather than considering the components that go into the product. Therefore we can easily attract more global brands.
The misconception among people about lower quality and price as well as the lack of complementary and subsidiary markets are also major obstacles that we are facing at the moment.
What is your recruitment requirement and standards?
A. We currently give 80 persons direct employment but in the coming years it will increase to 150. Despite the initial challenges of sourcing and recruiting skilled labour we soon realised the innovative spirit and creativity of people in this part of the Island and opted to recruit youth with no experience. After we selected them we gave them a comprehensive training to enable them to handle the production lines skillfully and achieved our goals as a result.
Please describe employee training, factory maintenance and the assembly process. Who provided the know-how for this?
A. Regular External Training is given to our employees. We also train them in house on a regular basis during the launch of the latest technologies and product launches. We also provide a comprehensive training on every stage of the product assembly line. Strict ESD Control Measurements are followed to minimise wastage and factory rejects.
How do you assess the quality of the final product and what warranties are provided.
A. Being a local manufacturer we are the first and only company in Sri Lanka that gives a manufacturer warranty.
In our Factory Process, 4 Levels of Quality inspections are implemented. The entire product assembled in the Factory will undergo a 100% QA Inspection. We provide a 1-3 Year onsite Comprehensive Warranty, extended Warranty up to 5 years and we provide maintenance services after the warranty expires.
How many devices have been assembled so far? How is customer tracking done? How does EWIS learn about customer satisfaction and how do you measure it?
A. Over 100,000 products have so far been assembled and delivered. All our product information is captured before being delivered to the customer and the records are maintained for up to 10 years.
Regular surveys are held to evaluate customer satisfaction and most of our customers stay with us even after the warranty period expires and ask us to maintain their products.
What was the approximate capital investment in the project and is it now generating profit/dividends?
A. We commenced our plant with an initial capital investment of over Rs 100 million. We are currently performing well below our true potential. It is mainly due to political victimisation by the past regime as well as the prevailing COVID-19 pandemic. Therefore our targeted profit/dividend is yet to be achieved. However we are currently generating over Rs 1.5 billion in annual turnover.
Will EWIS be listed via an IPO in the CSE and when?
A. It will depend on the growth in the Industry and future government policies and how they are implemented.
What is your view of the moratorium on loans – did EWIS benefit? Do you want the Central Bank to extend the period further? Do you think local businesses should be given more time?
Moratoriums on loans were somewhat beneficial and we feel that a more flexible moratorium on loans should be given especially for these kind of industries considering their contribution towards the economy and number of job opportunities created.
Yes, the Central Bank should consider providing more time to companies such as ours and also extend the period of the moratorium on loans.