Early Origins of Tandon Group’s Manufacturing Excellence

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Early Origins of Tandon Group’s Manufacturing Excellence

  October 15, 2019

Before fledging Tandon Magnetics could gain prominence as an exporter of key components IBM would incorporate into their pioneering floppy disk drives, founder M.L. (Manny) Tandon was faced with two significant challenges. The first early problem was sustaining a stable, dedicated workforce.

During the mid-1970s, entry-level assembly workers, males in particular, among India’s handful of electronics manufacturers were quick to hop from town to city in search of other career options. After noticing the costs associated with the high turnover, namely constant training of replacements, were gnawing at his bottom line, Manny turned to what at that time was considered a radical solution–avoiding hiring men in favor of a mostly female workforce.

Indian culture frowned upon young unmarried women leaving their households–or even independently taking nearby jobs on their own. But Manny recognized an opportunity to capitalize upon an untapped pool of industrial talent. Besides delivering a strong work ethic and long–term company loyalty, the all-female production floor proved to offer another distinct advantage–superior manual dexterity necessary for high-precision electronics assembly–such as meticulously winding wire around the donut-shaped core of a magnetic bobbin.

1983 Tandon Motors: Floppy Disk, Head Coil Winding

Quality…and Quantity?

While Tandon Magnetics’ female assembly workers consistently delivered top-quality results, the next issue soon arose­­how could production output ramp-up to meet IBM’s rising demand as he original PC gained popularity around the world?

At a time when industrial automation in India factories was rare, Manny looked at novel alternatives to standard coil wrapping machines of the day­­, which were sophisticated equipment typically retailing as high as $10,000 apiece. He soon developed a relatively simple solution: adapting a household sewing machine–a pedal­-operated appliance most of his female workers were already quite familiar with.

Mounting the sewing machine motor on a wooden block, he added a few enhancements, including an automatic counter to ensure the correct number of windings, as well as attaching a microscope to help the operator precisely wrap the smallest coils. After the handmade prototype proved an instant success, 100 more machines were installed throughout the assembly floor­­–at an estimated cost of about $5 each.

Thanks to lower overhead costs and skilled, efficient manpower­­–or, more exactly, womanpower– Tandon Magnetics would provide IBM with top quality PC components ­­at volumes up to 60,000 units per day–at prices, competitors simply couldn’t match.

1985 Tandon Motors: Voice Coils

A Prosperous Legacy

Nearly four decades later, the early success of Tandon Magnetics has evolved into a core specialty at the Tandon Group’s Syrma Technology, providing world-class electronics design and manufacturing services to global OEMs. High-­precision equipment based upon those original revamped sewing machine remains a cornerstone of Syrma’s 100,000 square foot state-­of-­the-­art flagship facility in Chennai.

2015 Syrma Technology: RFID coil manufacturing

Tandon GroupEarly Origins of Tandon Group’s Manufacturing Excellence

FreeCharge: Incubated Idea to India’s Biggest Online Acquisition

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FreeCharge: Incubated Idea to India’s Biggest Online Acquisition

  August 1, 2016

In April 2015, online marketplace, Snapdeal, bought Tandon Group portfolio company, mobile recharge app FreeCharge, further strengthening its position as a long term power player in the consumer internet space in India. FreeCharge is Snapdeal’s biggest acquisition to date and projects to add a substantial volume of transactions occurring through its platform by the end of the fiscal year.

Incubated by Tandon Group

Encouraging entrepreneurship amongst its employees, and mentoring talent for the future is Tandon Group’s passion and in the case of FreeCharge, the Tandon team nurtured the idea since inception. FreeCharge co-founder, Kunal Shah, was running Tandon Group’s business process outsourcing company in Mumbai and he became fascinated with customer behavior after reading a book given to him by U.S. based director Jaideep Tandon – The Psychology of Persuasion by Robert Cialdini.

Kunal then approached the head of Tandon Group, Sandeep Tandon, with an innovative idea built around customer loyalty – a rebate program for the Indian consumer called PaisaBack. It was designed to drive foot traffic to the growing organized retail segment in India. The program was successful but scaling operations was not easy. This drove Kunal to pivot and build a program on the backbone of the rapidly growing mobile phone market in India. This became FreeCharge.

“I knew that over 90% of all Indians using a cellphone had a prepaid plan that constantly needing refilling. I was always a postpaid consumer and never knew that recharges were that big,” said Kunal.

Incubated by Tandon Group, and later funded by leading venture capital firm Sequoia Capital, Kunal and Sandeep began building out a platform to allow for online recharge in 2010, encouraging users to participate by offering coupons of equal value for each recharge.

Launch and Early Struggles

FreeCharge launched its recharging platform on August 15, 2011. Sandeep was able to leverage his extensive network and bring on McDonald’s like the launch partner merchant. The company built up a large customer base very quickly. Before too long they were handling over 10 thousand transactions every day. This early success brought with it some challenges.

“The technology platform was built in a hurry. Our users were experiencing failed transactions as we tried to grow faster,” says Shailendra Singh, a managing director at Sequoia Capital India that served on FreeCharge’s board.

The company was still attracting new users, but it couldn’t grow because it simply didn’t have the technology to handle a higher transaction volume. It spent several months in this stalled state until it rearchitected the whole platform and moved a substantial portion of its operations to Bengaluru to be closer to young, talented engineers.

Scaling for Rapid Growth

Sandeep and Kunal quickly realized the need to bring in the right talent to scale. Freecharge rounded out its executive team bringing on industry veterans to serve in key positions of COO and CEO. Among them, Alok Goel, former COO of RedBus. With the re-engineered platform and Alok at the helm, FreeCharge started to really take off in late 2013. The company began to market more aggressively and achieve wider brand recognition around the country.

In January 2014, FreeCharge launched its mobile app. At first, the app only accounted for 10% of transactions, but it grew exponentially throughout the year and now accounts for over 70% of total volume. After a new round of funding, FreeCharge was preparing a multi-year growth strategy to double or even triple its user base of 20 million people.

It had quickly become India’s most transactive e-commerce site with close to 500,000 transactions a day.

Snapdeal Acquisition

Around the same time as the new investment deals closed, Kunal received a call from Snapdeal CEO, Kunal Bahl. Kunal B. met with Kunal S., Sandeep, and Alok at the Sahara Star Hotel in Mumbai, and the subject of an acquisition came up almost immediately. The company leaders focused on the fit between the two companies.

“The first question that came to our mind was of synergy between the two firms,” says Alok. “We did not want one plus one to be two but 11.”

On the other side of the table, Kunal and Snapdeal were thinking not just about FreeCharge’s current user base, but also its potential to grow and expand into new categories. They viewed it as a critical tool to drive long term user growth and engagement.

While FreeCharge is now part of Snapdeal, it will retain its name, brand identity, and leadership.

To Tandon Group, the acquisition of FreeCharge represents another kind of success: that of vision, incubation, mentoring and fostering next-generation innovation and entrepreneurial spirit within its own ranks.

Tandon GroupFreeCharge: Incubated Idea to India’s Biggest Online Acquisition