Structural reforms should help us boost our numbers

Usui believes that the Indian market has changed and is continuing to grow
rapidly. On his first visit to the country as President, Seiko Epson
Corporation, he elaborated on his views on the market and plans for the company
on a global scale

How has your financial performance been in the last fiscal?

Having just ended the fiscal year in March, I am not at the liberty to share
any specific numbers at this point of time. However, I can say that with regard
to last year our sales figures have come down but our profitability has gone up.
This has largely been due to the structural reforms that we have put into motion
over the last year. We will see the effect of this over the coming fiscal (FY
2010), where we hope to improve on both topline as well as bottomline numbers.

Elaborate on these structural reforms.

Our primary businesses are the printer and projector segments as well as our
Quartz division, which comes under Seiko. The LCD business is something we are
coming out of. As an extension of the sales function, which was shifted to Sony
in December last year, we have completed the transfer by handing over our
manufacturing assets to Sony from April 1, 2010 onwards. Our workforce in the
LCD division is now seconded to Sony and by the end of this fiscal, they will
become full time Sony employees. Also, we have shrunk our semiconductor business
to a great extent.

The major reason for exiting the LCD business as well as reducing our focus
on semiconductors is because we do not own the key final applications in those
product segments as compared to some of our Taiwanese and Chinese competitors in
the display and semiconductor space. They are forward integrated into the end
application space, which has enabled them to have better control over market
dynamics in terms of lower capital expenditure and cost advantages.

In the semiconductor space however, we are still bullish about certain niche
product lines including OLED (Organic LED) and e-paper, which we believe are
unique business models for us. We have also gone in for a leaner structure in
terms of manpower strength. The number of employees we have on board has been
downsized compared to last year. Having said that, we do not plan to reduce our
manpower further as we believe we have achieved the critical efficiency mass in
terms of people working for us.

What will be your key business focus areas this year?

We will continue to focus on the inkjet printer segment and will concentrate
on both the consumers as well as the enterprise space. We want to expand into
newer markets like the industrial verticals where products like large format
printers (LFPs) are more in demand and will be increasing our line-up in that
category. We are also bullish about dot matrix printers (DMP), especially for
verticals like retail in the BRIC countries. In the projector line of products,
we are launching new interactive low-priced devices with high brightness
quotient, which are ideal for the education segment where you typically have
large auditoriums. We will focus on price competitive products for the
developing economies while for the developed economies, we will be offering
feature intensive devices in both the projector and printer segments. In the
document management space, we are looking to tie-up with certain partners on a
global scale for document work flow software solutions, which can be integrated
with our printer hardware. We will continue to focus on our core proprietary
technologies like Micro Piezo for printers and 3LCD for projectors by looking to
develop on product design aspects.

Your focus on the laser printer market is not as much. Why is that?

We are not actively looking to up our laser play although there we are still
seeing traction in places like Europe, Japan and China. The reason for this is
because we feel that the users of laser will shift to inkjet because of the cost
benefits on a TCO basis. Hence, we are investing more in the inkjet as well as
in the DMP space. We do not own the core technology in the laser space. So in
this phase of consolidation, while we are not exiting the laser printer
business, our focus will not be on expanding the same.

Finally, what are your India specific plans? Any thoughts on manufacturing
from here?

As a company, we will continue making India specific products in terms of
design and pricing to suit the local dynamics here. We see increasing potential
in enterprise, home and the industrial segments and I am positive about the
prospects we see here. Also, our DMP play in the retail segment has been very
good and we are optimistic about the scope therein. With an annual growth of 28
percent overall in India over last year, I have been encouraged with the
performance and size of our sales network so much so that I would expect us to
grow our revenue by three times in a span of five years. Coming to
manufacturing, we currently have sites in Indonesia, Philippines and Thailand
for the printer business, while projectors are made in China. We are not looking
to begin anything from India at the moment but perhaps in the future,
manufacturing locally is a possibility especially given the amount of
intellectual capital available here.

John Jacob

johnj@cybermedia.co.in