SFO Technologies preparing for an IPO in 2 yrs to fund expansion plans

SFO Technologies, which claims to be the largest exporter of electronics hardware in India, accounts for around 90 percent of the group’s turnover.

The Rs 2,500-crore SFO Technologies, the flagship company of the Kerala-based NeST group, which has a major presence in electronics hardware manufacturing in the country, is looking to go public in a couple of years.

The company, which was recently in the news for supplying radio frequency (RF) products to ISRO for its Chandrayaan and Aaditya Missions, is eyeing a $1 billion turnover in the next five years.

Besides the core functions of hardware manufacturing and software services, the NeST group, which was founded by Dr Javad K Hassan and N Jehangir in 1993, has interests in the food and beverages, education, and retail sectors. SFO Technologies, which claims to be the largest exporter of electronics hardware in India, accounts for around 90 percent of the group’s turnover.

The company is planning to go in for an initial public offer (IPO) to fund its expansion, according to chairman & managing director (CMD) N Jehangir. ``The days of just electronics manufacturing services are over. People are now looking at solutions, and we have to move up from the role of passive component makers to providers of one-stop solutions encompassing hardware, software, engineering, and other services,’’ he said.

SFO Technologies has targeted a growth of 12 percent year-on-year (YoY), and hopes to clock a turnover of Rs 3,000 crore in the current year. The company has earmarked an investment of around Rs 800 crore over the next three years.

The group provides design, and hardware and software engineering and manufacturing services to various international and Indian clients in healthcare, aerospace, defence, space applications, transportation, renewable energy, and communications. It had developed a smart ICU and neonatal ventilator during Covid. Around 85 percent of its production is exported.

The company is in the process of finalising the amount to be raised in the IPO, and deciding on bankers to the issue. ``We are looking at technology development with in-house facilities and through acquisitions, as part of the expansion,’’ Jehangir told moneycontrol. The company, which has thus far depended on its own resources and bank loans, has planned the IPO as the technological upgradation requires huge investment.

SFO Technologies is hoping to cash in on recent developments in the electronics sector as the US-China trade war and the aftershocks of the pandemic is forcing MNCs to relocate their outsourcing / in-house units from China, including in the fields of IT hardware, telecom equipment, and semiconductors. This could offer more scope for production facilities in other Asian countries, including India.

The company currently has manufacturing units in the Cochin special economic zone (CSEZ), Bangalore, and Pune. It is building a high-tech park at its private electronics SEZ in Kochi, which it says is the only such facility in the country.

SFO Technologies has already set up a component park in Kochi as part of its Make in India initiative to reduce dependence on imports. At present, around 60 percent of their ingredients are imported. The company also plans to set up its own technology park on the Bengaluru-Mysuru corridor, Jehangir said.

Jehangir added that with over 60-plus customers and exports to 56 countries, NeST has succeeded in establishing 'Brand Kerala' among the leading OEMs across the world. In India, the defence sector and Indian Railways are among its major clients.

The NeST group employs 12,000 employees in different divisions across 25 locations worldwide, around 40 percent of whom are women. Jehangir said that with an attrition rate of 3 percent, the company has not faced any major labour issues in the last 30 years.

Althaf Jehangir, chief executive officer (CEO) and executive director (electronics business), said the company is poised to take on the future by progressing towards industry 4.0, which is the next phase of digitisation of the manufacturing sector, with focus on operational excellence and change management.

The group’s software arm, NeST Digital, has already started growing its software business by undertaking projects in e-mobility, next generation payment solutions, engineering transformation, and AI/ ML tools, said Nazneen Jehangir, CEO and executive director (software business).

The group’s food and beverages wing includes frozen food (exported to the US and west Asia), fruit juices, and mineral water (sold in the domestic market under the brand names NJuZE and Golden Valley, respectively). In the education field, NeST provides specialised skills training in fibre optics and geographic information systems.