Exclusive interview with Saagar Govil, chairman and CEO of Cemtrex
A lot’s happened since this website was introduced to Cemtrex a few weeks ago. The company’s been on a gigantic spending spree, buying up companies and restructuring its business for new markets as though it were in a hurry to get somewhere fast.
Where that somewhere is may be deduced from the acquisitions Cemtrex has made and the types of products and services in which the acquired companies specialise.
Last month, Cemtrex purchased an obscure German company called The Target, an electronics manufacturer which supplies top-level automakers.
Then, earlier this month, Cemtrex bought up and is synergising its operations with another German electronics manufacturer, Periscope. Not to be confused with Periscope the video streaming app, the Periscope Cemtrex bought is another supplier to major automotive companies.
It doesn’t take a genius to figure out what Cemtrex has its heart set on – the market for electronics used in autonomous vehicles.
However, in this exclusive interview, Saagar Govil, chairman and CEO of Cemtrex, indicates that the company’s ambitions are not limited to driverless cars and such – they include other nascent and exciting markets in what might be called “smart” clothes, except “smart” in this context means they’re loaded with electronics which enable the clothes to gather information and maybe even change its state.
So, for example, a jacket worn by a person taking a walk outdoors may have electronics which heat up the jacket if the weather is cold and cool down the jacket if the weather is hot. The safety issues surrounding such wearable technology is certainly worth looking into, especially as the idea seems good and popular in principle, and these “smart” clothes are likely to be worn by millions of people very soon.
Cemtrex, which also owns brands such as ROB and Griffin Filters, hasn’t yet made all the financial details of the Target and Periscope deals public, but SeekingAlpha.com calls them “major acquisitions”, adding that “Cemtrex management continues to buy when there is blood on the streets”, possibly referring to market conditions in manufacturing not being as positive as they might be.
Cemtrex is listed on Nasdaq, and has a market capitalisation of around $30 million. Its share price saw a healthy increase following the recent corporate acquisitions, which seem to be considered strategically sound by investors.
And the company isn’t just buying big, it’s talking big too, publishing its own comment on India’s decision to ratify the Paris Climate Accord, which is some sort of agreement to reduce “greenhouse gases” or “global warming” or something – it’s probably what was known simply as “pollution” back at the beginning of the millennium when Cemtrex was established as a subsidiary of Ducon, one of the largest Indian-owned companies in the US, with annual sales of more than $400 million.
As an independent concern, Cemtrex made a profit of approximately $3 million in 2015. Its annual report says the company’s net income has grown more than 20 per cent a year over the past five years. Around 300 people are employed there, a lot of them engineers.
Our type of company
Robotics and Automation News isn’t big on financial stories, but some developments are worth noting, especially if engineering innovation results in the growth of a company’s market value. And Cemtrex looks like it’s on a growth trajectory. So we asked Govil to provide us with an overview.
Robotics and Automation News: Which products and services have helped Cemtrex achieve business success over the past year or more? Which ones have performed well, and why?
Saagar Govil: “Electronics manufacturing services have been a large part of our recent growth and we expect it to continue for the long term. We are the supplier of electronics of some of global leading European OEMs [original equipment manufacturers], particularly two that are leaders in robotics and automation.
“Additionally technological advances from connectivity and data processing have enabled us to implement new environmental and process monitoring technologies that operate in real time rather requiring laboratory analysis in the past.
“This is a real game-changer for many industrial plan operators looking to improve efficiency and process optimization.
“We focus our efforts into this rapidly growing markets in order to achieve our long term growth objectives. It is a strategic approach to position our company into these markets in which we see growth due to innovation occurring and we can subsequently add value.”
If you’re going to hell, at least wear a cool jacket
Cemtrex supplies printed circuit board assemblies, provides instruments for industrial processes, and provides industrial environmental control systems. Given that almost no complex, engineered object in today’s world is purely mechanical any more – every one has a chip in them or incorporates some electronics, except for some very expensive Swiss watches – the market for companies like Cemtrex would seem vast.
Of course there’s a lot of competition – there are many electronics companies out there. But new markets – the one created by the emergence and expansion of the internet of things, for example – are providing opportunities for many of these companies to grow.
Robotics and Automation News: How will your products change to accommodate connectivity of machines – industrial internet of things? What are your own observations about IIoT?
Saagar Govil: “Companies are able to implement technology into things that never had them before. For instance, one of our newest customers is an Italian leather apparel manufacturer particular for motorcycle racing markets.
“They came up with the idea to implement electronics into the jacket such that when a motorcycle driver is at risk of toppling off the motorcycle, an airbag in the jacket would deploy, attempting to save the driver before he or she hit the ground.
“This is an extremely innovative piece of wearable technology that is only possible due to recent technology advances and is also an example of how companies that previously had no business in being a tech company suddenly have a whole new set of products in their business.
“We are seeing this occur in the IoT market as well with appliance manufacturers building in connectivity so that these products can provide data and communicate with the cloud. The motorcycle jacket also has connectivity both with smartphones and the motorcycle itself and there are a number of applications that this device could be tailored to, like elderly people at risk of injury from falling down.
“With environmental monitoring, industrial plants are allowing our analyzers to communicate directly with the cloud so we have remote access to both service the unit as well as provide them data. Some of these refineries were built 100 years ago and are operating on technology decades old. This new level of sophistication provides them with tremendous savings and efficiencies in their production processes which will ultimately lead to high profitability for them.
“We are seeing a direct ROI [return on investment] for these types of applications. Better connectivity in all types of industrial devices is a growing trend – we are seeing a lot of this from our industrial OEMs. We see recent IoT products as just the beginning of a whole new breadth of technological integration into otherwise everyday consumer products as well.”
The difference between US and Germany
Being an industrial company, Cemtrex has a good global perspective, so we asked Govil to comment on how leading industrial nations differ – perhaps in the way they do business, or their attitudes to technology.
Robotics and Automation News: What has been your experience of the differences between doing business in different countries?
Saagar Govil: “I can comment on my experience on the US and Germany. Germany retains a culture focused on innovation and implementing it, which I find you don’t see here in the US outside of Silicon Valley. For instance, it is expected that Germany will allow driverless cars before the US does.
“However, the advancements that the US puts out through Silicon Valley focuses heavily on software and its disruptive impact into a variety of industries, and the US is the global leader in that respect. Typically innovation in the US is driven by startups, which are subsequently acquired by larger companies.
“In Germany you find the innovation is driven directly by the major companies, albeit at a slower pace, in my opinion, because these are such large companies.
“I think this difference between the US and Germany is a result of the business risk. In the US, its easier to be an entrepreneur and bootstrap your way up. In Germany, due to labor laws and other factors it’s less easy to maneuver the challenges startups face.”
What do we know?
Cemtrex deals with some of the largest companies in the robotics and automation industry, although we hadn’t heard of it until recently. Part of the reason for this is journalistic procrastination on our part, but also partly because Cemtrex doesn’t like to publicise who its clients are, so we didn’t connect them to our audience.
They’ve mentioned some names to us off the record which made us realise that editorial coverage of Cemtrex would be consistent with our editorial policy, if only we had one. We’re working on it, but you know what startups are like – too many things to do too fast in too many directions. But we’ll get there/bought/wound down in the end.