The Hindu Business Line : Surana Tele shifts focus to sustain growth

AFTER about three years of relatively slow growth, the overall business scenario has started changing for the Hyderabad-based Surana Group, which consists of Surana Telecom Ltd, and Bhagyanagar Metals Ltd.

The positive development in the first quarter of fiscal 2005 is essentially due to the strategic shift towards wireless telecom products from cable manufacture

With a series of initiatives, including plans to create an assembly line for CDMA terminals, the company is on course to log a turnover of about Rs 400 crore this year, according to Mr Narender Surana, Managing Director of Surana Telecom.

In an interview to Business Line, Mr Surana outlined the company plans and the possibility of partnering with Qualcomm to manufacture some of the CDMA products.

The company has applied for Qualcomm product licence and would be able to take this initiative forward either by itself or through a joint venture company.

Why did you foray into wireless products from cable business?

From being a manufacturer of jelly-filled cables and optical fibre cables and jointing kits for the telecom sector, we have gradually diversified into new areas of assembly of CDMA (code division multiple access)-based telecom terminals in league with LG and Huawei. This is the right strategic move given the challenges we faced in the optical fibre cable industry.

After the year 2001, the Indian telecom sector witnessed significant growth, especially in the wireless mobile telephony. It meant an increased demand for optical fibre.

The growth resulted in mixed impact on the domestic manufacturers given the duty structure on the OFC cable industry.

Unfortunately, the policy makers missed out on the fact that the duty structure was more loaded in favour of imports rather than encouraging domestic players like Surana Telecom. This meant that the capacity of most of the domestic manufacturers was unutilised and large corporations preferred to import their requirement of OFC.

Consequently, a company like ours suffered with the turnover coming to about Rs 100 crore during the year 2000-2001 from Rs 300 croe. The capacity was not fully utilised and we had to look to new areas for growth.

We managed to survive during the slackened demand period because we were a debt-free company.

How are the collaborations with LG and Huawei progressing?

The partnerships with Huawei, one of the largest CDMA products provider based out of China and the Korean major LG, helped us get into the market of CDMA terminals relatively early.

We are now looking at the possibility of foraying into Internet Protocol TAX (Telephone Exchange), that is an equipment that supports the Internet and converts the existing networks to support IP. This is one area that is set to grow rapidly as it brings in significant cost savings for operators.

Interestingly, this will also complement the proposed growth of broadband network in the country.

Even within the business of OFC and jelly-filled cables, we continue to provide inputs wherever necessary. Given the plans for expansion of the broadband connectivity, wirelines still have to be used to provide the last mile connectivity.

We will be able to meet the requirements of some telecom operators locally, particularly, the state-owned BSNL.

How is the market for these terminals?

Surana Group is the only private company that provides fixed wireless terminals in the country. The other company is ITI, which is state-owned.

Operators such as Tata Teleservices, Reliance Infocomm, MTNL and BSNL are the largest users of these terminals.

However, the tendering process for BSNL needs to be further streamlined as it is loaded in favour of ITI.

It is estimated that we would need about 4 million lines a year to meet the domestic requirements. The market has the potential of about Rs 2,500 crore to Rs 3,000 crore.

As opposed to fully imported base set, it works out cheaper to bring in SKD (semi-knocked down) kits and assemble here. This is where we managed to be successful with Huawei and LG.

Do you see similar growth during the whole of this fiscal?

With BSNL and MTNL floating tenders for more terminals, we expect to close 2004-2005 with a gross turnover of Rs 350 crore to Rs 400 crore.

This is indicated from a buoyant first quarter where the combined revenues of Surana and Bhagyanagar Metals was Rs 99 crore.

While about 30 per cent of this turnover came from jelly-filled and OFC cables, the rest is likely to come from CDMA-based terminals and equipment.

More Stories on : Interview | Telecommunications

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
More pre-paid tariff cuts in offing

Gaming market set for `big growth'

Airtel base station in Kochi

IT exports from North up 26 pc, says study

Scicom plans second facility in Noida

Fidelity to pay $121 m for 29 pc stake in Covansys

iSmart takes over Soft Systems

Surana Tele shifts focus to sustain growth

Looking back