The Hindu Business Line : Tejas Networks to come out with IPO this year

Telecom equipment network supplier Tejas Networks India Ltd intends to come out with its initial public offering this calendar year, the company’s CEO & Managing Director, Mr Sanjay Nayak, told Business Line here today.

The Bangalore-headquartered company supplies a range of ‘optical transmission equipment’, which enable the use of the optic fibre networks. “We light up the fibres; we create bandwidth,” Mr Nayak said. Tejas Networks designs the equipment but outsources manufacture, from Flextronics in India, Celestica in India and other electronic manufacturing service providers elsewhere in the world.

Last year, Tejas achieved a turnover of Rs 235 crore, about 75 per cent more than in the previous year. Current year’s turnover is expected to be substantially higher, because export itself this year will be more than Rs 100 crore, Mr Nayak said.

Addressable market

Among its clients in India are telecom majors such as BSNL. In the Indian market, Tejas competes with the likes of Lucent, Alcatel and Huwaei.

Having “done well in India,” Tejas now wants to take its products global. According to Mr Nayak, the global addressable market for its products is worth $10 billion and Tejas aims for a tenth of it.

The IPO is partly to fund some of its financial requirements and partly to give its existing investors exit route. Since its inception in 2000, Tejas Networks has attracted $73 million of funding, from Intel Capital, Mayfield, Battery Ventures and recently and Goldman Sachs, which put in $24 million.

Big challenge

Mr Nayak did not want to disclose Tejas’ profits, but said that the company has been profitable in the last two years. Mr Nayak was one of the speakers at the Vision Summit, a conference of the Indian Semiconductors Association (ISA). Speaking at the conference, he said that it was necessary for Indian companies to get into product development.

Answering a question on challenges a start-up product company in the electronics industry faces, Mr Nayak observed that scaling up was a big challenge. Manufacturing a product in India is easy, but finding out what to produce is somewhat difficult as it requires a close understanding of customers’ needs.

However, because a thriving market is developing in India, there is proximity to the customers and hence with some effort, it is possible to arrive at what to manufacture. The real problem is in scaling up, supplying worldwide. Here again the large domestic market provides an anchor, but Indian companies should develop globally saleable products and look at the Indian market only as a base, Mr Nayak said.