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MANUFACTURING: Growing on Last Mile

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VoicenData Bureau
New Update

While India can boast of very few hardware-manufacturing players, even less

of them are into manufacturing of telecom-related equipments. One noteworthy

exception is the Bangalore-based, Rs 84-crore MRO-Tek, widely acknowledged to be

the country’s leading last-mile-access products and network solutions

provider.

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The 16-year old Bangalore company has a 49:51 JV with RAD Data Communications

of Israel–the collaboration is leveraged for a slew of WAN/LAN products. The

RAD products manufactured in its Banagalore plant contributed 80 percent of

MRO-Tek’s revenues in 2003—04. The rest was taken care of by the exclusive

partnerships it had with Extreme Networks of the US for layer 3 gigabit switches

and Zyxel of Taiwan for dial-up modems, ISDN products, and wireless LAN

accessories.

MRO-Tek

is heavily hedging its bets for growth during 2004—05 on last-mile

access products. The company expects to launch 16 last-mile-access

products by June 2004

It also has non-exclusive distribution relations with Israel’s Alvarion for

wireless-Ethernet connectivity, Expand Networks for enterprise caching products,

Axerra Networks for multi-service over IP networks, besides the US-based Quintum

Technologies for VoIP solutions, Servgate Technologies for security and VPN

devices and Tasman Networks for E1 access routers. However, MRO-Tek does the

manufacturing only for RAD in India, while it is mainly distribution in case of

the other relationships.

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MRO-Tek is heavily hedging its bet on last-mile access products for growth

during 2004—05. The momentum started last year and the company expects to

launch 16 last-mile-access products by June 2004. It hopes to beef up its

undisputed leadership in leased-line modems and for these products, the company

is not even piggybacking on RAD technology but manufacturing its own products in

the country itself. Accordingly, it has made an upfront investment of Rs 12

crore for its R&D activities.

The typical product lines MRO-Tek is banking on are first-of-its-kind metro

access products which, apart from India, would also have considerable market

even in the developed economies such as US, Japan, Europe, and Korea.

In fact, after having carved out a niche for itself in the Indian market,

going global seems to be the new mantra for MRO-Tek. Accordingly, it has

invested six crore rupees in setting up the US operations in Santa Clara,

California. Besides the developed markets, MRO-Tek also plans to strongly tap

the developing markets in the Gulf, ASEAN, and even the Saarc countries. It

already has a one million dollar project in Iran, a $50,000 project in Malaysia

(connecting Kuala Lampur Airport through WAN) and a $50,000 project in Maldives.

In three to four years, MRO-Tek expects to end up with business worth $20

million from its global operations. Optical access networks and metro Ethernet

are the two markets expected to drive this growth. And if one considers that the

former market is close to $20 billion and the latter $4 billion in size, the

projections do not seem too far-fetched. If MRO-Tek succeeds in meeting these

targets, it would truly be scaling heights no other Indian telecom equipment

company has even hitherto dared to dream of.

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On the domestic front, currently, MRO-Tek–which enjoys 60—64% market

share in the leased line modem category–hopes to have 100,000 lines by next

year. It has already implemented last-mile Ethernet solutions through fiber

optic in 50 PoPs for Tata Power. Its other domestic successes include a

customized last-mile-access solution for 2500 branches of State Bank of India,

800 branches of LIC, WAN broadband solution for ICICI Bank, metro area network

and TDMA over IP for the Indian Army, Andhra Bank, Ford, Hyundai, Cisco, Lucent

and Nortel. The focus areas next year would be to deliver QoS through solutions

in the domain of Gigabit Ethernet, performance management, and fault management

services. Accordingly, the company would double its manpower of 45 in R&D

over the next six months. The distribution strategy has also been meticulously

planned–while to the carriers it sells directly, it goes to the enterprise

through system integrators like Wipro Infotech, Datacraft, Tata Infotech, IBM,

HP, and CMC and 15 channel partners including big names like Nirmal Datacom in

Mumbai and Artek Enterprises and Convergent Communications in Bangalore and

Hyderabad.

On the hardware-manufacturing front, MRO-Tek has another unique achievement

up its sleeve. Most Indian manufacturers set up their manufacturing plants

usually in union territories to avail of tax benefits–Zenith and D-Link in Goa,

PCS in Silvassa while Wipro, HCL, and TVSE are in Pondicherry. But, MRO-Tek has

its manufacturing unit in Bangalore and has done viable business even after

being in the tax dragnet. It has also set up an ESTP in Bangalore from where it

did exports worth Rs 2.8 crore in 2002—03 while in 2003—04 the figure has

galloped to Rs 7.5 crore.

Rajneesh De

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