"India will be the next manufacturing destination"

Bharti Teletech, the manufacturing arm of the country’s leading private
sector integrated telecom company, Bharti Enterprises, which started its
operations in 1987, recently shipped its 20 millionth phone, an achievement
which it claims has made it the largest manufacturer of telephone instruments
globally outside China. What is remarkable about this achievement is that the
company that took 12 years to make the first 10 millions phones, took just four
years to make the next 10 million. Rakesh Bharti Mittal, vice chairman and
managing director, Bharti Enterprises, and chairman and MD, Bharti Teletech,
spoke to VOICE&DATA about the company’s journey so far and its future
plans. Excerpts:

Rakesh Bharti Mittal vice chairman and MD Bharti Enterprises

It’s a remarkable achievement for an Indian company to manufacture 20
million phones. How has the journey been so far for Bharti Teletech?

Right since 1987, we have been the first to do many things. We were the
first indigenous manufacturers of cordless phones and answering machines. All
our three plants are ISO 9002 accredited. All these efforts have been doing us a
lot of good. We have the widest range of product portfolio. For the past 16
years, we have been learning and assimilating new skills, whether it is in the
area of technology or marketing or selling. We have always believed that
customers cannot be taken for granted, and we have made a lot of effort in
understanding their needs. That has helped us a lot.

How has the consumer preference changed over the years? How has Bharti
kept pace with that?

We have seen a revolution in consumer preferences in the past 15 years. For
the first 9—10 years, the consumer was content with the basic telephone
instrument. But in the past 5—6 years the buying pattern has changed. Today,
consumers want state-of-the-art products. A model does not last more than 18
months. If we look at our own experience, every month we have to come out with a
new feature and every 3-4 months with a new model. The market share of feature
phones has been going up substantially. Last year, 10 percent of the overall
market was feature phones. The trend is likely to continue.

Where do you think you score over your competitors?

I think it’s our in-depth understanding of customer needs, quality
controls and after-sales support which has endeared us to millions of customers.
Besides, the kind of reach that we have also sets us apart. We have around 140
distributors and we cover some 5,500 retail outlets.

What kind of R&D and new product development efforts are you putting
in?

We have been investing a lot in R&D and we have an in-house unit for
that. We know our inherent strengths. For example, circuitry is our strength.
Wherever we do not have capabilities, we have exploited good partnerships. For
example, in designing. We have tie-ups with some UK and Hong Kong companies. All
this has culminated into a lot of new products like the CLIP model that has been
conceptualized, designed and manufactured in India.

What products are in pipeline?

SMS-enabled phone is one. It will be there in market by the end of June or the
beginning of July. Currently, the phone is being tested by a number of basic
operators. Initially, the cost of this phone is likely to be on the higher side,
but we will like to bring down the price so that more people can use it. We will
also be launching an e-mail-enabled phone, the prototype of which is ready.

Are you also looking at entering the CDMA-GSM handset manufacturing?

We are in discussion with various GSM manufacturers but no decision has been
taken so far. I think the current volumes in India, whether it is GSM or CDMA,
do not justify manufacturing. We are still at least 18 months away from the kind
of subscriber base that can sustain manufacturing in GSM.

What about IP phones?

IP still needs to mature. Besides, there are no volumes there. Lack of
quality on Internet voice is also a problem.

How big is the replacement market?

About 20 percent of the total market.

How are you placed in the global market? Is it not too crowded?

Globally every year, an estimated 150—200 million terminals are bought.
Out of this, 40 percent is cordless. We are not there. Of the rest 60 percent,
50 percent is the ‘2 dollar phone market’, where we cannot compete with the
Chinese. The balance (25—30 per cent) is desk top/feature phone. That’s our
niche.

How is India placed on the global manufacturing map, in your opinion? How
favorable has been the government’s policy?

India is the next manufacturing destination of the world. Our facilities are
world class, and we have a highly skilled and talented pool of engineers. Two
things, however, need to be corrected. One, we need to increase our
productivity, and two, improve the quality of our products. The government
policy is favorable for manufacturing. One thing that is lacking is
infrastructure.

Ports take too much time to clear shipments. Recently the government decided
to link 23 ports by EDI. This is a good step.

The speed of filing documents and getting clearance would improve. This would
help reduce the input costs and ultimately help exports.

Ravi Shekhar Pandey