Out of the Shadows

The Test & Measurement Instruments (TMI) industry inIndia has experienced a haphazard growth. Traditionally, the top-end of themarket has been catered to by the MNCs, while Indian suppliers catered to thelower-end users. All the major MNCs had initially planned to set upmanufacturing facilities in India. But many factors–government policies, lowdemands, severe price competition, and worldwide recession–forced them tostick to the import and trade method.

Things have changed recently. While there were only 10-15brands in the country initially, today there are about 30-35 names. A closemarket study reveals that TMI has finally emerged from the shadows as anindustry in itself. There have been aggressive moves by many players and themarket has witnessed realignment of market shares.

Market Size

Total size of the TMI market for telecom was about $75million in 1998-99 and $73.85 million in 1999-00. The market for general purposeinstruments was $17.90 million in 1998-99 and 1999-00, respectively. One of themajor setbacks to the industry has been the US embargo on sales to about 200defense establishments for offensive and ballistic applications.

The total market saw a marginal drop of 1.54 percent giventhe turnover from 1998-99 to 1999-00 of the
11 major players. Only routine sales are permitted.

The numero uno HP-Agilent has seen a substantial drop of 30percent in its turnover from 1998-99 to 1999-00. Its overall share went downfrom 30 percent to around 21 percent. And its loss has been the gain ofvirtually every other company especially WWG, Tektronix, and Rhode &Schwarz. However, Anritsu, like Agilent, has lost out to others, seeing itsmarket share drop to 2.71 in 1999-00 percent from 4.47 percent in 1998-99.

There are large numbers of players who cater to othersegments like process control, analytical, automotive, medical, textile, etc.National Instruments, Toshbro, Toshniwal, Tata Honewel, Rosemount, Fischer,E&H, Hitachi, etc. who have not been
included in the survey have sizeable turnovers as well. If the entire T&Mindustry’s market size were to be pegged, it would be around $125 million.

Major Players

The top-end of the market is completely governed by MNCs likeHP-Agilent India, Wavetek Wandel & Goltermann (WWG), Rohde & Schwarz,Anritsu, Tektronix, Fluke, and Tenet among others. While most of these companiesnow have their own India operation offices, some still trade through agents likeAnritsu.

Among the Indian players of repute are Aplab, AIMIL,Scientific Mesteknic, Fastech, Subex, etc, who are both manufacturing as well astrading in imported instruments.

Important End-user

The end-user segments can be divided as Defense, Departmentof Space, Railways & Utilities, R&D and Educational Labs, CellularOperators, Telecom Equipment Manufacturers. Large corporates like ITI, BEL, etc.Broadcast, DoT, MTNL, and VSNL were other end-user segment of importance. Eachsegment’s share is given in the figure 2.

Every company seems to have certain bread earning productsand has its major portion of revenue coming from one or two end-user segments.For Agilent India, the two major end-user segments traditionally have beentelecom manufacturing companies (25 percent) and Defense and Aerospace (together35 percent) followed by R&D labs. WWG gets half of its revenue from DoT,MTNL, and VSNL put together. For Tektronix, the main end-user segments wereDefense (20 percent), R&D labs (30 percent), and Broadcast (20 percent).

Rohde & Schwarz cater almost completely to the R/F &Microwave segment. Its major end-user segments were Defense (25 percent), Space(15 percent), Broadcast (11 percent), and large corporates (27 percent).

Tenet, which is relatively small but has a captive nichemarket in DoT through switching equipment manufacturers, gets its entire revenuefrom DoT by supplying to Siemens, Alcatel, Fujitsu, ITI, HTL, Ericsson, etc.

Hinditron has as its major end-user segments Air Force (25percent), R&D labs (15 percent), and large corporate houses (25 percent).

Aplab exports 40 percent of its TMI products. Out of the rest60 percent, Defense buys 39 percent. The other end-user segments are negligible.

Scientific’s biggest end-user segments are the R&D andeducational labs, which constituted 82 percent of its sales, amounting to $1.85million.

Subex’s major end-users are DoT (22 percent) and MTNL, VSNL(2 percent each) of its total sales. In terms of products sold, 70.5 percentwere Optic TMI and 29.5 percent for data communication purposes. Other majorsegments are Railways (10.3 percent) and R&D and educational labs (13.2percent).

Aimil’s major end-user segments are Defense (20 percent),Departments of Space (15 percent), telecom equipment manufacturers (20 percent)and Broadcast (15 percent). Fastech’s major end-user segments were telecomequipment manufacturers (15 percent), DoT (55 percent), MTNL (10 percent), andVSNL (5 percent).

Distribution Channels

Most companies have a 2-tier system of sales anddistribution. One is directly dealing with the customers and the other isthrough dealers.

HP-Agilent sales are 80 percent directly and 20 percentthrough dealers whom they call Manufacturers Representatives.

WWG executed 95 percent of their sales directly, while only 5percent through dealers.

In case of Tektronix, 40 percent of their sales are throughdealers and 60 percent directly. The company’s 80 percent sales are towardsdata communication and 20 percent towards voice communication.

While Scientific Mesteknic sells 70 percent through dealersand 30 percent directly, AIMIL sells 100 percent directly. Anritsu sellsentirely through their agents Meera Agencies. Rohde & Schwartz sells 100percent directly. The same is true of Tenet. Aplab, like WWG, sells 95 percentdirectly and 5 percent through dealers.

Future Plans

The future plans for WWG are to emerge strongly in the DWDMcategory and SDH/PDH and ISDN testers.

Tektronics plan to launch new products in the Call Generatorcategory, as well as Mobile Production Management System (Fraud Management).Products they believe will have more demand are oscilloscopes of over 1 GHz.Currently 500 MHz is being used.

Rohde & Schwarz plans to introduce optical fibreinstruments in collaboration with Advantec, Japan. Till now, it was onlysupplying high-end products in R/F & Microwave but now they plan to bring inmedium- and low-end products also–both in general purpose and microwavesegments. They plan to offer more integrated solutions and establish accreditedcalibration facilities at service centres in North and South.

According to Tenet, ISDN is a growing segment. The cellularoperators segment has remained dull and does not show much promise. Tenet isplanning to enter with more instruments for data communication, fibre optictesters, optical power meters, light source, attenuators, etc.

Hinditron’s future plans are to expand the productportfolio of Fluke in the network, telecom, and ISP segment.

AIMIL’s plan is to expand in the wireless and optic fibrecategory instruments. While, Aplab plans to concentrate more on exports and tointroduce new state-of-art instruments, the segments it sees as growing are thetelecom and network testers.

Major thrust for Subex will be in the area of softwaredevelopment products for the telecom sector and fibre-optic-based communicationsystem instruments. Scientific Mesteknic is going to launch educational trainersthis year. The product segment they feel which is growing for them are thedigital oscilloscopes.

Extracts from T&M Industry Survey by Preeti Singh, GM, Protech MarketResearch Services, rajiv_10@mantraonline.com