Segments: Structured Cabling: Wiring India Inc

Change was the only constant factor in the structured cabling sector. During
FY06, the market expanded immensely and with that the competition got tougher.
The industry registered a significant growth of 38% to reach Rs 574 crore-it
was pegged at Rs 417 crore in the previous fiscal. Therefore, it came as no
surprise that the concerned players lapped up the potential scope of the market
with great zeal and innovation.

With mature standards such as CAT6 and CAT5E accounting for majority of
installations, the field was open for all to take on the next challenge of the
communication boom across all industry verticals, namely denser patching
solutions for increasingly intelligent customers.

CAT6 took the cakewalk notching approximately 65 % of the market share while
CAT5E, still in demand, accounted for at least 32 %. Even as the CAT6A standard
was being ratified, deployment of 10G-over-UTP was on the rise contributing 3 %
to the overall coffers of the industry.

Power Play

Demand for bandwidth has grown dramatically during the year and that
resulted in an increased need for higher speed switches and routers. The
projected forecast over the next three years shows an increase in market share
for both the Gigabit Ethernet and 10 Gigabit Ethernet switches. Undoubtedly
then, the Indian enterprises are buckling up to ride the wave of communication
boom.

The industry is raking in high revenues as it retains buoyancy despite the hike in international copper prices

And this explains why despite wireless being the talk of the town, wiring
India Inc continued to remain a profitable venture for the Systimaxes, Krones,
and Tycos. The impressive performance of 2005-06 was a testament of an
impressive gamut of verticals that contributed significantly to the growth of
the structured cabling industry.

IT/BPO, BFSI, telecom, education, and health verticals were the usual key
drivers for the growth. While the major chunk business still came from BPOs, it
was the manufacturing industry that promised new excitement to the structured
cabling players. Further new areas of business were widening with the opening up
of FDI in retail as well as the real-estate boom.

The upsurge in the demand can also be assessed from the fact that the ratio
of demand to supply has been very high. On one hand, the industry was
overwhelmed by heavy demand of cabling from the customers, while the supply of
copper was falling short. The price of copper worldwide has been increasing and
in the first quarter of 2006 the copper prices doubled. Despite this, the
overall competition remained healthy, and the industry is optimistic in
maintaining high grounds.

Dissecting the Market

Tyco Electronic's AMP Netconnect topped the honors list this year
registering a growth of 41%: in FY 05-06, it clocked revenue of Rs 164 crore,
thus enjoying a sizeable market share of nearly 29%. The upswing could be
attributed to sizeable business deals for intelligent cabling systems and high
density of data center projects. Last year's numero uno Systimax slipped down
to number two as it grew only by 30 % to touch Rs 156 crore. D-Link brought up
the trio at the top as it sustained its previous fiscal growth of 36% to close
at Rs 80 crore.

Outside the Top 3, two interesting players worth watching included ADC Krone
and Molex who slugged out for positions #4 and #5 respectively. ADC Krone
registered a Rs 35 crore revenue implying a healthy growth rate of 46%,
significant compared to 20% in the previous fiscal. Molex was close on its heel
with revenue of Rs 34 crore: to its credit Molex recorded the highest growth
rate among the top ten players at almost 60%. It attributed this growth to some
prestigious wins in the telecom and IT sectors. Both Molex and ADC Krone enjoyed
equal market share of 6 % and have aggressive plans in the current fiscal too.

Panduit, Belden, TVSICS, Dax, and Finolex brought up the Top 10 list. Amongst
these players, TVSICS significantly improved its y-o-y growth and was inching
ever closer to Belden: the latter currently enjoys 3.3 % of the market share
compared to 2.8 % of TVSICS. Others such as Siemon, BNA Technology, Legrand, and
R&M also peddled their wares during the year.

Money Baggers

The buoyancy in the market was evident from the volume of business handled
by each of the players. High-order deals flowed in from both BPO and BFSI
verticals for Tyco. It notched the biggest deal from GE Capital for wiring four
of its data centers. For this, Tyco deployed MPO cabling solution catering to
45,000 drops on Cat 6 UTP. The other significant order was from Infosys that
entailed over 40,000 drops across eight cities in the country. Tyco also wired
the DR center at Mauritius for Infosys. For HSBC campus networks, it implemented
intelligent cabling system at Hyderabad and Kolkata with 30,000 drops. On CAT5e
UTP, the company wired up the inter-building connectivity of Cognizant with
20,000 drops with SM fiber. It has more than 30 projects on Intelligent cabling
system alone.

Systimax did around 10 lakh connects last year. Among the few top
installations done by Systimax were BPO service providers and few multinational
companies. A leading BPO provider has acquired a total of 12,000 connects of
which 5,000 drops on iPatch were done in its Gurgaon office, about 4,000 drops
on Patchmax Panels in its Pune office, and approximately 3,000 drops of 1071XL
and Angular Patch Panels in its Mumbai office. 1071XL cabling solution, which is
a CAT6 compliant solution of Ssytimax was used for the entire project. iPatch is
its real time infrastructure management solution. Systimax had its first
10GBase-T solution implemented at Vimta Labs, Hyderabad. This was Systimax's
first installation in the APAC region.

D-Link carried out most of its installation on CAT6. The portfolio of clients
for the company was diverse as it included education and manufacturing
verticals. Some key projects include wiring up NIT Suratkal, Manipal Academy of
Higher Education (MAHE), Hinduja TMT, Eastern Naval Command, and Vizag Steel
plant. D-Link favored using both copper and fiber.

ADC Krone was the first one to launch and introduce 10G UTP cabling solution
in India two years ago. It found a fast market acceptance with eight
installations in the first year itself. Among the key projects in FY 2005-06,
ADC Krone executed CAT6A installation for i2 Technologies and TCS mainly for
their data centers. Some other key accounts bagged included networking for Vikas
Soudha (Bangalore), IDBI (Mumbai), Ventura (Pune), and IGSL (Mumbai).

Molex has emerged as the dark horse with some prestigious orders.Â
An order worth over Rs 10 crore from Reliance Infocomm topped the list.
This aims at telecom and broadband related connectivity and hence the company
opted for CAT 5e. Molex also has ongoing project for Reliance industries
including connectivity in its Jamnagar facility. But the order that proves to be
the biggest bite for Molex in the market share was from HCL. The order to
network five of HCL's offices is near completion with only Mumbai remaining.
Covering Noida, Chennai, Bangalore, and Hyderabad the project entails 45,000
ports covering an area of 750,000 square feet. The HCL project entails 75 % of
CAT6 deployments and rest belongs to CAT5e. Molex has also wired up the entire
750 branches of the Income Tax department across the nation. This order worth Rs
4.5 crore began in November 2005 and was completed in a matter of four months
with 24,000 ports.

Panduit currently positioned at number six among the top ten players
registered revenue sales figure of modest Rs 20 crore. It has grown by 26 %
since previous fiscal year largely due to key orders from IT/BPO. Some of the
accounts in its kitty included Juniper Networks, Netapp, Motorola, Cisco (world
wide), and APC (world wide).

Delhi based Belden CDT clocked a revenue of Rs 19 crore. It demonstrated a
commendable growth of 58 % over last fiscal with over 100,000 connects in FY
05-06. Some of the key installations completed are for Reuters in Bangalore that
comprises of 12,000 ports, 6,900 ports for ICICI Onesource. Belden CDT delivered
intelligent cabling solutions for HDFC catering to 4,000 ports, among the IT and
ITES clients it bagged orders from Hexaware, Dell, Google's Hyderabad
facility, Cisco Systems, Mindtech, Convergys, and Fidelity. Belden is optimistic
of achieving 70 % growth rate in the FY 06-07.

TVSICS has shown a remarkable growth rate of almost 33% compared to previous
growth rate of just 15%. The company has pushed itself for some impressive deals
and completed total 100,000 nodes in fiscal 2005-06. Most of the business came
from IT and banking verticals. For instance, it wired IBM covering 6,000 nodes
and Wipro Infotech in Mysore global support centre was wired up using CAT6
covering 4,000 nodes. The most prestigious project on the anvil comes from GMR
Industries, a leading infrastructure player that will take up airport
infrastructure project in Bangalore and Hyderabad. Already TVSICS has wired up
3,000 nodes for the company in its main facility in Bangalore. TVSICS is the
chief distributor for R&M (Reichle & De-Massari) cabling solutions in
India.

Incidentally, last year, the Swiss-based R&M decided to establish liaison
and sales offices in India. In the span of one year, it has grown over 10 times
by picking up good business worth Rs 9 crore, in conjunction with TVSICS.
Together they will be involved in some key orders in aviation, manufacturing and
industrial verticals.

Cable for VoIP applications is predicted to account for the major UTP cable market in next 5 years

Another blazing performer is Siemon that started its operations in India in
2003. Its y-o-y growth since it began its operations in 2003 in India has been
over 160%. Among the major order in its kitty is that from Punjab National Bank.
This is Siemon's first site on 10GE (CAT6A), 625 MHz, which it completed in
four months. This is an end-to-end project using both copper and fiber for
PNB's data center in New Delhi. The company owes its success to the faith
invested by its customers and channel partners.

Chennai based Dax Networks, an Apcom company, looked at a diverse customer
portfolio including project for the UP Irrigation Department covering 2,500
nodes on Cat 5e, wiring up five colleges covering 3,500 nodes under Technical
Education Quality Improvement Programme (TEQUIP), and a smaller project for
1,200 nodes on CAT6 for Times TV in Mumbai.

CAT6 rules over CAT5e

CAT6 firmly ruled the roost in 2005-06 with an estimated 65% share in the
market. Most enterprises with upwards of 1,000 nodes are warming up to CAT6.
Within a year of the standard being ratified, orders for CAT6 have beaten the
market expectations. Even small players such as Dax Networks, TVSICS and Legrand
have done 60 % of their total business on CAT6 compared to just 30% in 2004-05.

On the other hand, CAT5e hasn't gone off the shelf just yet. It is a
favorable choice for most horizontal distributions. From the customer's
perspective since CAT 5e is also capable of gigabit Ethernet, smaller businesses
are satisfied with their existing CAT5 or 5e cabling systems, and are not too
concerned about issues like bandwidth intensive applications and 'future
proofing.'

Belden CDT anticipates CAT5e orders increasing to about 55% of its total
orders in FY 06-07 as opposed to 35% in FY 05-06. Other companies that have been
dominant in the smaller circles like Molex and Legrand also expects Cat 5e to
stay dominant in SME and residential segments. But having said this, they add
that even though the number of small projects on CAT 5e is large, the number of
ports done on CAT6 out paces CAT5e by a significant margin.

CAT6A Spurs 10GE

The arithmetic will change for CAT6 and CAT5e with CAT6A appearing on the
scene. The players are anticipating that as the network applications become more
bandwidth intensive, more evolved standards such as CAT6A will better support
the requirements and become the first choice of the technology managers. The
much-talked ratification of IEEE 802.3an is expected by June-July this year.
Cat6 has 250 MHz frequency and supports gigabit speeds, whereas the IEEE and EIA/TIA
are pushing 600 MHz frequencies in Cat6e or Cat7 so that it will support 10
Gigabit Ethernet.

Preparations are visible as prices are being rationalized. In addition,
reduction in price of 10G transceiver price is also important to fuel this
growth. Bandwidth hungry data centres, server farms and other
bandwidth-intensive applications (such as education, software development, IT
enabled services) have begun future proofing and scaling up for 10GE.

Big guns-Systimax, Tyco, and ADC Krone are offering key premier products to
suit these needs. Last year, Systimax implemented its first 10GBase-T solution
at Vimta Labs, Hyderabad. Tyco is pushing for shielded over unshielded as it
tackles cross-talk better and overcomes error margins adequately. ADC Krone has
added some Indian customers in the first list of Global customers for its
CopperTen, Category6A solutions. Initially, Cat6A was considered for data
centres and backbone cabling but now it is being considered for horizontal
cabling. With the standards ratification, ADC Krone expects a major shift
towards Cat6A.The company was the first one to implement 10G UTP solution in
India. Among the smaller players, Siemon had 10 % of total orders for 10GE in FY
05-06, and it has already notched 30 % of total orders for 10GE in the current
fiscal.

However, most players are being cautious about the 'hype' over CAT 6A.
Dax Networks has not yet introduced 10GE solutions, as it wants to wait and
watch after EIA/TIA committee approves the standard to see how the customers
demand. Molex, Belden, R&M, and Panduit are among those who feel its still
early days for 10GE and don't expect orders flowing in immediately, even
though they are ready with 10GE solutions. The customer is likely to take a
closer look before choosing CAT6A.

Trends on the Horizon

The industry is unanimous about intelligent cabling systems as well as
greater acceptance of Power over Ethernet (PoE). Intelligent cabling systems
provide real-time management of the physical layer that enables immediate
troubleshooting of problems, if any, besides optimum utilization and efficiency.
These systems are able to track IP-based devices such that the network manager
can access, control and manage them from one central location.

These solutions largely suit BFSI clients, but the customer portfolio for
Intelligent cabling is expanding with new verticals showing interest. Retailers,
construction companies and residential builders are on the radar now besides the
data centres.

Power over Ethernet technology is expected to grow with the increasing
deployment of VoIP and wireless access points. Currently, all major players
including Systimax, Tyco, ADC Krone, and Molex are offering PoE over mid-span
that is largely preferred for existing installations and few end-span solutions
for new installations.

It is projected that copper UTP cabling will continue to dominate the
horizontal cabling subsystem market in the future. Fiber-to-the-Desk (FTTD) will
be found mainly in niche applications, in which speeds of 10 Gbps or higher are
required at the workstations. As a result it will account to a small percentage
of the total horizontal cabling subsystem market in the future.

As indicated by market trends, faster networks will demand greater bandwidth
network capacity. The data center will be the primary environment helping to
support new applications relating to data storage and server clustering. If
history is any indication of future trends, applications developed for the data
center environment will eventually migrate to the desktop. Therefore, the
ability to address this goal is also important to the 10GBASE-T task force
group.

Among the new applications VoIP offers a significant new market opportunity
for structured cabling system suppliers. For most new cabling installations,
both PC LAN networking and VoIP are being installed simultaneously. Past issues
of quality, security, etc. have been resolved. Cable for VoIP applications is
predicted to account for the major UTP cable market in next five years. Besides
this, there is a growing trend towards interoperability and providing higher
security to the user as well.

Marching On

With the intent to increase its market share, Tyco is pushing its
intelligent cabling solutions as a top priority. This year Tyco would be
launching in India its other globally available products in the Power over
Ethernet (PoE), wireless, and cable management domains. By September the company
expects to have an end-to-end PoE product.

Tyco Electronics has introduced a new version of the itracs Infrastructure
Management software that is suited for customers with complex telecommunications
networks and critical applications, such as financial and educational
institutions, data centres, medical facilities, and government organization. The
company is also conducting trials for its High-density cable manager solutions
with its customer CapGemini and will launch it next year.

This May, Systimax Solutions announced the opening of its executive briefing
centre (EBC) in Bangalore. The center is the company's fourth such
international facility that will cater to customers (from SAARC region
primarily). Focus is on educating the customer and familiarizing them with the
scope of cabling solutions. In the past three months, Systimax has installed a
total of 70,000 drops in India alone. Some key accounts include a leading BPO
provider that has acquired 16,000 drops, an investment and financial service
provider in Gurgoan has installed 8,000, and a significant order of 20,000
connects for the energy and materials industry.

VoIP offers a significant market opportunity for the structured cabling suppliers

D-Link is tackling the technological challenge to design and produce
foolproof transmission medium-be it copper, fiber or for that matter wireless.
The company is active on the research and development Active and Passive
Networking Products under one umbrella.

What is new for ADC Krone is the availability of a complete portfolio of data
center-grade infrastructure solutions. ADC Krone's data center product set is
led by its flagship TrueNet Structured Cabling System which has high quality
physical layer components that intend to eliminate network infrastructure
problems.

Molex plans to double its sales headcount as it steps up its aggressive
marketing strategy in Class A cities such as Kolkata, Hyderabad and Delhi. It is
looking at strengthening its base in Class B cities with its channel partners in
Chattisgarh, Nasik, Patna, Chandigarh, Guwahati, Madurai, and Cochin to name a
few.

This year May, Dax Networks launched PatchSee series of Intelligent Patch
Cords. It is designed for network administrators in SMBs and large enterprises
and addresses one of the major difficulties faced by network administrators
during troubleshooting-identification of required switch ports and user nodes
in a network rack. The PatchSee Cord makes identification of the extremities of
an RJ45 patch cord easy, and thereby network downtime is significantly reduced.

TVSICS is another company that is making big leaps with an order worth Rs 5
crore from ABN Amro to wire up offices in Delhi, Chennai, and Kolkata catering
to over 25,000 nodes. Along with R&M, the company provides cabling solution
in the airport infrastructure projects that not only includes Hyderabad and
Bangalore, but also Kolkata and Chennai airports. With focus on addressing
security and installation issues, R&M is introducing enhanced security
system for data networks with a lock for RJ45 patch cords.

Siemon recently, introduced its new line of MAX Surface Mount boxes in India.
These come with multiple built-in cable management features that ensure proper
bend radius and strain relief for both copper and fiber, for a well-organized
installation. The box also allows sufficient clearance for a range of cable
sizes including the larger diameters of the latest 10-Gigabit UTP, screened, and
fully shielded cables.

Bangalore based BNA Technology Consulting, an old player in the industry is
also looking at educating the customer and reaching them directly. It recently
launched an online support portal www.bnaITmart.com
that combines e-tailing with the creation of a localized support channel across
India. Cabling solutions is one among the wide range of branded IT and
networking products and accessories. This system will enable delivery of a
complete IT infrastructure solution possible without the customer having to
travel to nearest Tier I or Tier II cities in search of the same.

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