Successful homegrown Indian telecom vendors are hard to come by. That makes Bengaluru-based Tejas Networks something of an anomaly. Started way back in 2000, Tejas is one of India's few hardware producers and recently hit headlines after it launched an initial public offering (IPO).

Tejas Networks India Ltd. has made a name for itself in the optical networking market, especially within India, which looks poised for a boom in this sector. Nearly two thirds of its sales come from India, with the rest earned overseas.

"We are growing at 35% year-on-year and we hope to grow by at least 20% over the next two to three years," says Sanjay Nayak, the CEO and managing director of Tejas, during an interview with Light Reading. "Overseas, we mainly target south-east Asian, Latin America and African markets." Telcos in these markets have similar concerns to those in India, explains Nayak, making it easy for Tejas to address their demands.

A boom in the optical equipment market is happening as data consumption continues to soar. This growth is forcing India's telcos to upgrade their transport networks so that end customers are able to use data without any network congestion. The future launch of 5G networks, and emergence of new "Internet of Things" services, are likely to fuel continued growth in India's transport segment.

But Tejas is hardly the only optical equipment vendor looking to benefit. The biggest by market share in India is currently Ciena, with 22% of the market, according to recent data from Ovum. Finland's Nokia has a market share of 18%, says the market research company, while China's Huawei controls 14% of it. That makes Tejas the number-four player, with a 13% share, ahead of ECI on 12%. Tejas has made a name for itself but still lags the global giants in this sector.

Nevertheless, with its focus on the metro and aggregation layers of the market, Tejas believes it is well placed to grow. For one thing, it regards its R&D focus as a competitive strength, channeling between 8% and 9% of revenues into R&D investments each year. It also claims to be more price-competitive than its rivals. (See India Poised for Transport Network Boom.)

"R&D is in our DNA and we believe that unless you come up with a differentiated product the market will not take you seriously," says Nayak. "We have a huge advantage as an Indian player … [which] allows us to provide the product at a lesser price."

Nayak believes that the experience of developing solutions for the problems faced by Indian telcos has helped the company to address overseas markets as well.

"Our products do very well for networks evolving from TDM to packet, which is a key concern of the Indian telcos," he explains. "We realized that the US-based service providers were facing a similar problem of cross connect, which we were able to resolve. So, as we say, you can address any market if you are able to handle the Indian market."

Tejas had raised around USD 35 million in funding from IL&FS, Battery Ventures and MayField before it decided in June to pursue an IPO, which raised 4.5 billion Indian rupees (USUSD 69.1 million). That result made Tejas one of the few Indian vendors to have had a successful IPO.

"Initially the ecosystem was not supportive," says Nayak. "Everybody is talking about 'Make in India' now, but at the time it was tough. When we started the focus was on hardware, but we were able to leverage India’s strength in software to create more programmable products."

Tejas plans to use some of the funds from its IPO to pay off debts, which currently stand at around INR1.8 billion (USD 27.6 million). Funds will also go toward enhancing the company's presence in the global market. It also aims to increase its spending on research.

It has not all been plain sailing for Tejas, though. In 2009, a tough year in which former Canadian equipment maker Nortel filed for bankruptcy, revenues generated by Tejas slumped to just INR2 billion (USD 30.7 million), from INR6 billion (USD 92.2 million) a year earlier.

"We have been able to survive for so long because we have a combination of Western world innovation and the price competitiveness of the Chinese players," says Nayak, referring to those difficult times. – Light Reading 


 

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