: Tejas is one of the few Indian innovative product companies to have succeeded. How did this happen?
It takes three elements to come together for such companies to come up. Innovation is all about people, technologists. The inflection point came when outsourcing to India started to move up the value chain. That created a talent pool.
The second challenge in creating tech sector products is you need a context, a market. What to develop, where do I start, what's the competition? The inflection point for that was 2000-01 when, in two industries, India became relevant as a market "" telecommunications and everything consumer-related.
The third need is venture capital. Product companies typically require a long gestation period. When risk of failure is high, you will not take optimal decisions if you put your own money into it. Venture capital came to India after 9/11. People said my $10 invested in India will take me much further.
A fourth element is yet to happen "" success stories. Then the last part is globalisation.
As an Indian product company...
Today there is nothing like an Indian product company. We are a global product company which is successful in its first market that is India. My competition is global, my customers expect me to deliver global quality. The beauty for us is that success in India today is the gold standard because it is the toughest market in the world. You have to offer the latest technology, of the highest quality, and at the lowest price. This is the holy grail of products. Today, with 500 people in Tejas, we generate revenue equal to 5,000 people in an IT services company.
How is Tejas also succeeding globally?
International revenues have gone up four times in the current year, to 30 per cent of total revenue. After the telecom meltdown in 2000-01, many telecom equipment companies downsized dramatically to about one-third or one-fourth of their headcount. But the number of products they need to innovate and develop has not reduced. So, they are looking for partners and we have become suppliers, like say tyre makers to the auto assemblers, to the big five in telecom equipment producers like Alcatel, Lucent, Nortel, Nokia-Siemens, Cisco.
How exactly does your technology touch the end-consumer?
In a telecom network, the starting point is the cellphone with which you access the network through the nearest tower. The towers have to connect all the information they get from cellphones to the end destination. We come into the picture starting from the cellphone tower which is connected to all the other towers in the city, the main switch or exchange, which is connected to other cities in different states and countries. The connectivity ten years back between the towers and exchanges was via jelly-filled copper cables with very limited capacity, tens of mega bits of data. Then came microwave towers, 34 mega bits (mbps). Today you can get that in your office. Then came optical fibre on which you can carry not megabits or gigabits but tonnes of terabits of data. We build optical networking equipment which are physical systems in every base station, exchange and along the road where fibre run.
Who are some of your big Indian customers?
We are in BSNL, MTNL, Bharti, Tatas, VSNL, Powergrid, Railtel. We are in all major networks in India. There are also some customers to whom we don't sell directly but our original equipment manufacturers (OEMs) do.
What about global customers?
We cannot mention the OEMs at this stage. But they are very large equipment companies. We also have customers in southeast Asia and Africa. If you take what I call the plus/minus three hours of India, this is what today are the emerging markets. All the hottest telecom markets in the world fall within this time zone, from east Asia up to eastern Europe, except Mexico and Brazil. In telecom networks, you not only need the best equipment, you also need the best customer support and some proximity. These are mission critical networks which have to have the legendary reliability of five 9s, 99.999 per cent. It means if our equipment runs continuously for one year, it is allowed to go down for a maximum 15 minutes.
What is your near-term scenario?
We are likely to end the year with a topline of Rs 400 crore and we are profitable. Any technology product company, after building the right product, reaches an inflection point and challenge: can you make what you did bigger and take it global? In the last 12 months, we have doubled our R&D headcount.
Number two, do we have the best sales organisation? We have recently hired the Cisco India head Rangu Salgame. Cisco is probably the most respected telecom company in terms of sales and marketing. Rangu's job is to build the best customer-facing organisation that we can.
Third, we are a high-tech brick and mortar company "" we physically ship inventories and build supply chains for which we need working capital. For this we did a private placement of Rs 95 crore with Goldman Sacks. Getting an endorsement from someone like that is important. We are looking at an opportunity to further strengthen the balance sheet with a public offering. In the next three to five years, we want to get into the top league of our business.
How are you ensuring a strong IP pipeline?
This is the most crucial aspect. We should spend more on R&D and out-innovate anyone in our peer group worldwide. We have built a very strong portfolio of IP building blocks. A magic which Tejas has been able to come up with is a product development time frame which is much much faster than the industry's. We have been able to deliver 10 to 12 different products in the last four or five years.
