Vuppalamritha Magnetic Components Limited (VMC), a Hyderabad-based manufacturer of telecom equipment and power conversion products, is in the process of raising anywhere between Rs 400 crore and Rs 500 crore through an initial public offering (IPO) to fuel its overseas expansion plans.
“We will be filing the draft red herring prospectus in July and hopefully enter the capital market with an IPO by the end of this calendar. We are currently limited to the geography of India and are just starting to enter the South Asian Association for Regional Cooperation (Saarc) countries. A major portion of the IPO proceeds will go into this overseas expansion,” VMC executive director, B Venkataramana, told Business Standard.
VMC, in which Fidelity Capital invested Rs 110 crore in October 2008 holding 25 per cent in the company, currently derives 70 per cent of its revenues from transmission equipment, while the remaining flows in from customer premises equipment (CPE) and power supplies.
Venkataramana said the company, which follows a July-to-June financial year, reported a net profit of Rs 85 crore on revenues of Rs 1,069 crore last year, and expected an 8.5-9 per cent PAT on revenues of Rs 1,500 crore this year, primarily on the back of the Worldwide Interoperability for Microwave Access (WiMax) roll out that it was planning to do for Bharat Sanchar Nigam Limited (BSNL).
“We will be delivering 6,000 WiMax base stations and 200,000 indoor and outdoor CPE units that can communicate with the stations in Andhra Pradesh, Orissa and the northeastern regions. We have tied up with Israeli company Alvarion for the base stations, and the roll out will begin from next month,” he added.
VMC has five manufacturing units located in and around Hyderabad, churning out power supplies in the range of five-watt to five-kilowatt. “We are currently manufacturing half-a-million pieces of power supplies a month and our goal is to cross one million pieces per month from next year,” he said.
VMC is working on the next-generation fibre-to-home technology ‘Gigabit Passive Optical Network (GPON)’, which will replace the existing last mile to most residences (copper) with optical fibre, while promising triple play – voice, data and entertainment.
“Though in a nascent stage now, the horizon for fibre-to-home will be in the next five years when the market in India is expected to touch Rs 10,000 crore. We are currently talking to network operators, both public and private players, and real estate developers who are already evincing interest in putting up optical line terminals (OTLs) in their new residential projects. We are designing the product and will be patenting it, and expect to launch the technology in another six months,” Venkataramana said.