Surana bags Rs 115 cr MTNL, BSNL orders

City-based Surana Telecom Ltd has bagged two orders worth Rs 115 crore from BSNL and MTNL. The order is for supply of CDMA-based fixed wireless telephones (FWTs).

Surana Telecom managing director Narender Surana told Business Standard here today that Surana Telecom and Bhagyanagar Metals Ltd, a group company, were already executing the Rs 90-crore BSNL order. He said the Rs 25-crore project for MTNL had entered the testing phase and equipment supply would commence shortly. The MTNL order was bagged in February this year.

Surana Telecom is to fully execute the MTNL order worth Rs 25 crore, while it will meet the BSNL order to the extent of Rs 30 crore. Bhagyanagar Metals gets to execute the remaining part of the BSNL order at Rs 60 crore. The turnover of Surana Telecom and Bhagyanagar Metals is expected to touch Rs 120 crore and Rs 125 crore respectively by the end of the current fiscal.

Narender Surana said the group had entered into tie-up with LG for the BSNL order. For the MTNL order, the group had joined hands with Huawei Technologies of China.

He attributed the success in forging tie-ups with the cellular handset majors to the transition effected by both the companies and becoming wireless product manufacturers last year. Both the companies would be adding value to the handsets with four to five physical components besides software patches developed indigenously, he said.

Spurred by the new developments, the Surana group is now keen on entering into manufacture of third generation soft switches. With BSNL and MTNL actively firming up plans to replace the existing switching technologies with the soft switches, the group expects the market size for this segment in the order of Rs 200 crore.

"The group is currently holding negotiations with Huawei Technologies for venturing into this segment," Surana added.

Based on strength of their foray into CDMA wireless products, both the companies are expected to register record growth this year.

Surana Telecom would be recording a turnover of Rs 41 crore for the financial year 2003-04, compared with Rs 28.62 crore in the previous financial year. Bhagyanagar Metals is likely to record Rs 94.4 crore turnover for the year ended March 31, 2004, up from Rs 48.32 crore in the previous fiscal, Surana said.

For the financial year 2002-03, the net profit was Rs 3.83 crore for Surana Telecom and Rs 2.22 crore for Bhagyanagar Metals.

Explaining the factors which had compelled the group to revise the business strategies for the two companies during the last fiscal, Surana said the cellular revolution in the country and increasing use of wireless technology had led to substantial reduction in the demand for JFTC (jelly filled telecom cable) and OFC (optic fibre cables).

Last year, it was seen that there was excess capacity of JFTC at 1600 lakh conductor kilometres (LCKM) in the country as against the demand for 200 LCKMs. In the case of OFC, the installed capacity was at 5.12 million fibre kilometres (FKM) and the demand at 1.5 million FKMs.

The lower capacity utilisation of both JFTC and OFC saw Surana Telecom and Bhagyanagar Metals see their turnovers nosedive in 2002-03. Surana Telecom's turnover during that year fell by 72.31 per cent, while in the case of Bhagyanagar Metals the turnover fell by 68.14 per cent.

"This steep fall in business made the management sit up and evolve new business plans and the subsequent foray into the manufacture of cellular wireless products during the financial year 2003-04. The company zeroed in on CDMA technology-based handsets due to their superior value proposition compared with GSM handsets," Surana explained.

Bhagyanagar Metals was originally into the manufacture of JFTC, copper wire rods, conductors etc, while Surana Telecom was engaged in the manufacture of JFTC, OFC, jointing kits, optical testing and measuring instruments etc.

"Both the companies went in for manufacture of CDMA components during the year 2003-04. They also set up divisions to develop and manufacture local feeder cables, patch panel antennae to enhance signal strength from 4 km to 12 km radius from base stations, data cables for Net connectivity from handsets to PCs, battery cables etc," Surana said. The company acquired technology for these products from LG.

Surana exuded confidence that the turnover of Surana Telecom would touch Rs 120 crore, and Bhagyanagar Metals Rs 125 crore by the end of the current fiscal.

"Both the companies would record at least Rs 40 crore turnover in the first quarter of the current financial year. The wireless segment would contribute 70 per cent of total business for Surana Telecom and 75 per cent for Bhagyanagar Metals," he said.