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Tejas Networks Chairman's Speech > Engineering - Heavy > Chairman's Speech from Tejas Networks - BSE: 540595, NSE: TEJASNET

Tejas Networks

BSE: 540595|NSE: TEJASNET|ISIN: INE010J01012|SECTOR: Telecommunications - Equipment
Nov 20, 16:00
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Mar 17
Chairman's Speech (Tejas Networks) Year : Mar '19

Chairman''s Message

Digital economy is core to India''s journey towards a US$ 5 trillion economy and we have the right products to enable high-speed broadband networks, that will power that journey.

Dear Shareholders,

We are in the age of extreme technology disruptions that are transforming every industry We have built a pioneering deep-technology product company from India with very strong foundation and sustainable moats around our business. The financial year 2019 had seen healthy revenue growth and improved profitability for your company Our Board of Directors had recommended a maiden dividend to our shareholders which will be paid in July 2019, subject to approval of shareholders.

High-speed internet and digital connectivity are critical elements of the new digital economy. Thanks to the availability of powerful and affordable smartphones and tablets, over half of the world population is now on the Internet. In 2018-19, an average user spent more time on his mobile than watching TV and there is more data stored in the cloud today than on private enterprise servers. As the world''s largest carrier of Internet traffic, India is clearly leading this trend and the total data usage in the country is doubling every year. We have built high-capacity optical transmission and next-generation broadband access products that are foundational to modern-day telecom networks that will play a critical role in enabling the digital highways of our future. Digital economy is core to India''s journey towards a US$ 5 trillion economy and we have the right products to enable high-speed broadband networks, that will power that journey.

We continue to break new ground on the technology front, thanks to our pioneering use of field programmable chips (FPGAs) to design highly flexible software-defined hardware™ products. Today we own a rich portfolio of re-usable building blocks of hardware as well as software intellectual property (IP), which enable us to develop cost-effective and highly customisable products that optimally meet market requirements, in terms of features and performance. Our

reprogrammable hardware approach provides a significant time-to-market advantage while incorporating new features and technology standards. During the year, we employed our software-defined hardware™ approach to commercialise a unique access product that combines fiber broadband, fixed wireless and optical transport functions in a single ultra-converged platform. This product attracted wide international attention from the global telecom industry and it was selected as a finalist for two of the world''s most prestigious innovation awards, which is a testimony to our ability to design globally leading products. Our continued investments in R&D have created a strong technology moat in the industry.

We operate in a highly dynamic industry characterised by rapid technology advances, diverse customer requirements, evolving industry standards and competitive pressures. We have a highly differentiated approach whereby a substantial part of our operations including R&D, manufacturing and G&A are based in India. Also, we are able to tap into the best and brightest talent pool offered by India, which enables us to achieve significantly higher productivity on our R&D investments. This results in significantly lower operating expenses as compared to our global competitors and enables us to deliver superior returns on our investors.

In a highly competitive world, companies should focus on their core competencies and align with right outsourcing partners to create asset-light, scaleable and competitive business models. We partner with leading Electronics Manufacturing Services (EMS) companies in India and outsource a large part of our manufacturing. This allows us to significantly reduce capex costs as well as working capital needs, while providing virtually unlimited manufacturing capacity.

In India, large opportunities exist for us in both Private and Government segments. On the India Private front, the

Our continued investments in R&D have created a strong technology moat in the industry.

industry consolidation is almost over with three large telcos remaining. Providing reliable, high-speed connectivity will be the focus area for all these telcos. While we have over 50% of the population using mobile broadband, less than 2% of the homes have high-speed (at least 100 Mbps) connection. We are extremely well placed for this opportunity with our advanced and mature FTTx products that have been rigorously tested and proven in actual field conditions in India. In addition, the 5G adoption will open up larger opportunities for us, since networks will be required to carry a lot more data and also require faster response time.

On the India Government front, we are the largest supplier of communications equipment to several large critical infrastructure agencies in the power, rail, metro, oil and gas sectors. It is a segment that is seeing increasing demand for high-capacity fiber optic equipment on account of growing proliferation of data and high-bandwidth applications. Besides this, large Universal Service Organisation fund (USOF) projects such as next phase of BharatNet will continue for several years and offer opportunities for us. We are particularly enthused by Government of India''s vision to make India a global telecom manufacturing hub and the several favourable policies they have enumerated over the last few years to achieve this. Policies like the new National Digital Communications Policy (NDCP 2018), Preference to Make in India (PMI) in telecom indicate a strong intent of the government to promote Indian companies, which are doing high value-addition in the country with significant R&D and IPR creation. We are one great example of the success of Make in India initiative by the Government of India.

The 5G adoption will open up larger opportunities for us, since networks will be required to carry a lot more data and also require faster response time

Our business model is predicated on predictable, sustainable, de-risked and profitable growth. Today, majority of our business comes from India with heavy focus on government business. Our medium to long-term plan focuses on de-risking our business model to achieve at least 50% of revenues from International markets.

Our international operations have grown significantly year-on-year, with strong showing across all regions. Going forward, growing direct sales in international geographies will be the cornerstone of our strategy. The global addressable market for our products today exceeds billion and we are currently addressing 50% of this opportunity. Our focus is primarily in South East Asia, Africa and Middle east, along

The telecom markets in the developing countries that we are focusing on closely mirrors India, in terms of their sectoral characteristics such as user demographics, infrastructure constraints, and an accelerating demand for fiberization, broadband, mobile data services. As a result, the products we deploy in India are highly suitable for these markets and success in India is serving as a strong reference in these countries. The policymakers and regulators in many of these countries are formulating national broadband policies that are similar to India''s and are seeking to build their national broadband networks to bridge the digital divide between their urban and rural areas. We can leverage our experience and success in India for winning such projects internationally.

The trade war between US and China is significantly positive for us. Most of the telecom players in advanced economies also perceive national security risks in dealing with Chinese equipment suppliers. This opens up significant opportunities for our products and we are investing heavily in Sales and Marketing in these geographies and hiring sales talent. We believe that US and other developed markets could provide meaningful revenue for us in the medium to long term.

During the year, we added two new members to our Board. Mr. C.B. Bhave, former SEBI Chairman and the first Chairman and Managing Director of NSDL, has joined us as an Independent Director while Mr. Arnob Roy, the Chief Operating Officer (COO) of Tejas Networks, is now a Whole-time Director on our Board.

On behalf of the Board of Directors of Tejas Networks, we thank the governments of various countries where we have business operations. We also thank the Government of India, particularly the Ministry of Communication and Information Technology, the Ministry of Commerce, the Ministry of Finance, the Ministry of Corporate affairs, the Customs and Excise departments, the Income Tax department, Reserve bank of India, Karnataka State Government, and other Government agencies for their support and look forward for their continued support in future.

We are grateful to our customers, employees, shareholders, suppliers and bankers, all of whom have played a major role in making this a landmark year for the company. We see a strong growth potential in our business and we are confident that we have a solid strategy to deliver outstanding success in the coming years.

Warm regards,


Balakrishnan V

April 22, 2019


Source : Dion Global Solutions Limited
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