Tata Nelco Eyes VSAT Growth

Tata Group's Nelco Ltd. is targeting annual revenues of around INR 2 billion (US$35.4 million) from VSAT (Very Small Aperture Terminal) satellite connectivity services in India.

"The size of the market for VSAT services is limited around INR 4-5 billion [$71-88.6 million] per annum including revenue from existing installed base. We are looking at almost 40 percent market share of new business in this sector," says Harish Keswani, General Manager, Marketing at Nelco.

Nelco, which was formed in 1940, was initially a consumer electronics firm, selling radios and television sets. Following a recent revamp of its business, which included the sale of some divisions to Crompton Greaves, it now focuses on offering a range of connectivity and IT services, including VSAT (through its Tatanet VSAT business), managed security and IT services, Satcom Projects and Meteorological Solutions.

The company is betting big on its managed services portfolio and demand for cloud computing services, as it believes it can capitalize on the growing outsourcing wave in India. Growth in the VSAT services market is also being driven by the financial services sector, especially for rural site and ATM connectivity, as VSAT connections are considered to be highly reliable for low-bandwidth applications.

Overall, the company says its ISS (Integrated Security & Surveillance) and VSAT services will be its biggest top line contributors. "Managed services revenues may be lower as these do not constitute any equipment sales, but these managed services will add considerable value to our bottomline," adds Keswani.

In next quarter, the company plans to launch its n-Cloud (Infrastructure as a Service) and n-Vision (Video Surveillance as a Service) offerings, which involve Nelco working closely with its customers to monitor and manage their entire critical infrastructure.

In the VSAT services market, Nelco's closest competitors are Huge Systems Inc. and Bharti Airtel Ltd..

Nelco has a three-year structured business plan to push revenues in each of its business lines and has set an annual revenue target of INR 5 billion ($88 million) during that time period.

In the financial quarter ending March 2012, Nelco reported revenues of INR 482.6 million ($8.55 million) and a net profit of INR 6.2 million ($110,000). The company recently appointed P J Nath as its Executive Director and Chief Executive Officer to lead Nelco's new business growth strategy.

Jatinder Singh, Principal Correspondent, Light Reading India