Mr. P J Nath, Chief Executive Officer, Nelco Ltd.

“The long term objectives are to drive the company’s revenue multifold with consistent growth in profits.”

May 15, 2012 12:05 IST India Infoline News Service

Mr. P J Nath, Chief Executive Officer, Nelco Ltd., a Tata Enterprise. Mr. Nath, 49 years, has immense knowledge and experience of over 25 years in the Indian Enterprise market in the fields of IT, Telecommunications and System Integration. Mr. Nath has an in-depth understanding of the businesses in Enterprise and Govt. sectors where he has carried out leadership roles across different organizations successfully. He has been in the leadership roles for the last 14 years. Prior to taking command at Nelco, Mr. Nath served as an Executive President for Enterprise Business for four years at Sify Ltd., a NASDAQ listed company with focus on IT, SI & Telecom Services in the Indian market. Before Sify, he had worked with Tata Communications (erstwhile VSNL), as Sr. Vice President & National Sales Head for the Enterprise, SMB and the Carrier segments. Mr. Nath also held various positions during his 11 years at Wipro. He has done his Master of Management Studies from BITS Pilani.


Nelco Ltd. (a Tata enterprise), a part of the US$83Bn Tata Group, started in 1940 as a revolutionary electronics company. It has many firsts to its name and has today reinvented itself from the ground up. Nelco has aligned its businesses and set for itself new goals. Nelco is focused on helping its enterprise and government customers unlock potential by offering solutions in the areas of Integrated Security & Surveillance, VSAT connectivity (Tatanet VSAT), Managed Services, Satcom Projects and Meteorological Solutions. These solutions are backed by Nelco’s values and proven expertise in consulting, customization, system integration, end-to-end management, as well as robust infrastructure and processes. Nelco offers a range of innovative and customized solutions for businesses and government institutions under one roof. Nelco is one of India’s leading VSAT providers and offer powerful and dependable network communications solutions. Nelco is also the preferred partners for the Government, Defense and Enterprise sectors when it comes to security and surveillance in India. Nelco also partners with enterprise and government customers in managing their Communication, IT, Security and Surveillance networks. In addition, Nelco offers end to end Networking Solutions (Satcom Projects) and Maintenance of private hubs and hybrid networks. Its innovative turnkey solutions in the meteorological space are meant to meet the entire gamut of requirement of its customers.


In an exclusive interaction with Hemant P. Maradia of IIFL, Mr. P.J. Nath says, “The long term objectives are to drive the company’s revenue multifold with consistent growth in profits.”


What was the rationale and thinking behind the change in brand identity?

We had really transformed our business recently, with some divisions being sold off to Crompton Greaves, Nelco now has new leadership and aggressive business plans. To communicate this change in the marketplace and increase our visibility, this identity and branding change was very essential and a key first step towards our transformation.


What does the new brand identity and logo represent?

The new identity introduces the certain element of unlocking potential and captures the very essence of how we now operate at Nelco. The two spheres in Nelco’s new identity which is a mere slicing of the common element ‘CIRCLE’ denotes the unlocking of potential within the company,


Tell us about the mega transformation Nelco has undergone? What are your long-term objectives?

The year 2010-11 was the year of consolidation and preparation of a solid foundation for growth in Nelco after divestment of three lines of businesses viz; – Industrial Drives, Traction & SCADA to Crompton Greaves Ltd. (CGL) in July 2010.


The board appointed the new CEO in February 2011, with the objective of alignment of the organization to the focused market segment for business growth, projecting unified NELCO to the market place and aligning human resources based on core competency for effective utilization and better efficiency.


The long term objectives are to drive the company’s revenue multifold with consistent growth in profits as well.


How did you go about re-inventing and rejuvenating the company?

The following business realignment initiatives have been taken:

  • Rearranging the market facing team into Corporate & Government business verticals in the revised Organization Structure;
  • Building Managed Services Portfolio for IT services and Security & Surveillance business utilizing the same platform;
  • Unified Projects Team for SI Projects;
  • Unified Customer Relations Team;
  • Unified Support Functions;

Consistent focus on development of Human Resources (HR) continued. HR plans have been defined with appropriate measurement indicators keeping in mind both long term goals and short term requirements.


What is the outlook for various Service Lines over the next four quarters? Has your business been affected by the slowdown in the Indian economy?

We are in the sunrise sector for most part of our new offerings. If you look at Integrated Security and Surveillance, this is an industry which is yet at the tip of the iceberg. There is enough and more growth in the security solutions business primarily driven by convergence of infrastructure to ‘IP Networks’ which make the infrastructure ready for remote monitoring and management. Companies are waking up to internal and external security threats which are major risk for their sustenance and profitability.


The VSAT services are also witnessing huge volumes with banking, especially rural branches and ATMs driving growth, since VSAT is the most viable and highly reliable mode of connectivity for low bandwidth applications.


We are also offering Managed Services encompassing both, Security Solutions and Data Center/ IT Services. These would do well since there is now an outsourcing wave in India.


Since we have enough business funnel, we are not directly impacted by the conservative sentiment, but the US dollar fluctuations are putting us on the alert mode. At the same time, we can look forward to a high growth phase for our services once the infrastructure spending gets back on track.


Which sectors of the economy are driving growth for you? What is the share of Defence in total sales?

We are serving mainly the large and medium corporates for VSAT Services and Managed Services. For the Integrated Security and Surveillance solutions (ISSS), we are targeting the public sector, especially Mass transport, Oil & Gas and Defense sectors.


We have now started selling high tech security solutions to corporate segment as well, to leverage the strengths of our direct sales teams and there is a genuine need for integrated solutions in the enterprises today.


Our revenue from Defence varies year on year depending on projects under execution. Currently revenues from Defence would contribute approximately 5-10% of our sales.


Which service offerings are you betting big on for future growth?

We have identified all current lines of business to be in the growth phase and we would look forward to an overall growth driven from all of our current services.


What kind of ramp-ups from existing clients do you expect in FY13?

We look at retaining and growing our existing customers, including banking sector alliances in VSAT services where we have a good annuity base. Most of the growth for ISS will come from system integration with new public sector & corporate customers.


Give us a break-up of your orders in terms of private sector clients and government customers?

Currently, the ratio of Government and Corporate customers would be close to 50-50 for the company as a whole.


The margins are slightly lower in the government sector due to the concept of winning on lowest bids after you qualify technically. But, the government sector projects are larger in size. Thus, there is pressure on margins due to fierce competition from larger System Integrators and OEMs.


What is the size of the business that you are in? What kind of growth potential do you see in this business? What will be the key challenges in future?

The size of the market for VSAT services is limited around Rs 400-500 Cr per annum, including revenue from existing installed base. We are looking at almost 40% market share of new business in this sector.


Nelco is also looking for growth in the Managed Services sector, including new offerings in cloud computing, i.e IaaS (infrastructure as a service). The Managed Services industry size is close to Rs 8000 Cr.


The Security and Surveillance market, especially the IP Networked market does not have any reputed research figures. Our estimates of the market size for systems integration is close to Rs 5000Cr.


Key challenges will be to drive organization change, customer visibility and business modeling all with equal force, with a good leadership team we am confident of overcoming the challenges at hand.


What is your USP vis-à-vis your competitors?

Our USP is that we can offer integrated solutions to customers – including monitoring and management of their critical infrastructure. The critical infrastructure can include IT and Non-IT elements such as security systems, energy management, alarms, servers and networking devices.


Are you open to inorganic growth?

Yes, once we achieve our near term goals and are consistently profitable, we may look at inorganic growth, subject to business plans and approvals at that time.


Are you also looking at the overseas markets for accelerating company’s growth?

Not at present.

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