Costs low, not profits

INNOVATOR OF THE YEAR

Kavveri Telecom Products

Turnover (2008-09): Rs 180.57 crore PAT (2008-09): Rs 11.34 crore No. of employees: 150 Year of incorporation: 1991 Headquarters: Bangalore Company profile: Engaged in design, development and manufacture of RF products and antennas for telecom, defence and space applications

C. Shivakumar Reddy, MD: “Innovation is helping our customers provide more cell sites within their budget”

Innovation and profitability do not have to be mutually exclusive, as Kavveri Telecom’s example demonstrates.

When telecom companies bought splitters, used for distributing radio frequency (RF) power, from the Bangalore-based Kavveri Telecom Products around this time last year, they were in for a surprise. The company had slashed their price 60 per cent over what it was a year ago.

Also cheaper were omni antennas, panel antennas and combiners, among other things. A series of innovations had helped the company tweak with design and use of material to bring down costs. That, however, did not result in any fall in revenues. The company ended 2008-09 with a 29 per cent growth in revenues, clocking Rs 180 crore.

The past year has, in fact, been a period of frenetic innovation in products like tower mounted boosters, tower mounted amplifiers and microcell omni antennas. “This is helping our customers provide more cell sites within their budget besides earning us a bigger market share,” says C. Shivakumar Reddy, Managing Director, Kavveri Telecom. The 47-year-old entrepreneur set up the company in a small room in Bangalore in 1991 with an investment of Rs 10,000 and now has operations spread across India, UK and Canada.

Backed by a robust R&D, Kavveri is now aiming big. So, when the company recently moved its manufacturing unit from a 16,000 sq. ft facility to a complex almost 10 times bigger in size, it was a declaration of its global ambitions. The maker of RF products and antennas has devoted a third of its new facility for contract manufacturing for a global clientele. “The cost of manufacturing of these products is quite steep in North America and Europe. We can do the same in India at costs 30-40 per cent lower,” says Reddy.

The company has also snapped up Trackcom Systems International (TSI), its fourth such buyout in Canada. “Very good technology companies are available at cheaper valuations and we are of the firm opinion that this is the right time to acquire these companies, which have value and potential to grow in an exponential manner,” he asserts.

Reddy’s next frontiers are space and defence, where Kavveri hopes to make a killing. Its presence in the sectors has not been big, but the company is determined to enlarge its footprint, reckoning it as the area of hyper-growth in the next 7-8 years.