MRO-TEK expands manufacturing lines

By Our Corporate Reporter

CHENNAI, SEPT. 3. Started by two first generation technocrat promoters 16 years ago, the Bangalore based MRO-TEK Limited is scaling new heights. Beginning as a producer of line drivers and modems, today the company offers an entire range of sophisticated and state-of-the-art WAN (wide area network) and LAN (local area network) products. The portfolio of products enables the company to deliver end-to-end networking solutions to Internet service providers, banks/corporates, government/PSEs, telecom and Defence.

The company has been promoted by Mr. S. Narayanan, an Electronic Engineer having rich knowledge in that field, and Mr. Himadri Nandi in 1984.

MRO-TEK plans to expand manufacturing lines to increase its indigenous content and this would enable the company to reduce the burden of import duties and strengthen bottomline further.

The company will use the Indian market to build hi-tech products and core technologies and develop products to address major international markets. The business of the company is fully diversified into various segments and does not depend on few customers in one particular segment. MRO-TEK will be a `one-stop shop' for clients requiring innovative and cost effective solutions and this strategy will help the company to position itself with high end marketing chain, says Mr. Narayanan, Chairman and Managing Director.

The company had raised a loan from Nandi Investments Limited, a wholly owned subsidiary of CDC Financial Services Limited and from Development Investment Trustee Company Limited and converted it into 24 lakh equity shares at an issue price of Rs. 25 per share on March 3, 1997 and two lakh equity shares at an issue price of Rs. 60 on October 28, 1999. This would enable the company to reduce the debt equity ratio to 0.53.

The venture fund companies would be offering these shares on a book building basis. The company would also be offering 19.98 lakh equity shares under book building process, which opens for subscription on September 4. It will be offering 5.11 lakh equity shares under the fixed price portion to the investing public on September 25. The floor price for the above issues has been fixed at Rs. 95. The debt-equity ratio would be a nominal 0.02 after the allotment of equity shares to the public.

On completion of the public allotment of 25.09 lakh equity shares of Rs. 5 each, at a premium fixed after finalising the price for the book building portion, the paid up capital of the company will rise to Rs. 10.22 crores from Rs. 8.96 crores. Free reserves stood at Rs. 22.94 crores, even after issue of bonus shares on three occasions between 1992 and 2000. These will go up by about Rs. 23 crores through the realisation of premium on present issue, assuming a price of Rs. 95. On a net profit of Rs. 32 crores, EPS on post-issue capital works out to Rs. 15.7 per share for the year ending March 31,2001 .

MRO-Tek will be investing about Rs. 36.92 crores for expansion of manufacturing facilities, to create additional marketing facilities and to augment working capital. As the import of spares and raw materials would become costlier, the company plans to acquire the base materials from the local market and manufacture certain products for its operations.

The company expects to keep the sale of manufactured goods and traded goods at equal levels and achieve a turnover of Rs. 98 crores and Rs. 102 crores for the year ending March 31, 2001, says Mr. Himadri Nandi, Managing Director. The net profit after tax has been placed at Rs. 32 crores.

For the quarter ended June 30, 2000, the company achieved a turnover of Rs. 36 crores against Rs. 9 crores in the same quarter in 1998-99. For the half year ending September 30, 2000, the company will be realising a sales of Rs. 70 crores against Rs. 28 crores for the corresponding period in 1998-99. The net profit rose to Rs. 5.8 crores in the quarter ended June 30, 2000 from Rs. 9 lakhs in the same period during the previous year.

The opportunities for MRO-TEK are being driven by key technology trends that were already having a favourable impact on the telecom and Internet service providers. Integration of networks and convergence of voice, video and data transmission is driving development of new products and services to cater to future customer demands. Consequently, telecom providers would be required to transform their infrastructure from a circuit- switched network to packet-switched network.

The company has designed the network for the Indian Army for their voice/data connectivity. The company has more potential for tapping business through ISPs, banks and corporates. The joint venture formed by the company with RAD of Isreal in 1979 had enabled it to produce select high-end products such as 64k modems and interface converters. The company has launched the Zyxel range of ISDN data communications in the Indian market. It entered into a non-exclusive value-added retailer arrangement with Radguard for incorporating advanced security technologies. The company has also entered into marketing and distribution agreement with RADCOM, BreezeCom, Cobalt, Extreme, Global Loop for products distribution.

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