May 16, 2012 | DNA

Managed services, V-sat to drive Nelco

Diversified Nelco of the Tata Group is looking to grow turnover to Rs500 crore over the next two years from the current Rs110 crore by coasting on demand for security and managed services.

That would consolidate the progress made as a loss-making company since last year, said P J Nath, CEO of Nelco. Nelco - it was outgoing group chairman Ratan Tata’s first turnaround challenge in 1971 — has forayed into consumer electronics, V-sat connectivity and security surveillance in recent times under Nath. (Tatas roped in Nath from Sify Technologies where he was the CEO.)

“Today, Nelco is very focused about the businesses we want to grow. We are building different competencies to cater to the growing needs of customers. Managed services would become a very important part of our business, going forward. V-sat will grow too, given the rapid expansion of ATMs and retail in India,” he said.

With the system integration business generating thin margins, V-sat and managed services business will bring in large margins from here on, said Nath.

Nelco is also increasing presence in the security surveillance business where the government, railways and enterprise customers form its core.

Nelco started working in the V-sat space in 2003 and now has a 15% market-share, which is likely to grow as verticals like banking, oil and gas, education, manufacturing and retail services implement the technology, he said.

Under Tata, Nelco was known as National Radio and Electronics Ltd, and made transistors and consumer electronics. Challenges concerning product portfolio, pricing, structural issues, and competition kept him busy then.

More recently, in April 2010, electrical equipment maker Crompton Greaves bought three businesses of Nelco — traction electronics, supervisory control and data acquisition (SCADA) and industrial drives — for Rs92 crore.

The BSE-listed entity recently took on a rebranding exercise to grow market-share in V-sat and security services market.