On a global quest

On a global quest

S.K Jha, Managing Director and CEO, AGC Networks

“We are in the process of creating a solutions integrator, with a wide spectrum of solutions and original equipment manufacturers (OEM) relationships, which understands the four quarters – unified communication, network infrastructure, information security, and the business application and consulting space – and is ready to engage with its customers on a transformational basis where you get paid on delivery outcome,” says S.K Jha, managing director and chief-executive officer, AGC Networks (AGC). AGC, the subsidiary of Aegis Limited, an Essar Enterprise, delivers customised business solutions that help companies accelerate revenue growth, increase market penetration, optimise operating costs and improve employee productivity by embedding communications in their business processes.

Essar Group in itself is a conglomerate, which has three main business interests – iron and steel, annuities (power), and information technology and services. AGC was acquired by Essar Group in September 2010 from Avaya, a networking and enterprise communications provider. For Essar, this acquisition meant strengthening its foothold in the IT and services sector, and the mandate to AGC’s new management was clear – develop new markets, expand its services and develop greater understanding from the customer engagement point of view.

Serving the mandate

“When Essar acquired AGC, it was a unified communications company and around 90 per cent of the market was served by AGC,” says Jha. Post-acquisition, various adjacent businesses were created around data, security, governance and compliance, he adds. This expanded AGC’s addressable market by around tenfold. Currently, from an India perspective, AGC is looking at an addressable market size of above US $ 4 billion to US $ 4.5 billion.

AGC also expanded its OEM (Original Equipment Manufacturer) reach. It has partnered with global leaders like Avaya, Juniper Networks, NICE Systems, Hewlett Packard, Microsoft, Siemens, Polycom, Cisco, Extron, AMX, Sony and Fujitsu. Some of the sectors the company caters to include BFSI, BPO, IT, service providers, manufacturing, hospitality, healthcare, and the Government.

The company entered the ASEAN market in late 2010. It acquired Singapore-based Aegis Tech in November 2010 from Mumbai-based Essar Services Mauritius. It also has a wholly owned subsidiary, GlobalConnect, in Australia. Commenting about its performance, Jha says, “We can do better in Australia. It is a mature market. We have made some leadership changes and I believe that there will be a good amount of traction soon.”

Growing forward

The revenue for the latest quarter ended September 2011 has registered a 98 per cent increase to touch Rs. 256.28 crore and a 124 per cent increase in AGC’s post tax earnings which stood at Rs. 19.05 crore when compared to the corresponding previous quarter. “Growth has come from the other adjacencies we created around data, business video, security, some of the professional services and these have added up to the revenue,” says Jha. While unified communication business continues to form a large block in the revenue, its share has, however, declined in the last one year. The company expects the contact centre and unified communication market to exhibit marginal growth in 2012. Video networking and board room integration is likely to witness double-digit growth and will contribute significantly to its revenue growth in 2012. Newly added business verticals like IT GRC, data networking, storage and security appliances are other key growth areas for AGC in 2012.

Small and medium businesses (SMB) are a significant part of the company’s growth strategy. AGC is aiming for Rs.100 crore revenues (around 10 per cent of the total revenue) from SMB clients in financial year 2011-12. “We believe that our tomorrow’s evolution in India will happen in Tier – II and Tier – III cities, and the rural market,” shares Jha. To cater to this underserved market, AGC created differentiated products, methods of deliveries and pricing. It is tying up with Tier – II partners to tap the US id=”mce_marker”.5 billion SME (the company defines an SME as an organisation with employees in the range of 10 to 500) opportunity for solution integration in the Tier – II cities in India. AGC has appointed 45 active partners in the last six months and plans to raise the count to 120 by the end of this financial year. Some of its active partners include Supercom, Systematic, Presentation People, Telenet, and Linkwell. The company has channel programmes for education, healthcare, telemedicine, normal communication requirements and so on.

Future plans

From a strategy perspective, in India, AGC is creating the OEM principal relationship, creating skill sets for technologies and to deliver solutions. As it progresses, the intention is to enter various geographies with these skill sets and relationships provided from the backend in India. The company will replicate this sales engagement layer in all the countries it enters indicating a thick backend and thin front-end for its overseas operation, shares Jha.

The company is already expanding its business in Australia and ASEAN nations. It has also entered the Middle East and African markets. “We see large traction here and expect to do well. There is a great amount of acceptability of all our products and solutions,” says Jha. The company also aims to enter North America and Europe by January. “Currently, 18 per cent of our revenues come from rest of the world and we are working towards making it 50:50 in the next 24 months,” says Jha. AGC wants to add more geographies to its business and one of the key challenges is to achieve that in the shortest possible time, concludes Jha.


HISTORY

•   AGC Networks was incepted as Tata Telecom Limited in 1986 to cater to the emerging EPABX (electronic private automatic branch exchange) market in India. Lucent Technologies then invested in this listed company, promoted by India’s leading conglomerate Tata Sons, and formed a joint venture with both parties holding 25.5 per cent equity.

•   In the year 2000, Lucent spun off its enterprise business into a separate company – Avaya Inc., which later acquired Tata Son’s stake and the company was renamed Avaya GlobalConnect Limited. In April 2010, the company changed its name to AGC Networks Ltd.

•   In 2010, Avaya Inc sold its 59.13 per cent stake in AGC Networks to the Essar Group for US $44.5 million. Essar completed the acquisition of the company after acquiring another 20 per cent of AGC Networks’ outstanding shares through open offer. At present, the Essar Group holds 79.13 per cent stake in AGC Networks Ltd.


What’s Next?

AGC wants to add more geographies to its business and one of the key challenges is to achieve that in the shortest possible time. It plans to enter North America and Europe by January 2012.

It is expanding its business in Australia and ASEAN nations.

It plans to strengthen the small and medium businesses channel.


Poornima Kavlekar has been associated with The Smart CEO since the time of launch and is the Consulting Editor of the magazine. She has been writing for almost 20 years on a cross section of topics including stocks and personal finance and now, on entrepreneurship and growth enterprises. She is a trained Yoga Teacher, an avid endurance Cyclist and a Veena player.