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December 3, 2010

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Dialling it right in telecom sector

Posted on December 3, 2010 | Author: Deepali Gupta | View 252 | Comment : 1

Microqual had a roller coaster ride to make it big in the field.

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Young, completely unfamiliar with technology but with a never say no spirit – that is how people remember Mahesh Choudhary’s early days, when he started his business in the telecommunications sector under a company called Microqual.

“All I knew for sure was that I didn’t want to join the family business of dyes and chemicals. I wanted something that grew faster; to take me to my billion-dollar dream,” recalls Choudhary.

In August, 1996, when the company was formed, telecom was the newest of businesses after licenses in India were granted two years earlier.

Since then it has been a roller coaster ride building signal splitters for wireless landline phones to now building telecom towers, a journey that has moved the once fledgling start-up with revenues of 7 crore to a 235 crore company.

“But the company’s profit margin still remains in single digits we need to move it to the teens”, says Choudhary.

The Microqual journey began at the Indian Institute of Technology, Mumbai, about ten years ago when Choudhary sought research inputs to build his first product,

“He spent a lot of time at the campus,” recalls Girish Kumar, Professor, IIT Bombay, who led the research project.

Orange, now Vodafone Essar, was Microqual’s first client who required an antenna to be re-engineered at IIT.

“The students worked strange hours, so there were times we’d start work at 4PM and go on to early morning.”

For three years, the company made splitters and these antennae, but one customer was insufficient to take Mr Choudhary to his dream.

So he approached Mahanagar Telephone Nigam, which needed someone to supply equipment and deploy it.

“I don’t know what possessed me. I said I would do it,”says Choudhary.

Microqual provided connectivity at a building called Panchratna, and that opened new doors.

In 2002, the first big contract came in from BPL, now Loop Mobile, to do up the South Mumbai hotel, Oberoi.

“Microqual’s antennae were aesthetic, it had done a fairly difficult project earlier, and Mahesh was always ready to take on a challenge,”says Prasad Kale, who worked for BPL at the time when the contract was awarded to Microqual.

Soon the company opened offices in Bangalore, Hyderabad, and Delhi and revenue moved to around 18 crore, it was time to move out of the IIT campus.

New lines of business opened with trading in radio frequency cables and manufacturing, to fund these activities the company raised $ 10 million from a slew of investors including New Enterprise Associates, Jafco Asia and BTS Advisors.

By the end of 2007, the company’s revenue transformed from 25 crore to 139 crore.

Such mega growth spawned its own problems as Choudhary now eager to expand further sought more capital, rejecting nearly six offers in search of the best valuation.

Instead he found the company’s equity value slipping along with falling stock markets in the aftermath of the global meltdown.

“We were exposed to more global risks like buying of copper and foreign exchange,”says Choudhary.

Even worse, when the rest of the Indian telecom sector was booming in 2008-09, Microqual lagged behind, as Choudhary dealing with a personal family crisis was unable to concentrate on the business and the company posted its first year of revenue decline.

In a bid to stem that rot Choudhary has hired new leaders and led the company’s move into becoming a tower builder, keeping pace with a changing industry.

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