The Hindu : BSNL order on 'jointing kits' upsets producers

Online edition of India's National Newspaper
Tuesday, Aug 13, 2002

Business

Business

BSNL order on 'jointing kits' upsets producers

By P. Vikram Reddy

HYDERABAD AUG. 12. An unprecedentend order issued by the Bharat Sanchar Nigam Ltd. (BSNL) on procurement of `jointing kits' of polyethylene insulated jelly filled cables (PIJF) from vendors who manufacture `jointing kits indigenously from granules stage,' has upset the 21 manufacturers in the country, of whom 16 happen to be in Andhra Pradesh.

The order has raised eyebrows of the people in this line of business. Why was such an order issued in an industry segment that is considered close to being a `sunset' industry is the question being asked.

The order stated that after a period of six months from the date of issue of this circular, 50 per cent of total requirement of jointing kits is to be procured only from vendors manufacture jointing kits indigenously from granules stage. Further after a period of one year from the date of issue of the circular, 100 per cent of the total requirement will be procured only from indigenous manufacturers.

The existing 21 manufacturers cater to the annual requirement of about three million closures (jointing kits) or a market size of Rs.150 crores. Excepting one or two companies, all of them are now importing components such as `adhesive' and `profiles' (used for making heat shrink profiles).

While becoming `total indigenous manufacturers' is not a big task, manufacturers are unhappy for several reasons. For one, it would involve an additional investment of about Rs.1 crore in a sector that is already facing difficulties — what with demand expected to come down with growth of CDMA technology. Consequently there is uncertainty of return on investment and also the issue of need for fresh approvals.

Industry sources say the required technology is available with at least ten Korean companies. In fact, according to these sources, Chunma Corporation of Korea has already offered technology to at least 8 of the 16 companies operating out of Hyderabad! The sources say tie-ups are also being finalised with three of them already.

Some feel stabilisation of quality may take anywhere up to two years also — otherwise homogeneity may not be there. And during this period, there is fear that the order may facilitate `monopolistic' tendencies with two to three players left in the field.

There are several players based in Hyderabad such as Merritronics, Hemanth, Sinclair, Surana Telecom, Victory, Siddharth, P.M.Telecom, and Goldstone. Outside companies include the Mumbai based Raychem RPG of the RPG Group, Rohit and Siechem (Pondicherry), Nirmal Wire Products (Pune), and Ram Tele (Gulbarga).

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