Presentation for the

PEC Workshop ,27th April 2011

Mudassar Hussain

Telephone Industries of PakistanMinistry of Information Technology

Overview of Presentation

Historical Perspective: Public Sector R&D and Manufacturing

Survival and sustainability: recipe for the futureSolving real problems , be relevant to markets and

compete: leverage synergiesOpportunity in adversity: The case for indigenous

alternative energy products (Solar/Hybrid)PCRET/NIE/TIP Collaboration: Value propositionProposed Collaboration Framework: the progress

so far and targetsParameters for success Recommendations to the GoP

Historical Perspective: Public Sector R&D and Manufacturing

Multitude of Research organizations set up by the Govt. with different “ Research and Development” mandates.

Successful in development of technology to varying degrees but no visibility in real life scenario due to lack of clear path for commercialization.

Public sector manufacturing organizations primarily JVs between foreign technology companies with narrow product focus primarily targeting public sector market and no focus on diversification and R&D.

Change in technology and focus of principle JV partners , large overheads and outmoded way of working led to gradual decline

• Public Sector R&D and Manufacturing have been operating in silos and have never been meaningfully linked leading to failure on both counts• Local R&D making way to the markets and• Truly indigenous production in public sector manufacturing

Practical Realities and Way forwardAre publicly funded R&D and Indigenous

Manufacturing lost causes?Funding scenario in economic downturn

increasingly fluid and limited: sustainability of research

Govt cannot afford to keep funding sick industrial units that continue to lack innovative product portfolio

• Market and commercial products present a lifeline: Pool Strengths, solve market relevant problems, build commercial products and achieve self sustainability for both R&D and Manufacturing

• Ready example: Cost Effective Alternative energy

Opportunity in adversity: Indigenous Alternative energy products (Solar/Hybrid)

Energy sector scenario: Established need to diversify the mix, increase alternative energy contribution.

The case for solar power: would depend on cost effectiveness & RoI for mass scale adoption in public sector and open market.

Indigenous and tailored solutions can play a vital role in the market: competitiveness against imports across entire ecosystem is crucial

Opportunity for Public sector Organization JVs for innovative and sustained indigenous supply to markets

Case For Possible Synergistic CollaborationTIP/NIE/PCRET

Leveraging Synergies for Tapping Alternative Energy Market

R&D organizations PCRET and NIE have developed an array of alternative energy/solar power generation systems, subsystems and end products, at research prototype level

They however have no capability to address market level production volumes and almost no marketing experience. And most crucially no brand for instant recognition by market even if products produced on commercial level

TIP has extensive strength in mass scale manufacturing, a strong brand name with household recognition, extensive experience in supply testing and commissioning and after sales service. R&D and design are however major weaknesses

• PCRET/NIE/TIP is a natural alliance that can leverage each others strengths through bipartite or multipartite JV arrangements with

• each partner focusing on specialized role.

From R&D to Market for Solar products: The PCRET/NIE/TIP Proposition

PCRET/NIECompetencies

TIP Strengths

TIP OverviewEstablished in 1953: Mandate to manufacture and supply

broad range of engineering products particularly Telco and energy related equipment for the GoP

Remained profitable for 50 years.Established household and industry brand name particularly

for terminal equipment, exchanges and energy meters.Decline in recent decade due to change in technology,

telecom deregulation, PTCL privatization, lack of competitive product development and marketing, narrow telecoms related focus.

Diversification of product line is imperative: TIP is ready for the Alternative energy opportunity due to

expected market volumes

Light/Medium/Heavy Steel Fabrication. Containers refurbish services.CNC Nibbling Facilities.CNC Machining. Conventional Machining. Pressing Work. CNC Plastic Injection Single Moulding.CNC Plastic Injection Double Moulding.Thermoplastic Compression Moulding. Pressure Die Casting,

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Telecommunication Equipment Supply, installation , commissioning and staff training.

Material Testing. Mechanical , Physical, Chemical tests.

PCB and Hybrid Fab Component stuffing through THT & SMT

TIP Manufacturing Capability

Tool designing & Manufacturing.Progressive cutting tools. Pressure Die casting Moulds.Customized Jig and Fixtures. Customized precision gauges

Tool designing & Manufacturing.Progressive cutting tools. Pressure Die casting Moulds.Customized Jig and Fixtures. Customized precision gauges

Packing Solutions: Styropore packing.Card board packing.Wooden Packing.

Surface Treatment & Heat Treatment:Electro Plating. Ferrous and non Ferrous.Precision part bakes painting.Screen Printing. Hot Dipped Galvanizing ( up to 24 feet length)

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Manufacturing Capacity (Per annum)

1. Digital Telephone Exchanges (EWSD) 500,000 lines Units

2. Telephone Sets (All versions) 250,000 Sets

3. Container Shells for Digital Exchanges 200*

4. Cross Connect Cabinets 1000

5. Printed Circuit Boards 5000 Sq. m

6. Thick Film Hybrid Circuits 400,000 Nos.

7. Fire Alarm Systems 300*

8. Drop Wire 36,000 Km

9. Single Phase Energy Meters 200,000

10.Telecom Towers and Masts 300*

11.Earthquake rehabilitation shelter 1000 homes

Capacity enhancement depends on labor force and can be increased any time

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Roles of Collaborating Partners

Complete value chain for R&D, Design, Manufacturing & Marketing

Proposed Collaboration Framework: Developments and progress

Joint Professional Working Group Set up after inter-ministerial meeting to Shortlist priority marketable products from existing designs at

PCRET and NIE Build business plans for the targeted products. Work out operational collaboration framework

Possible scenarios being considered by the Joint Group TIP acting as contract manufacturer for NIE/PCRET with no TIP

brand or role in marketing the product Multipartite inter-organizational JV/MoU with TIP brand for all

solar systems and products Separate commercial limited company with stakes of all three

organizations, corporate style working with independent diverse Board utilizing all shared resources

Since joint product development will entail some production line setup and upgrade, new product test and QA facility as well as the initial input costs the organizations will devise

Revenue and profit sharing model also being worked out by the Joint Group

Ingredients for SuccessSound collaboration FrameworkPrompt and realistic market study and feasibility of

products.Effective product line and brand strategyCompetitiveness. (Quality, capacity, service & price)Bundling of product with financingMarket entry facilitation (Policy and administrative

arrangements)Incentives for both manufacturing outfits/consortia

and the user (tax break, rebates).Sustained high level ownership and funding of

Initiatives

Recommendations to GoP Need for clear-cut policy

for commercialization of academic, public sector and publicly funded research.

Need for institutional support for entrepreneurship and innovation and renewable sector startups

Venture capital style access to resources. Research funding and incentives for this particular area.

Enabling adoption of the products reproduced through the proposed collaboration particularly public sector market in the beginning without distorting free competition.

Enable quick decision making in all collaborating public sector organizations, through their respective Ministries and PPR modification for the purpose to enable such public JVs to stay market relevant.

Enable financing of viable business plans not through PSDP but form specially designed package to support Public sector JVs in the renewable energy area.

Incentives for major economic sectors for conversion to alternatives and for using indigenous products.

Mandate all public sector bodies and authorities to give first priority to indigenous products while considering energy conservation

Thank You

Questions and Answers

Mudassar Hussainmhussain@moitt.gov.pk

md@tip.org.pkPhone 051-9221048

Fax 051-2870790