Videocon Telecommunications Ltd (VTL) is falling back on its old skill as electronic hardware maker to climb out of its debt trap. It now wants to manufacture and market surveillance equipment like webcams and is targeting a revenue of Rs 1,050 crore by 2021.

At present, the video security and surveillance market is pegged at Rs3,650 crore while the overall security market stands at Rs 6,600 crore. This segment is expected to grow at 26% year-on-year, thus reaching nearly Rs 10,000 crore in the next four years. A large part of the market is unorganised and unbranded, surviving on imports from China. Says Arvind Bali, CEO of Videocon Telecom and Videocon Wallcam: “We are launching mass-market products and solutions to ensure market expansion.”

The parent company Videocon Industries had invested Rs 7,500 crore in Videocon Telecommunication Ltd (VTL) by the end of FY17. “VTL has huge accumulated losses as at March 31, 2017. The ability of VTL to continue as a growing concern is substantially dependent on its ability to fund its operating and capital expenditure requirement. VTL is confident of continuing its commercial operations in the National Long Distance (NLD) and International Long Distance (ILD) business,” the company said in a statement.

At one time, amongst the top consumer durable companies in India, Videocon lost the race when Korean brands like Samsung and LG launched in India. It then used its manufacturing expertise to become a contract manufacturer for durables and electronic goods. It dabbled in everything from palm-held devices, set top boxes to mobile phones, without making its mark in any of those products. Its latest idea to manufacture electronic surveillance equipment also seems to be on those lines.

Surprisingly, some analysts are optimistic, calling the decision to enter the security devices market as wise and think it could give VTL an opportunity to bounce back.

“The overall telecom market has been bad for VTL. It did not work out for them in the network market and they tasted little success in the Direct-to-Home (DTH) market in India. Thus, it makes sense for them to get into the surveillance market as their core competency has been creating low-cost hardware,” says Neil Shah, research director of research firm Counterpoint.

He adds that there is a big gap in the security market as most of the products available are expensive, thus missing out on a large chunk of consumers in the mass market. “The need for security cameras is everywhere—from urban households to large agriculture farms but the integration of good hardware and software is not there currently. Videocon can fill in this gap with its low-cost devices.”

Videocon Telecom has partnered with Vodafone for the latter’s 3G and 4G connection. “It’s a laudable move. Internet-based services are bound to grow and so its a wise decision they made,” says telecom industry veteran T V Ramachandran, president of the Broadband India Forum.

On being asked about the company’s poor performance in the mobile-handset market, Ramachandran says that the company cannot be judged on the basis of its performance in one segment. “The mobile handset market has become a commodity market and making margins is very difficult. However, security and surveillance market is niche and will have higher margins because of the nature of the product category,” he points out.

There are others like Rahul Upadhyay, former telecom executive and currently an industry analyst, who are critical of the move and calls it an attempt to stay relevant in the telecom market which has changed drastically after Reliance Jio’s entry.

He points out that apart from the consumer telecom business, the other B2B telecom businesses that they have–enterprise, towers-among others, are all in competitive fields which either have low entry barriers or are capital intensive (network business). Hence this diversification is probably one of the many options that they. Says Upadhyay; “Agreed that security and surveillance market is growing fast and there is space for new entrants. However, it also requires a larger footprint with an on-ground sales and service team–which again is capital intensive.”

“Given their imperatives, I am not sure how well will this succeed especially when competing with marquee names like Panasonic, Zicom at one end and cheap Chinese imports at the other end of the price spectrum. One opportunity area could be in underserved geographies but that would mean significant investments.”

The company had earlier announced its plans to strengthen its position in the eastern market which includes West Bengal, Bihar, Odisha, and The northeast. The manufacturer aims to generate revenues worth Rs 276 crore from the eastern region alone in the next four years. You can’t fault Videocon for trying.

Videocon Telecom

Survival bid: Videocon targets surveillance pie