RAD to exit MRO-Tek JV on manufacturing

TEL AVIV, ISRAEL: Tel Aviv-based RAD Data Communications, a manufacturer of access equipment for data communications and telecommunications applications, is set to exit from its 50:50 manufacturing focused joint venture with Bangalore-based MRO-Tek.

This decision comes in the backdrop of government driven favorable conditions for multinationals to locally manufacture IT products in India.

According to Motti Holler, director, Asia, RAD data Communications Ltd, the decision to exit from the joint venture will not have any affect on the company’s ongoing long-term relationship with MRO-Tek as its sole distributor as well as a unique partner in the sub-continent.

“Today there are a lot of multi-nationals that are coming to India with their manufacturing plans on IT products. We thought about it much before in the year 1996. At that point in time, it made favorable for our overall business in the region to have a joint venture on manufacturing with MRO-Tek. But today there are a lot of incentives that the government is giving to encourage local manufacturing by foreign multinationals, so we are taking this decision to exit from this particular joint venture and manufacture products on our own. The final dates for exiting this JV and starting our own manufacturing have not been decided so far but we will surely do it in the year 2008,” he explained.

A special relationship

MRO Tek’s relationship with RAD started in 1991, when the Bangalore-based networking products focused company established its contacts with Israel’s RAD. Soon, it turned out to be a unique relationship for both the companies as MRO Tek was given the responsibilities of distributing RAD products in the country as well as assist in terms of manufacturing the products locally.

“It is a very special relationship that we have with MRO-Tek. So far we have not been able to replicate this relationship anywhere else in the world. MRO-Tek is the only distributor for us, which is also helping us in terms of manufacturing the products. This has particularly helped us in terms of being closer to our customers and most importantly listening to their demands and hence fine-tuning our products according to the local market needs,” Holler said.

Moving forward, RAD will further strengthen its relationship with MRO-Tek. “We firmly believe in the huge potential of the Indian market and we are going to realize this potential with the help of our partner MRO-Tek. They are an integral part of our strategy to target this geography,” Holler added.

Targeting the Indian telecom space, the company is looking at garnering close to $14 million from its Indian operations for the coming year.

“We are looking at the cellular backhaul as a big opportunity for us and we would be launching our new products for Ethernet access. We are looking at the $14 million figure as revenue coming from this geography for the coming year,” Holler further said.

RAD MRO manufacturing Limited, a joint venture between RAD and MRO-TEK went on stream in the year 1998, to manufacture RAD products in India.

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