For the last two-three weeks the market was abuzz with rumors that Gurgaon-based XO Infotech Ltd, promoters of Pepper brand of motherboards, was closing down its business.
The rumors started making rounds when XO Infotech decided to close down its only office in south India, located at the Ritchie Street in Chennai, a couple of weeks ago. However, when contacted, a top official of the company discounted this attributing it as a mere rumor. But, the official agreed that Pepper brand is maintaining a low profile in business and will continue to do in future also. According to Navin Juneja, Director (Finance), XO Infotech, "The company always wanted to register a high growth rate and in the process we identify newer opportunities every time. Now, XO Infotech has embarked on the plan of manufacturing set-top boxes for the proposed CAS (Conditional Access System) to be introduced from mid-July."
However, XO Infotech will continue to be in the mainline IT business and Pepper will be distributed in north and west India.
"In south, we had a tough time in business and there were many reasons for it. Our outstandings were on the higher side and bad debts increased in business. Considering the situation we decided to close our operations in the south and also wanted to maintain low profile in business across the country. Our major thrust area would be set-top boxes in the coming years," explained
The company has assured warranty support to all its partners in south India and the channels here in Chennai are also acknowledging it. "It is not that we want to completely move away from south--we will continue to promote our products here," said
XO Infotech has already entered into a joint venture with a Korean company for the set-top box business. According to Juneja, "We are doing it in three phases. In the first phase, we will import the fully finished product and in the next stage, we will import on Complete Knock Down (CKD) basis and assemble it here and finally, we will start indigenous manufacturing here." The company is confident of starting its own manufacturing within six months.
XO Infotech has a 40,000 sq ft plant in Gurgaon and it does contract manufacturing for several leading companies like Lucent and Mitsubishi, producing telecom, VCD and automation cards. "We have not decided on the brand name for set-top boxes and the success of set-top boxes purely remains on government initiatives and policies. Presently, the government has reduced the import duty on set-top boxes from 50 to five percent to encourage imports and this concession is only upto July 31, 2003," he said.
The company is planning to tie-up with Multi-System Operator (MSO), cable operators and other agents to promote its product.