Banyan Networks’ resurgence after changing business plan

Venkatachari Jagannathan
12 February 2003

“We are getting into manufacturing without disturbing our existing agreements with our licensees. We have a larger interest in seeing that all of us survive. Further, our agreement permits the same,“ says chief operating officer K V Nair. The 45-year-old electrical engineering graduate was earlier with Sify's business development wing, looking after the networks.

In 1995, the Telecommunications and Computer Networks Group (TeNet) of the Indian Institute of Technology, Madras (IIT-M), promoted Banyan to get into the wireline telecom segment. The next year, the company developed its first product — a 24-port Ethernet switch — and sold the rights to Acacia Networks, USA.

The company licensed Himachal Futuristic Communications (HFCL), Shyam Telecom, Hindustan Teleprinters and the Hyderabad-based ARM to manufacture and market its products.

In 1999 the company got an equity infusion from Intel, Sycamore Ventures and IL&FS. The angel investor, Ray Stata, chairman of Analog Devices, converted a part of his interest-free loan into equity.

In 2001, the company raised $17.5 million from the stakeholders, barring Intel, when the company was valued at Rs 20 crore. “The four investors together hold 53 per cent, 33 per cent is held by an employee trust and 14 per cent by well-wishers of the TeNet group.“

Apart from converting its pilot plant into a proper one with test facilities, Banyan has also hired additional space to roll out products like Direct Internet Access System (DIAS), modems, routers, remote access server (RAS), etc. Banyan has obtained the bulk production certificate from Bharat Sanchar Nigam Limited (BSNL). The company will produce goods worth Rs5 crore this year.