The Intrepid Innovator
Acme Tele Power's business saga is unique. Unlike most start-ups, it grew like lightning thanks to a slew of blockbuster product innovations. Then it hit a wall-growth and revenues slowed dramatically. Can Manoj Kumar Upadhyay put the mojo back into the company?

The Blockbuster Innovation

In 2003, telecom in India was beginning to enter its turbo charged phase. The government was allotting what in industry parlance is called "circles"-essentially licences for particular geographic regions to telecom companies. Bharti Airtel was a key player at the time. It had huge growth plans but was beset by anxieties on how it would ramp up its network of cell sites. Most of the infrastructure was imported from European manufacturers. But this equipment wasn't able to withstand Indian conditions like erratic power supply and near-bipolar fluctuations. "Power generator sets in Bharti's cell towers in Delhi were fraught with problems. When Delhi was like this, there were huge worries about what the situation would be in other places," remembers Upadhyay, who Bharti Airtel had brought on as a consultant to figure out what to do about the problem.

Upadhyay had just sold his entire stake in his first business venture, a lightning protection systems company, to his cofounder for '20 lakh. Bharti Airtel thought his experience with lightning and power protection systems could help them. Upadhyay put together a project report, and they approached GE for a solution. "What they suggested was not doable, or implementable. It's then that I started thinking-can I do this? The customer is in trouble. Can I create something that has never been made before?" reminisces Upadhyay.

It took him 17 days, 12 of which were spent without a wink of sleep, as he tried to come up with his innovation—the Power Interface Unit, a power management system that minimised diesel usage and maximised utilisations of mains power. Bharti lapped up the product because it upped cell tower uptime from an 80 to 90 per cent to close to 97 per cent. It also resulted in huge energy savings. "We did nearly 80 per cent of Bharti Airtel's total roll-out from 2003-2009," says Upadhyay. How important a role that was is evident from Bharti Airtel's growth trajectory in those days. "We grew from 12,000 sites in 2005 to 1,50,000 in just six years," adds S. Asokan, executive director, supply chain, Bharti Airtel.

Asokan credits Acme for quickly identifying a "sweet spot". "They saw the opportunity and used it. Basically, they combined many power conditioning equipments available back then to create the PIU," elaborates Asokan. "I'm very good at putting things together to create new things. It's not about being the smartest engineer. To create, you need to know what will make a useful product," adds Upadhyay.

The PIU, which was later patented, became a "household name", says Upadhyay. It also brought him right to the centre of the kind of business he wanted to run-massive and scalable. "I had a huge vision. I'd left Adhunik Power Systems, my lightning company, because I knew it couldn't scale up to '2,000 crore. That was my filter for a business-worth-doing," Upadhyay says.

Incredibly, he actually got there. Acme started with '20 lakh as seed capital, and by 2009, it was a '2,000-company. The early successes also helped Upadhyay secure a place in history. "I've played a critical role in the telecom revolution," he says with pride. "By bringing down fuel costs, we brought down operational costs. We all know the benefits of the telecom revolution in India. It feels great that we've played a role in this, and left a social impact by the amount of diesel we helped cut down," says Upadhyay.

The Twist

Acme followed up the PIU with a range of successful products such as the Green Shelter (a pre-fabricated, integrated energy management solution which houses the electronics and energy-efficient components at telecom sites), Phase Change Material (a solution for storing thermal energy in off-peak hours that reduces fuel consumption by more than 6,500 litres per annum per site) and Free Cooling Units (reduces AC running hours on telecom sites). "They didn't stop at their first product. Every year, they kept widening the gap between them and their nearest competitor," adds Bharti Airtel's Asokan. Even now, roughly 70 per cent of all Bharti Airtel cell sites use one, or more of these products.

Imitation is the best form of flattery, it's often said. Acme got heaps of compliments in the guise of the many patent wars they had to fight as other telecom vendors copied their products. Within its first five years, Acme had become a comprehensive wireless telecom energy management company. Thanks to Upadhyay’s itch to constantly experiment, they had also begun to dabble in alternative energy solutions like solar power. In November 2007, the company filed a red herring prospectus to go public. CRISIL gave Acme's keenly-anticipated IPO a 5/5 rating. Acme wanted to raise Rs 1,000 crore from the market to invest in bolstering their manufacturing and research capacity. But that wasn’t going to be. With the global economic collapse in early 2008, Upadhyay had to abandon these plans. This unplanned turn of events was symbolic of the twists the company would have to begin negotiating.

Bharti Airtel's Asokan says Upadhyay always seemed to him to be more of a technology leader than a driven businessman. There may be a kernel of truth in that. Surely a wiser entrepreneur, especially one who is so technologically sharp, wouldn't hoard all his eggs in one basket. In Acme's case, this spelt double trouble. Not only did all the products cater to telecom, a lion’s share of the business was conducted with one client—Bharti Airtel. Once the frenzy of cell tower construction was over, Acme's main business was in trouble.

An R&D junkie by nature, it isn’t that Upadhyay wasn't trying to come up with industry-transforming innovations even when things were going like a song with telecom. But the wastewater treatment plant he conceptualised that could recycle a household's waste water, and produce clean, usable water, ran into choppy currents. After spending Rs 30-40 crore on research, Acme wrapped up these plans. "To install these, every house would need two plumbing lines. Nobody was going to break their house to get that done," explains Upadhyay.

Similarly, in 2007, Acme worked on a thermal cooling technology which could store and transport vegetables, ensuring they wouldn't perish before reaching consumers. The lack of cold chain and refrigeration facility is responsible for a lot of produce going waste in India, says Upadhyay. So, they developed hawker carts that could keep the vegetables cool, and farmed a new company called Cold Chain. Although they managed to transport 210 tonnes of vegetables from many states, the company was eventually closed down. "We were too ahead in technology and time with this one. Also, we couldn’t manage the daily give and take of cash. We'd have to become an operational company from a technology company to do this," explains Upadhyay. Again, they lost nearly Rs 60 crore. Upadhyay philosophises, "No success comes without paying a price, especially when you try to work on disruptive technologies." He continues, "For one thing to succeed, you have to try 20 other things. From the outside, people can only see the successes.They don’t know how many products we worked on that could never materialise. I was lucky that my first, second and third products were super successful. I had to work much harder for my fourth, and thereafter."

The Future

Not surprisingly, Upadhyay is an impatient man today, as he waits for another innovation from his stable to storm the market. S.S. Kohli, vice president of R&D at Acme uses a sports analogy to describe the performance pressure. "It's like asking Sachin Tendulkar's son to give us as many centuries," he says jokingly.

"It isn't that we are not growing. We're still growing 50 per cent year on year. But nobody wants to see a dip. Fifty per cent isn't great compared to the triple digits we were used to," confesses Sandeep Sethi, Acme's CEO. Today, the company has a new set of priority areas—coming up with innovative energy management solutions for the telecom sector, targeting Africa as a big export market for their products (compared to India's 55 per cent, the continent has a tele density of just 33 per cent, says Sethi), and becoming a leading player in solar power, and other alternative energy areas.

Going back to the drawing board has been great, adds Sandeep Kanwar, the company's chief operating officer. "We have matured a lot in the last four years," he says. "We've been able to take stock and zero in on long-haul, sustainable opportunities. The cornerstone of this evolution has been diversification," he adds.

Each of the opportunities they have laid out certainly has potential. "We see Africa as being seven years behind India in terms of telecom maturity. In three years, we've grown our business there from $16 million to $80 million a year," adds Sethi. With about 4,00,000 existing telecom sites, and energy costs amounting to 60 per cent of the operating costs of a telecom operator, Sethi adds that energy management, operations and maintenance is about a Rs 15,000-crore market, of which they currently have less than five per cent. Bharti Airtel's Asokan agrees that there's definite promise. "There can be efficiencies in generation, utilisation and monitoring. In their next birth, companies like Acme can cater to the very real need to manage these three fronts." He cuts out the task for Acme, though. "What would make us happy is if they do this with speed. They have to come up with superior products quickly, and make sure they're easily adaptable." Upadhyay plays a key role in the company's new R&D initiatives. It's part of his non-negotiable morning routine, in fact. "When I come into office, the first thing I do is spend an hour with the R&D team. That gives me the energy to work throughout the day." He worries that because he "doesn't actually work with his own hands" on the technology, things don't get executed as well. "I need a model where the wheels run faster like they used to. Our product pipeline must be robust." Kohli, who heads the R&D function, deconstructs the morning meetings. "We're slowly learning the culture of how he works. He fires away with a lot of ideas. We're trying to build a culture of technology. Manoj wants to make R&D a process—how do we as a company make sure we think like that?"

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