Presentation for the PEC Workshop ,27 th April 2011 Mudassar Hussain

1. Institutional Collaboration for Indigenous Production In Renewable Energy Sector: Manufacturing Perspective and Collaboration Framework Presentation for the PEC Workshop ,27th April 2011 Mudassar Hussain Telephone Industries of Pakistan Ministry of Information Technology

2. Overview of Presentation • Historical Perspective: Public Sector R&D and Manufacturing • Survival and sustainability: recipe for the future • Solving real problems , be relevant to markets and compete: leverage synergies • Opportunity in adversity: The case for indigenous alternative energy products (Solar/Hybrid) • PCRET/NIE/TIP Collaboration: Value proposition • Proposed Collaboration Framework: the progress so far and targets • Parameters for success • Recommendations to the GoP

3. Historical Perspective: Public Sector R&D and Manufacturing • Multitude of Research organizations set up by the Govt. with different “ Research and Development” mandates. • Successful in development of technology to varying degrees but no visibility in real life scenario due to lack of clear path for commercialization. • Public sector manufacturing organizations primarily JVs between foreign technology companies with narrow product focus primarily targeting public sector market and no focus on diversification and R&D. • Change in technology and focus of principle JV partners , large overheads and outmoded way of working led to gradual decline • Public Sector R&D and Manufacturing have been operating in silos and have never been meaningfully linked leading to failure on both counts • Local R&D making way to the markets and • Truly indigenous production in public sector manufacturing

4. Practical Realities and Way forward • Are publicly funded R&D and Indigenous Manufacturing lost causes? • Funding scenario in economic downturn increasingly fluid and limited: sustainability of research • Govt cannot afford to keep funding sick industrial units that continue to lack innovative product portfolio • Market and commercial products present a lifeline: Pool Strengths, solve market relevant problems, build commercial products and achieve self sustainability for both R&D and Manufacturing • Ready example: Cost Effective Alternative energy

5. Opportunity in adversity: Indigenous Alternative energy products (Solar/Hybrid) • Energy sector scenario: Established need to diversify the mix, increase alternative energy contribution. • The case for solar power: would depend on cost effectiveness & RoI for mass scale adoption in public sector and open market. • Indigenous and tailored solutions can play a vital role in the market: competitiveness against imports across entire ecosystem is crucial • Opportunity for Public sector Organization JVs for innovative and sustained indigenous supply to markets

6. Case For Possible Synergistic Collaboration TIP/NIE/PCRET

7. Leveraging Synergies for Tapping Alternative Energy Market • R&D organizations PCRET and NIE have developed an array of alternative energy/solar power generation systems, subsystems and end products, at research prototype level • They however have no capability to address market level production volumes and almost no marketing experience. And most crucially no brand for instant recognition by market even if products produced on commercial level • TIP has extensive strength in mass scale manufacturing, a strong brand name with household recognition, extensive experience in supply testing and commissioning and after sales service. R&D and design are however major weaknesses • PCRET/NIE/TIP is a natural alliance that can leverage each others strengths through bipartite or multipartite JV arrangements with • each partner focusing on specialized role.

8. From R&D to Market for Solar products: The PCRET/NIE/TIP Proposition PCRET/NIE Competencies TIP Strengths

9. TIP Overview • Established in 1953: Mandate to manufacture and supply broad range of engineering products particularly Telco and energy related equipment for the GoP • Remained profitable for 50 years. • Established household and industry brand name particularly for terminal equipment, exchanges and energy meters. • Decline in recent decade due to change in technology, telecom deregulation, PTCL privatization, lack of competitive product development and marketing, narrow telecoms related focus. Diversification of product line is imperative: TIP is ready for the Alternative energy opportunity due to expected market volumes

10. Light/Medium/Heavy Steel Fabrication. Containers refurbish services. CNC Nibbling Facilities. CNC Machining. Conventional Machining. Pressing Work. CNC Plastic Injection Single Moulding. CNC Plastic Injection Double Moulding. Thermoplastic Compression Moulding. Pressure Die Casting, TIP Manufacturing Capability • Telecommunication Equipment Supply, installation , commissioning and staff training. • Material Testing. Mechanical , Physical, Chemical tests. • PCB and Hybrid Fab • Component stuffing through THT & SMT • Tool designing & Manufacturing. • Progressive cutting tools. • Pressure Die casting Moulds. • Customized Jig and Fixtures. • Customized precision gauges • Packing Solutions: • Styropore packing. • Card board packing. • Wooden Packing. • Surface Treatment & Heat Treatment: • Electro Plating. Ferrous and non Ferrous. • Precision part bakes painting. • Screen Printing. • Hot Dipped Galvanizing ( up to 24 feet length) 10

11. Manufacturing Capacity (Per annum) Digital Telephone Exchanges (EWSD) 500,000 lines Units Telephone Sets (All versions) 250,000 Sets Container Shells for Digital Exchanges 200* Cross Connect Cabinets 1000 Printed Circuit Boards 5000 Sq. m Thick Film Hybrid Circuits 400,000 Nos. Fire Alarm Systems 300* Drop Wire 36,000 Km Single Phase Energy Meters 200,000 Telecom Towers and Masts 300* Earthquake rehabilitation shelter 1000 homes Capacity enhancement depends on labor force and can be increased any time

12. Roles of Collaborating Partners Complete value chain for R&D, Design, Manufacturing & Marketing

13. Proposed Collaboration Framework: Developments and progress • Joint Professional Working Group Set up after inter-ministerial meeting to • Shortlist priority marketable products from existing designs at PCRET and NIE • Build business plans for the targeted products. • Work out operational collaboration framework • Possible scenarios being considered by the Joint Group • TIP acting as contract manufacturer for NIE/PCRET with no TIP brand or role in marketing the product • Multipartite inter-organizational JV/MoU with TIP brand for all solar systems and products • Separate commercial limited company with stakes of all three organizations, corporate style working with independent diverse Board utilizing all shared resources • Since joint product development will entail some production line setup and upgrade, new product test and QA facility as well as the initial input costs the organizations will devise • Revenue and profit sharing model also being worked out by the Joint Group

14. Ingredients for Success • Sound collaboration Framework • Prompt and realistic market study and feasibility of products. • Effective product line and brand strategy • Competitiveness. (Quality, capacity, service & price) • Bundling of product with financing • Market entry facilitation (Policy and administrative arrangements) • Incentives for both manufacturing outfits/consortia and the user (tax break, rebates). • Sustained high level ownership and funding of Initiatives

15. Recommendations to GoP • Need for clear-cut policy • for commercialization of academic, public sector and publicly funded research. • Need for institutional support for entrepreneurship and innovation and renewable sector startups • Venture capital style access to resources. • Research funding and incentives for this particular area. • Enabling adoption of the products reproduced through the proposed collaboration particularly public sector market in the beginning without distorting free competition. • Enable quick decision making in all collaborating public sector organizations, through their respective Ministries and PPR modification for the purpose to enable such public JVs to stay market relevant. • Enable financing of viable business plans not through PSDP but form specially designed package to support Public sector JVs in the renewable energy area. • Incentives for major economic sectors for conversion to alternatives and for using indigenous products. • Mandate all public sector bodies and authorities to give first priority to indigenous products while considering energy conservation

16. Thank YouQuestions and AnswersMudassar Hussainmhussain@moitt.gov.pkmd@tip.org.pkPhone 051-9221048Fax 051-2870790