It’s not how many times you fall, it’s how many times you get up. A L Srinath, CEO, Shell Networks shares the eventful journey undertaken by him on the path to becoming the country’s leading networking solutions provider.
A L Srinath, CEO and Director of the Hyderabad-based Shell Networks, started his journey as an entrepreneur in his college days. During an India-West Indies cricket match at Bengaluru, he and his engineering college mates set up a canteen that did roaring business. “It was then that I realized I could do something on my own,” he recalls.
However his family was upset when they came to know about his ambitions, and they strongly reprimanded him. But an entrepreneur had already born. After graduating in 1981, Srinath worked for a year and half with a company selling industrial microwave components. But “I decided to quit and go on my own, much to the disappointment of my parents. Till then, in my entire family, no one had ventured into any kind of business, and overnight I became almost an outcast,” he says.
Along with a friend, Srinath started a venture called Team Engineers which focused on manufacturing electronic components and devices. Team Engineers began small, but in the late eighties and early nineties started doing well. “By 1993 we clocked a turnover of Rs 6 crore with a profit of nearly a crore, which was a fortune in those days. The company also bagged a huge order from the Mumbai Telecom Factory in 1994 to manufacture line drivers and data modems.” However, the order started to suck up all the energies of the company, and led to an extreme financial crunch. At the same time, the company signed on with D-Link to be a distributor in Andhra Pradesh. “I never understood distribution, and never knew that distribution would be an investment-intensive business. It was clear that Team Engineers could not fund the operations.” Growing differences between the two partners also frustrated Srinath. “We were managing the show on a personal level, and not professionally, and things were not going the way they ought to have. That’s when I decided to walk out of the partnership.”
Focus on networking
Along with another friend, Ramkrishna P, Srinath then launched Shell Networks. The inspiration for the name ‘Shell’ was Unix Shell. “We decided to focus on networking because it offered a lot of potential. But the market was small and nascent, and we had to educate a number of customers before we could get business.” The turning point came in 1997, when Microland, a leading network integration company during the nineties, was looking for a partner in Hyderabad. “Microland handheld us into the business of networking, educating and nurturing our business. During those days every major networking vendor had a relationship with Microland, and we learned a lot from them,” admits Srinath.
Towards the end of 1998, Microland announced that they were exiting the low-end network integration space and moving up the value chain to focus on facilities management and consultancy. Subsequently, the company handed over many of its customers in Hyderabad to Shell.
Getting up every time you fall
One of Srinath’s biggest strengths is his ability to fight back every time the chips are down. His lack of a business background never brought down his confidence. “I have had several setbacks in business. Every time I learned something new, I came back with a vengeance to do better the next time.”
For example, in 1997, Shell was banking on ECIL, which kept awarding one project after another to the new venture. ECIL, being a strong government player, was seen as an ideal client by everyone. However, ECIL soon started facing troubled times. “We suddenly had an outstanding of nearly Rs 60 lakh, and our creditors were behind us. The money was stuck for nearly a year, and took a lot of effort to recover,” says Srinath. “But this taught me several lessons.”
Soon Shell came up with a policy not to put all eggs in one basket, and it became extra careful about payments. “We decided to collect an advance on every order, and do due diligence before we took up any project. This made us conservative, and may have even affected growth, but it sure made for a more accountable business,” he adds.
Another shock arrived in 2000. The sales tax department announced that networking services came under sales tax laws, and slapped a notice on networking vendors dating back to all the business they had done in the previous four years. Shell was asked to pay Rs 99 lakh. Srinath had to personally run about, meet and convince government officials, and generate awareness among other partners. Finally, the government decided to waive off the dues.
In between, Shell got an investor to invest in the company to raise capital. “The infusion of capital was god sent as it helped us expand our business. But all of a sudden the investor wanted his money back with interest. Since we had decent reserves at that moment, we settled matters with him. But this made me cautious about the cost of financing. Today, financially, we are one of the most controlled companies.”
Rs 100 crore in three years
Recovering from such setbacks, the company started focusing on its core networking business. The big break came in 2000, when the School of Information Technology of the Jawaharlal Nehru Technology University placed an order worth Rs 30 lakh for an end-to-end networking solution. “We won the order against Wipro and others, and both Cisco and AT&T Systimax started noticing us, and soon we were signed on as their premier partners,” Srinath says.
Somewhere along the way, he realised that cutting-edge technology was a means to differentiate Shell from others, so the next few years were spent building a team that was capable of delivering cutting-edge solutions.
The company focused on providing end-to-end networking solutions. Unlike many other systems integrators, Shell does not outsource structured cabling work. “Frankly, there is good margin in cabling, and it gives us an introduction to many customers. We have grown from a structured cabling vendor to a total network solutions vendor at many places.”
By 2006, the vendor had made large inroads in the IT, ITeS and education segments. “The icing on the cake was when we were chosen to implement Digital Media Systems at Baptala Engineering College in partnership with Cisco,” Srinath says.
At present, Srinath is trying to add other services to his portfolio. The company has signed on with EMC for storage and Emerson for power and cooling. “With Cisco, Systimax, EMC and Emerson, we have become a total solutions provider,addressing the data center market,” notes Srinath. Shell is also a complete solutions provider for digital signage displays, and post-recession Srinath is betting that this technology will help things forward.
The company, which clocked revenues of Rs 20 crore during the last fiscal, has offices in Vizag and Pune, is shortly starting operations in Chennai, and has signed on a partner in Bengaluru to address the market there. In the next three years, Shell plans to open more offices across the country and aims to reach the Rs 100 crore revenue mark. Says Srinath, “I am confident we will net Rs 25 crore in the next two quarters if we tap our existing funnel efficiently, and with our plans to enter the services space we see the target being achieved well within three years.”
Srinath sees himself at the helm of affairs at Shell for at least the next ten years. In three years he plans to elevate some of his loyal employees to become stake-holders in the company, and also plans to issue ESOPs to all staff once the target of Rs 100 crore a year revenue is achieved. He is working on a succession plan, but is averse to the idea of going public or selling off the company. “I will one day divest a significant portion of my stake and take a back seat. But selling off the company is not an option I am thinking of.”
Giving credit where it’s due
Srinath says he owes his success to his wife. “She was working in a bank, had a regular income, and supported the family during the tough days. As the proverb goes, behind every successful man there is a woman, and in my case it was my wife.” He also gives credit to his never-say-die attitude and the team at Shell. A workaholic, he says he has little time for movies or books or any pastime. Spiritually, he identifies himself with Mantralaya and the principles of Madhavacharya. He believes in giving to charity, and plans to do more for the needy.
His advice for his peers? Stay focused on what you are good at and what you know, and take the logical route to grow up the value chain.