Netweb Technologies India Limited

A IPO Analysis

About Netweb Technologies

Netweb Technologies designs, manufactures and deploys HCS comprising proprietary middleware solutions, end-user utilities, and precompiled application stack. It develops homegrown compute and storage technologies, and deploys supercomputing infrastructure to meet the rising computational demands of businesses, academia, and research organizations, particularly, under India's National Supercomputing Mission. Two of the company's supercomputers have been listed 10 times in the world's top 500 supercomputers.

As of February 28, 2023, the company has undertaken installations of over 300 Supercomputing systems, over 50 private cloud and HCI installations, over 4,000 accelerator / GPU-based AI systems and enterprise workstations, and HPS solutions with throughput storage of up to 450 GB/ sec.

Netweb Technologies caters to marquee customers across various end-user industries such as information technology, information technology-enabled services, entertainment and media, banking, financial services and insurance (BFSI), national data centres, and government entities including in the defence sector, education and research development institutions (Application Industries) such as Indian Institute of Technology (IIT) Jammu, IIT Kanpur, NMDC Data Centre Private Limited (NMDC Data Centre), Airamatrix Private Limited (Airamatrix), Graviton Research Capital LLP (Graviton), Institute of Nano Science and Technology (INST), HL Mando Softtech India Private Limited (HL Mando), Dr. Shyam Prasad Mukherjee International Institute of Information Technology, Naya Raipur (IIIT Naya Raipur), Jawaharlal Nehru University (JNU), Hemvati Nandan Bahuguna Garhwal University (Hemvati University), Akamai India Networks Private Limited (Akamai), A.P.T. Portfolio Private Limited (A.P.T.), and Yotta Data Services Private Limited (Yotta).

The company also caters to an Indian Government space research organization and an R&D organization of the Ministry of Electronics and Information Technology, Government of India which is involved in carrying out R&D in information technology and electronics and associated areas including Supercomputing.

Business Overview

Company is one of India’s leading high-end computing solutions (HCS) provider, with fully integrated design and manufacturing capabilities. (Source: F&S Report). Company's HCS offerings comprises (i) high performance computing (Supercomputing / HPC) systems; (ii) private cloud and hyperconverged infrastructure (HCI); (iii) AI systems and enterprise workstations; (iv) high performance storage (HPS / Enterprise Storage System) solutions; (v) data centre servers; and (vi) software and services for our HCS offerings. Company are one of India’s leading Indian origin, owned and controlled OEM in the space of HCS providing Supercomputing systems, private cloud and HCI, data centre servers, AI systems and enterprise workstations, and HPS solutions. (Source: F&S Report) In terms of number of HPC installations, the company is one of the most significant OEMs in India amongst others. (Source: F&S Report). Since the inception of the erstwhile sole proprietorship, one of their Promoters, Sanjay Lodha, M/s Netweb Technologies, which their Company had acquired in August, 2016, until May 31, 2023, company have undertaken installations of (i) over 300 Supercomputing systems, (ii) over 50 private cloud and HCI installations; (iii) over 4,000 accelerator / GPU based AI systems and enterprise workstations; and (iv) HPS solutions with throughput storage of up to 450 GB/ sec. For further details of the acquisition of the sole proprietorship.

Company cater to marquee Customers across various end-user industries such as information technology, information technology enabled services, entertainment and media, banking, financial services and insurance (BFSI), national data centres and government entities including in the defence sector, education and research development institutions (Application Industries) such as Indian Institute of Technology (IIT) Jammu, IIT Kanpur, NMDC Data Centre Private Limited (NMDC Data Centre), Airamatrix Private Limited (Airamatrix), Graviton Research Capital LLP (Graviton), Institute of Nano Science and Technology (INST), HL Mando Softtech India Private Limited (HL Mando), Dr. Shyam Prasad Mukherjee International Institute of Information Technology, Naya Raipur (IIIT Naya Raipur), Jawaharlal Nehru University (JNU), Hemvati Nandan Bahuguna Garhwal University (Hemvati University), Akamai India Networks Private Limited (Akamai), A.P.T. Portfolio Private Limited (A.P.T.), and Yotta Data Services Private Limited (Yotta), Centre for Computational Biology and Bioinformatics, Central University of
Himachal Pradesh (CUHP University). We also cater to an Indian Government space research organisation and an R&D organisation of the Ministry of Electronics and Information Technology, Government of India which is involved in carrying out R&D in information technology and electronics and associated areas including Supercomputing.

Over the years what company have designed, developed and deployed some of India’s most powerful Supercomputing systems as set out below: 

The company have recently, in Fiscal 2023, forayed into developing new product lines, viz., Network Switches and 5G ORAN Appliances.

Network Switches and 5G ORAN Appliances are critical to the data center industry for enterprise IT, and the telecommunication industry for enabling 5G services, and are expected to (i) address the dearth in Indian network switch market which has significantly fewer Indian network switch OEM; and (ii) reduce India’s dependency on foreign OEMs. Adoption of high throughput – low latency network switches in data centres and 5G networks has been proliferating at a very high pace which further necessitates higher security, reliability, and greater operational efficiencies with lower latencies. (Source: F&S Report) company have recently introduced 5G cloud on core and edge for an international telecommunication service provider.

The company operate out of their manufacturing facility located in Faridabad, Haryana (Manufacturing Facility) which is equipped with capabilities to (i) design, develop, manufacture and test our products, and (ii) cater to our software and service portfolio. In addition to their registered office in Faridabad, we have 16 offices across India. Our Manufacturing Facility has received ISO 9001:2015 (Quality Management System), ISO 14001:2015 (Environmental Management System) and ISO/IEC 27001:2013 (Information Security Management System) certificates from International Benchmarking & Certifications.

HCS Offering

Supercomputing system: Supercomputing systems are bespoke, and tailored with specialised hardware designs and architecture and cater to varied customer specifications. Company's ercomputing systems use our ‘Tyrone’ cluster management suite which is an integrated set of software components that can be deployed in a variety of configurations. We have deployed diverse Supercomputing systems ranging from 10 nodes to 400 nodes, catering to different requirements of our Customers, and our Supercomputing systems are scalable up to 1,000 nodes. We have established a Supercomputing testing facility where we test parallel computing codes to inter alia check the integrity of the system. Further, the Indian Supercomputing systems market size in Fiscal 2022 (E) was USD 493 million.

Private cloud and HCI: Company's private cloud and HCI offering, which is built and sold under their Tyrone brand, offers hyper-converged capabilities i.e., combining compute, storage, and network, thereby enabling us to provide a bespoke hardware and curated software stack. Our private cloud and HCI offerings comprise (i) private cloud; (ii) hybrid cloud; (iii) cloud tools; (iv) HCI; and (v) cloud native storage.

Tyrone based private cloud and HCI offerings are efficacious product offerings which in a short time frame has enabled us to compete with foreign HCI OEMs, virtualization Independent Software Vendors (ISVs), private cloud platforms and general computing rigs. Further, the Indian private cloud and HCI market size in Fiscal 2022 (E) was USD 2,369.20 million. 

AI systems and enterprise workstations: Our AI systems and enterprise workstations address requirements of Supercomputing, machine learning and deep learning, and are equipped with our proprietary containerised application solution (viz., Tyrone ) to address standalone parallel compute intensive applications. Our AI systems and workstations are designed to support a wide range of applications such as. computational fluid dynamics (CFD), computer aided design (CAD) and computer aided manufacturing (CAM). We have recently deployed our first blockchain based AI systems based facility. Further, the Indian AI systems and enterprise workstations market size in Fiscal 2022 (E) was USD 261.60 million.

HPS solutions: Company is provide high throughput and high IOPs storage for enterprise computation users. Company HPS solutions comprise unified storage solution (viz., an upgraded version of Opslag FS2), cloud native storage (viz., Tyrone), parallel file system storage (viz., Tyrone) surveillance, archival and object storage (viz., Tyrone with Fluid Input Output). Other salient features of our HPS solutions include ‘no single point of failure’ (i.e., a system will not fail if an individual part or component fails), scalability up to Exabytes (1 exabyte = 1 trillion megabytes), and high availability. Our HPS solutions are capable of being integrated into private and public cloud environment.
Further, the Indian HPS solutions market size in Fiscal 2022 (E) was USD 678 million.

Data centre servers: Company have designed and built an extensive range of over 200 dual processor server models under our brand ‘Tyrone Camarero’, catering to disparate customer needs from entry level servers to highend ‘mission-critical’ servers. Company is ability to design the systems platform enables us to constantly improve and customise their offerings to address specific requirements such as low rack space consumption, high energy efficiency, wide accelerator/GPU support, high in-built storage capability (up to 1 petabyte, i.e. 1 million gigabytes (1015)) and ‘all flash storage servers’ (i.e., a storage infrastructure containing only flash memory drives instead of spinning-disk drives). Further, the Indian data centre servers market size in Fiscal 2022 (E) was USD 3,265 million.

Software and services for HCS offerings: Company provide private (on-premises and off-premises) cloud software stack designed for managed Kubernetes, open stack services, AI-machine learning and deep learning as a service, containers as a service, and handle complex workloads (including 5G enterprise cloud, 5G edge compute, private 5G and enterprise IT).
Company ‘Big Data’ centric solutions use Tyrone Camarero dense systems, Tyrone Cluster Management Suite and Tyrone Collectivo range of specialized storage systems. Our ‘Big Data’ centric solutions are designed to cater to data intensive distributed applications under a single umbrella. 

Company products and solutions offerings sold under ‘Tyrone’ brand are supported by our engineered solutions: 

Company's Product Portfolio

HCS

Supercomputing system
The company are one of India’s largest manufacturer of Supercomputing systems. (Source: F&S Report) company have a specialised Supercomputing testing facility through which they test parallel codes for quality assurance of their Supercomputing systems. Over the years, company have designed, developed and deployed some of India’s most powerful Supercomputing systems including AIRAWAT, and PARAM Ambar. Further, one of their Supercomputing systems, PARAM YUVAII is one of the India’s fastest and largest hybrid supercomputer as on date and another one of our Supercomputing Systems AIRAWAT is also India's largest and fastest AI supercomputing system.\

Private cloud and HCI
Company's private cloud and HCI offering, which is built and sold under their Tyrone Skylus brand, offers hyper-converged capabilities i.e., combining compute, storage, and network, thereby enabling us to provide a bespoke hardware and curated software stack. Our private cloud and HCI offerings comprise (i) private cloud; (ii) hybrid cloud; (iii) cloud tools; (iv) HCI; and (v) cloud native storage. Tyrone Skylus based private cloud and HCI offerings have emerged as an efficacious product offering in a short time frame and has enabled us to compete with foreign HCI OEMs, virtualization ISVs, private cloud platforms and general computing rigs. Since inception until May 31, 2023, we have undertaken installations of over 50 private cloud and HCI to marquee Customers such as Graviton, Akamai A.P.T. Portfolio, and Yotta Data.

AI systems and enterprise workstations
Company's AI systems and enterprise workstations address requirements of Supercomputing systems, machine learning and deep learning, and are equipped with their proprietary containerised application solution (viz., Tyrone Kubyts) to address standalone parallel compute intensive applications. AI systems and workstations are designed to support wide range of applications such as CFD, CAD and CMD. Since inception until May 31, 2023, company have undertaken installations of over 4,000 accelerator / GPU based AI systems and enterprise workstations for marquee Customers such as IIT Jammu, IIT Kanpur, IIIT Naya Raipur, JNU, HL Mando, Hemvati University, and Airamatrix. 

Strength of the Company

One of India’s leading Indian origin owned and controlled OEM for HCS with integrated design and manufacturing capabilities

Company is one of India’s leading Indian origin owned and controlled OEM for HCS with integrated design and manufacturing capabilities. (Source: F&S Report) company design, manufacture and deploy our HCS comprising proprietary middleware solutions, end user utilities and pre-compiled application stack. Company deep expertise in system design and architecture, has helped us innovate and build bespoke solutions. Further, our proprietary designs are cloud native which, in addition to technological benefits, are capable of catering to the evolving needs of Customers.

The company is one of the few players in India who can offer a full stack of product and solution suite with comprehensive capabilities in designing, developing, implementing and integrating high performance computing solutions. Company are also an Indian origin OEM to build Supercomputing systems, private cloud and HCI, data centre servers, AI systems and enterprise workstations, and HPS solutions under the ‘Make in India’ initiative of the Government of India.

Long standing relationship with a marquee and diverse customer base

We design, develop, and implement their entire solutions package which helps them engage with their Customers in a more holistic manner. This enables them to embed ourselves within the institutional framework of their Customers and helps in customer retention and repeat business. Company diverse customer base spread across different Application Industries demonstrates the suitability of their systems, design and architecture across disparate applications. Further, company also provide comprehensive implementation and service support which ensures that to cater to end-to-end needs of our Customers, which they consider to be one of the factors that enables them to attract new Customers.

Company's marquee Customers include IIT Jammu, IIT Kanpur, Airamatrix, NMDC Data Centre, Graviton, INST, HL Mando, IIIT Naya Raipur, JNU, Hemvati University, Akamai, A.P.T. Portfolio, Yotta Data, CUHP University, an Indian Government space research organisation, and an R&D organisation of the Ministry of Electronics and Information Technology, Government of India which is involved in carrying out R&D in information technology and electronics and associated areas including Supercomputing. Our customer accretion between April 1, 2020 and March 31, 2023, had grown at a CAGR of 11.26%.

Revenue from operation from top 10 Customers and top 5 Customers as a percentage of their revenue from operations during Fiscal 2023, Fiscal 2022 and Fiscal 2021 is set below:

Company's Strategy

Expanding and augmenting our product portfolio

Currently, company have a manufacturing agreement with a third-party entity pursuant to which such entity has been appointed as a contract manufacturer for the purpose of manufacturing server motherboards and related printed circuit board (PCB) assemblies using surface mount technology (SMT), for their products. In order to manufacture our products, without any reliance on any third-party entity,  company propose to set up a manufacturing facility at Plot No. M12, Pocket 14, Faridabad Industrial Town (FIT), Sector 57, Faridabad, Ballabhgarh, Haryana -121004 towards setting up our new SMT line which is one of the Objects of the Offer.

Expanding geographic footprints in EMEA (i.e., Europe, Middle East and Africa)

The company has HCS provider based in India catering to many Indian and multinational Customers based in India. Company's focus over the years has been to build our technological, and their design and development, capabilities and their customer base demonstrates their ability to compete successfully in a highly competitive market like India. Company, now, propose to expand and grow their geographical footprint in EMEA by offering the following HCS, (i) private cloud and HCI, (ii) HPC solutions, (iii) AI systems and enterprise workstations, and (iv) 5G products and solutions, where our Company has already established its footprints. Further, the 5G market in European and Africa countries is expected to grow at a CAGR of 45.7% between Fiscal 2023 and Fiscal 2029. (Source: F&S Report) and propose to focus on 5G IT infrastructure roll-outs that require their specialised solutions and leverage their existing strengths. The company already cater to a number of Indian multinational companies that have operations overseas and company propose to start by leveraging their existing relationship to expand their business and cater to the international operations of such companies. 5G is expected to drive growth in businesses globally.

The 5G market in European and Africa countries is expected to grow at a CAGR of 45.7% between 2023 and 2029. Mobile service providers in the Asia Pacific region intend to invest USD 227 billion on 5G deployments between 2022 and 2025. 5G networks, cloud services, edge computing, artificial intelligence (AI), big data, and the Internet of Things will all be key to fully achieving the promise of a post-pandemic digital economy. These new networks are aiding in the transformation of business and manufacturing in addition to enabling cutting-edge new consumer services and fostering economic growth. (Source: F&S Report) While, thus far, our growth has been organic and through developing our product and service portfolio, we may also, in future, consider and evaluate inorganic growth opportunities, in India or overseas, if and when, commercially viable opportunities arise. 

Deepen our penetration across verticals

Currently, company's HCS offerings cater to various Application Industries such as information technology, information technology enabled services, entertainment and media, BFSI, and government entities including the defence, education and research development institutions, national data centres such as NMDC Data Centre. The company strive to expand verticals namely oil and gas in India, and deepen their penetration across sectors such as the automobile sector particularly in western and southern region of India, BFSI clusters in the western region of India, and multi-sector corporates in order to expand their customer base.

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Industry Analysis

Global Enterprise Networking Market

Overview
The global enterprise networking market was USD 67.3 Bn in FY 2022. The market is forecasted to be USD 70.8 Bn in FY 2023 and is expected to reach USD 96.7 Bn by FY 2029 with a CAGR of 5.3% over the forecast period (FY 2023-2029).

Global Network Switches Market
One of the markets expected to grow under enterprise network is the enterprise network switches market. The global network switches market is expected to be USD ~8.3 Bn as of FY 2023. The market is expected to grow with a CAGR of 6.5% between FY 2023 and FY 2029.

The market for network switches is anticipated to grow because of the increased need for data centres worldwide, the need for simpler networking communication management & automation, and rising investment in digital platforms. Also, the necessity for effective administration of telecom services has grown as a result of the fierce rivalry among telecom service providers worldwide. The need for network switches is anticipated to rise as the number of data centres run by telecommunications service providers, cloud-based solution providers, and government organisations increases.

Additionally, it is predicted that the market will rise during the forecast period (FY 2023-2029) due to rising internet penetration. However, it is projected that concerns with device compatibility and bandwidth fluctuation will impede the growth of the global market for network switches. Unfortunately, the market for network switches is also being constrained by their high operational costs.

Key players in the global network switches market are Cisco, Arista and Juniper

India Enterprise Networking market

Overview
The India Enterprise Networking market was USD 1,269.4 Mn in FY 2022. The market is forecasted to be USD 1,382.4 Mn in FY 2023 and is expected to reach USD 1,984.1 Mn by FY 2029 with a CAGR of 6.2% over the forecast period (FY 2023-2029). 

Companies, such as CISCO Systems is witnessing greater adoption as an enterprise networking service provider in India in areas, such as defence, weather and climate prediction, academic research, semiconductor industry, automotive industry, and oil & gas sectors.

By Product Type

India Enterprise Networking market by product is segmented into Ethernet Switches, Routers and WLAN. Ethernet Switches held the largest share in FY 2022 and is expected to reach a value of USD 1011.9 Mn by FY 2029 at a CAGR of 5.6% over the forecasted period (FY 2023 - FY2029)

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Management of the Company

Sanjay Lodha is the Promoter and the Chairman and Managing Director of our Company. He has been associated with our Company as a director since September 22, 1999. He holds a bachelors’ of arts (honours degree) in economics from the University of Delhi and a post-graduate diploma in business management from Apeejay School of Marketing, New Delhi. He has been leading the Strategy and Business Development department of our Company from the year 2016. He was the sole proprietor of the proprietorship, M/s Netweb Technologies since 1996 which was acquired by our Company in August 2016. He has been a part of the Governing Council of Manufacturers Association of Information Technology from 2016 to 2022 and currently serves as a Vice President with effect from June 30, 2022. He has also served on the Board of Advisors for Intel for the year 2020 and 2022.

Navin Lodha is the Promoter and the Whole Time Director of our Company. He has been associated with our Company as a director since September 22, 1999. He holds a bachelors’ degree in commerce from Shaheed Bhagat Singh College, University of Delhi. He leads the west zone of our Company’s sales and marketing department and has over 15 years of experience in sales and marketing. Prior to joining our Company, he was associated with the erstwhile proprietorship of our Chairman and Managing Director, M/s Netweb Technologies since 2008 until its acquisition by our Company in August 2016. 

Vivek Lodha is the Promoter and the Whole Time Director of our Company. He has been associated with our Company as a director since April 13, 2015. He holds a bachelors’ degree in commerce from Shaheed Bhagat Singh College, University of Delhi. He leads the east zone of our Company’s sales and marketing department and has over 15 years of experience in sales and marketing. Prior to joining our Company, he was associated with the erstwhile proprietorship of our Chairman and Managing Director, M/s Netweb Technologies since 2008 until its acquisition by our Company in August 2016.

Financial Performance

Vertical wise performance

Key Performance Indicator

Profit and Loss

Balance Sheet

Cash Flow Statement

Risk Factors

• Raw material related issue
• Forex volatility
• High competition

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