Channel Chief
 “We’re targeting Rs 5,000 crore by FY2013”
With a number of partnerships with the likes of Cisco, Dell and Microsoft, Compuage Infocomm is aiming at an aggressive growth trajectory. Managing Director Atul Mehta discusses plans and strategies for 2010 and beyond, with Dhaval Valia
Three years ago Compuage chalked out an exponential growth strategy to achieve a turnover of Rs 2,400 crore by the end of FY2010. Are you on track to achieve this target?
In FY2007 we had set a three-year target to grow from Rs 300 crore to Rs 2,400 crore, or 100 percent every year. The unexpected slowdown has put us behind our target by a couple of years. We now expect to close FY2010 at Rs 1,050 crore, up from the Rs 803 crore posted during the last fiscal.
However, if you see our growth trajectory, we have grown must faster than the rest of the industry with a CAGR of more than 50 percent over these three years.
What has been your growth strategy for the last 12-18 months, which have been the toughest for the IT industry in almost a decade?
We have focused on achieving organic growth by adding new products and brands to our portfolio, improving our market penetration especially in smaller cities and towns, and improving our value proposition for both vendors and channels.
In the past 12-18 months, we have expanded our product portfolio significantly. We became the national distributor for HP IPG. We consider this a remarkable achievement because we began our HP relationship only in 2007 as a distributor for the northern region, excluding NCR. This means that in two years we have been elevated to selling their entire portfolio across the country.
Toward the end of last year we became the LFR distributor for Dell consumer products, and from the beginning of 2010 we have strengthened this partnership by signing up as their distributor for mini-notebooks (netbooks) in the western and southern regions. We have also signed up with HCL to distribute their notebook range in the western region.
On the software side, we added Microsoft’s volume licensing business in July 2009, and have been appointed a distributor for Tally for the western region. We recently signed up as national distributor for Cisco’s portfolio which includes small business and fast track products.
Over the last year we have consolidated our relations with AOC, and today we cover 60 percent of their distribution, geographically.
Toward the end of 2009 we expanded our relationship with Kingston to distribute their entire range of products including DRAM modules, USB drives and memory cards. Earlier, we distributed only their USB drives.
All these new partnerships and the strengthening of existing relationships have boosted our growth.
Last year, Compuage refreshed the Odyssey brand. Has that improved the brand visibility and business?
We felt the need to instill some novelty in Odyssey, hence we initiated a complete brand refresh. The new branding aims to position Odyssey as a value-for-money brand. We want to sell a range that provides the best possible price-performance with the best post-sales support. As of now, we have speakers, keyboards, mice, PC power supplies, cabinets and TV tuner cards under our brand.
Are there any product areas where Compuage needs to strengthen its portfolio?
There are two areas where we think we need to add products. One is on the component side, where we are looking to add processors and motherboards to our portfolio. The other category is that of commercial PCs and servers. In fact, in October 2008, we had signed up with HP to distribute their commercial PCs and volume servers, but owing to the slowdown that followed we mutually decided not to activate the partnership. There is a probability that we may activate the HP relationship in case the vendor is willing.
Some distributors like Rashi and Neoteric have quit HP business as it wasn’t profitable. What’s your policy?
If you are asking me if our HP IPG business is profitable, then clearly it is. And that’s why we are growing our engagement with HP. However, as a distributor we are absolutely sure that we don’t want to continue with products which don’t meet our gross margin criteria. In the recent past, we gave up the Viewsonic and Western Digital portfolio because they failed to meet our profitability parameters. In future too we will not hesitate to discontinue brands which don’t meet our bottomline goals.
What’s the focus for 2010?
Over the past one year our focus has been on creating a value proposition for partners and vendors to do business with us. In essence, we want to make it easier for them to work with Compuage. We realized that to achieve this we had to work on two aspects—systems and processes, and people. We have considerably streamlined our processes to make it easier for resellers to deal with us. We are now in the process of launching a platform which will allow resellers to log their orders online with us.
Additionally, we have reorganized our teams to create a stronger personal interface with resellers. We have created a sales organization that is completely focused on reseller engagement. At every branch we have appointed two experienced sales executives—one with the responsibility for driving reseller engagement and sales in the city, the other with the responsibility for driving business among resellers in upcountry locations surrounding the branch.
For commercial products, we have appointed account managers in 14 of our branches; their main role is to help the commercial partners do business with us in the most efficient and easy way.
We have also strengthened our HR and credit management operations by putting experienced managers from our team to head them. You will see us investing a lot in HR training. Our aim is to do, every quarter, at least three to four HR and sales workshops that address the specific needs of various teams in the organization.
What’s your outlook for 2010?
Our overall outlook is bullish. We think that we have seen the worst behind us. We should now see a strong economic recovery. There is already a lot of pent-up demand in the market because Indian companies haven’t been buying in the last 12-18 months. Overall, the IT market is expected to grow at 20 percent.
For Compuage, the target is to grow by more than 50 percent to cross Rs 1,750 crore in FY2011. We have already aligned our internal resources and vendor targets to achieve this turnover.
The focus throughout the next fiscal would be to grow our commercial products business a lot. At present, our commercial portfolio—consisting of Microsoft, Cisco, APC, Tyco and HP IPG—contributes less than 20 percent to the topline. We aim to increase this to 30 percent by the end of the next fiscal.
By March 2010, we plan to finalize the blue-print for the next three years. We have set a target of achieving Rs 5,000 crore in topline by the end of FY2013.
Considering that you are a public limited company, are you looking at raising more funds, maybe through a preferential allotment or follow-on offer?
For the next fiscal we have already aligned our capital needs with our growth targets. However, we definitely need infusion of capital to sustain the fast-paced growth we have planned over the next three-year term, and for this we are considering a preferential allotment to the existing promoters. |