Role Model
Secunderabad-based IT distributor M Venkateshwara Rao, Managing Director, SV Electronics, has a simple formula to make any debutant product into a runaway hit: ensure perfect promotion and offer best after-sales services
CRN Network
 A BSc graduate from Andhra Pradesh (AP) University, M Venkateshwara Rao always believed in aggressively pursuing dreams. So in early 1984, soon after his graduation he took a plunge and set up Shree Venkateshwara (SV) Electronics with Rs 35,000 as an initial investment. The company started dealing in active and passive electronic components and catered to SOHOs and SMBs.
In 1990, Rao began importing Epson’s mini-printers. It was then that he caught on to the pulse of the IT market. So in 1991, he decided to start selling PC building blocks which soon became the core business of the company. Subsequently, he also split the business across two companies with SV Electronics Limited (SVEL) handling the IT business and SV Electronics managing electronic components business.
After tasting success in distribution of IT components, SVEL launched its own PC brand Savvy in 1997. Savvy soon became the most sought after brand in Andhra Pradesh. “By 2001, the brand was worth Rs 40 crore in annual revenues. We became the largest regional PC OEM,” Rao offers.
However, 2002 turned out to be a challenging year for SVEL. With MNC brands gaining ground, the company’s PC brand witnessed a negative impact.
“By 2002, MNC PC vendors had become very aggressive with their pricing and go-to-market. This impacted our PC business, which in turn compelled us to focus on other streams of IT business,” he informs.
Instead of wasting time ruing Savvy’s fate, Rao decided to focus on IT distribution. The company already had a channel selling its own PC brand and hence the option came easily to them. SVEL’s big break happened when Microsoft came looking for a sub-distributor. “We presented Microsoft with a complete plan of how we will help them increase penetration for their products. They were impressed by our presentation and made us their SD.”
After bagging Microsoft, SVEL moved to expand its portfolio. The company now deals with almost all the major brands including Intel, Samsung, LG, Canon, Epson, Acer, Mercury, Seagate, HP, IBM, AMD, Gigabyte, Sony and Asus. The company has emerged as the largest distributor for Epson, Microsoft an Sony in South.
Current business
In FY2008-09, SVEL saw a turnover of Rs 101 crore, and in FY2009-10, it clocked Rs 110 crore. The company could have done more business had it not been for the unrest in AP on the issue of a separate Telangana state. “Over the last three months, we could do business only for 15 days and this affected our targets significantly,” he states.
Nearly half of the turnover last year came from distribution while the remaining came from retail (25 percent), solutions and services (5 percent), corporate reselling (15 percent) and system building (5 percent).
According to Rao, a major reason for the growth in topline and bottomline of its sub-distribution business during the last 12 months has been its partnership with Belkin. “While PC sales declined, accessories sale increased. Also the profit margins are great in this business thus helping us boost our bottomline.”
Another growth area for SVEL, over the past couple of years, has been its retail business. It has eight large multi-brand showrooms across the twin cities of Hyderabad and Secunderabad. In addition, the company also has several small footprint multi-brand notebook stores across AP called Laptop Zones-exclusively selling notebooks and accessories. Another emerging area of focus for the sub-distributor has been the corporate reselling business.
Rao says that the USP of SVEL is that it takes full ownership of the brand it distributes. Giving an
example of F-Secure, the brand it began distributing in 2005, he informs, “F-Secure was a late entrant in the market and hence we took full onus of making the brand successful. Not only did we train and enable the distribution channel to sell their products, we also marketed the products among businesses to create brand awareness and demand. We created new promotional schemes in addition to the vendor schemes.”
Another important reason for success is the company’s focus on post-sales support. SVEL has dedicated support centers with hardware engineers who can handle all service requests ranging from installation support to troubleshooting and repairs.
“Even after the warranty has expired, we do help partners and customers with post-sales support. This creates a stronger bond with them,” Rao avers.
Money matters
For its sub-distribution business, SVEL follows a stringent financial process. "In the value chain, you have to ensure that every one has a profitable business. So, we tell our vendors that we will only do business if they leave good margins for us as well as our resellers.
Also from our end, we ensure optimum logistics and inventory management to ensure that margins are not compromised," offers Rao.
SVEL claims to have the best inventory management among its peers. “We have a 15-day inventory cycle which is the best in the industry. We put a lot of effort in forecasting, managing logistics and ensuring faster sell out for our partners in order to maintain a short inventory cycle.”
Growth trajectory
Rao hopes to achieve Rs 150 crore turnover in FY2010-11. For its sub-distribution business, the strategy this year is to focus on the existing consumer product range and add new products in the commercial segment especially networking, security and storage.
“IT business is transitioning from hardware to solutions. Hence, as a sub-distributor, we believe that our role is changing from that of a volume partner to a value partner.”
Also, the company is considering deploying automated management service (AMS) platform for its
post-sales support business. “We believe that AMS will help us improve our support and AMC
business greatly. It will improve the turnaround time, and also help us do more business with same number of technical field people,” he says.
People and policies
According to Rao, the biggest problem plaguing IT sub-distribution today is the lack of quality manpower and high attrition rates. “We conduct a comprehensive induction program for all new recruits. To make all our 150 employees feel at ease, I ensure that my door is always open if they need to talk. Be it a monetary problem or a motivational one, I am always ready with a patient ear and a solution,” says Rao.
The company also ensures that interested employees are vendor-certified and takes care of all
certification and training expenses.
Considering the downturn, SVEL couldn’t offer a substantial raise last year, but it did ensure that its employees got healthy performance bonuses.
Personal touch
While growing up with seven brothers, being his own individual self was a tough task. “You are always compared and this gets irritating. However, I am a person of my own mind and probably that’s the reason why I chose a very different profession than my brothers,” he quips.
However, Rao also points the advantage of having a large family. “I have groomed my nieces and nephews to assist me with my business. Many of them are a part of SVEL and manage different parts of the business, thus leaving me enough time to spend on future strategies and plans.”
A peculiar habit of Rao is that he drives his own car. “I haven’t had a chauffeur as I prefer to drive. I am too possessive to hand my vehicle over to someone else. Presently, I drive a Volkswagen Passat.”
Rao is an active member of a social organization called Janhita that is involved in providing education in rural and tribal regions. “Nothing gives me more pleasure than seeing literacy spread its wings. I will continue to work on ground to ensure that every small hamlet in the AP has a school and the next generation achieves 100 percent literacy,” signs off Rao. |