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“We will soon launch our brand of motherboards and memory”
 Sudeep De, Business head for IT peripherals at Moser Baer India, is responsible for driving the company’s IT business. He spoke to Sharmee Roy.
Last year, Moser Baer announced plans to launch IT peripherals. What are the latest developments in that area? Why has the company maintained such a low profile since then?
As an organization, we work in a subtle manner and resist tom-tomming. We try to get our basics right and build on them. We are in a stabilizing mode, and things are shaping up quite well for us.
On the products front, we have launched 15-inch LCD monitors this month, and are planning to launch the 19-inch and 22-inch versions soon. After this, we have plans to introduce 17-inch and 24-inch monitors.
Secondly, we are getting on with more models in the speaker space as well. The first model was launched two months back; we will launch five new models by year-end.
Give us an overview of your current distribution set-up. Are all your distributors pushing the entire range? What kind of changes have you made in the distribution line-up?
We follow a three-tier channel model. At the top we have three national distributors: Neoteric, Salora and Ingram Micro. Neoteric and Salora were taken aboard in September last year when we launched the IT vertical. Ingram Micro is the latest addition, and was signed up in May. Below them we have sub-distributors who are city-specific, and in turn sell products to resellers/retailers. For each product category we have 300 partners, and 85 percent of these sell all the products in IT space. However, for the USB and memory business, we have an open-ended channel. It is more of press billing, where the count goes up to 700 partners.
The three distributors have been assigned a mix of products; not all are doing the entire range. USB drives and DVD writers are the only products to be distributed by all.
Salora is exclusively handling our peripherals business. They have created a special IT vertical to handle the IT peripherals. Neoteric is handling four product categories—USB drives, memory cards, DVD writers and external hard drives. Ingram is pushing seven categories—DVD writers, memory cards, USB drives, LCD monitors, external hard drives, UPS’ and accessories.
There have been a few changes after we brought Ingram into the loop. Earlier, Salora was also handling the memory card business for us, but we have taken them off that. Prior to setting up a separate IT vertical, Salora was distributing the memory cards through their common sales force for the telecom industry. With this new vertical, we thought it was a distraction for them, and hence we gave it to Ingram.
How does your channels benefit from selling your products?
We have retained 97 percent of the partners we started working with one year back, and over time have added a lot more channels. Because we have to be competitive in the market, we cannot offer huge margins to our partners; it is not a margin game for us. However, we have never failed on our promises to partners. On the average, partners get to make margins of about 3.5 percent.
We are competitive, and every product has its own positioning. We offer our customers value for money. We are not in a market share grabbing mode right now, and are hence trying to place the products at an arm’s length for our customers.
Are you also looking at retail? Any specific strategy in this space?
We have an LFR strategy in place, and we are in talks with all the majors in this space. We already have tie-ups with Jumbo, Salora’s Terminal and Vishal Megamart. Now we are talking to Croma, Reliance and the Future Group. These are the big three that we are in hot pursuit of, and we expect to get onboard with them this month. Our idea of getting into LFRs is more to create visibility in the market than to get volumes out of it.
You already have 12 product categories in the market. Any plans to add more?
We will get into motherboards and RAMs. Motherboards will be introduced in March next year. However, we are still pondering whether to introduce RAMs in December or February or post-budget.
With so many products, are there any specific ones you would like to focus on more?
In terms of product categories, our focus is primarily on LCDs, USB drives and memory cards. This is in line with our plans to start a manufacturing unit for these products in the country. We will begin manufacture USB drives and memory cards, then gradually get into the manufacture of LCD monitors. The tentative timeline for the manufacturing unit is sometime next year, but the details are yet to be worked out.
Brief us about your service support.
So far Neoteric’s support arm, F1 Services, has been providing support services as our national ASP for the entire product range across 44 locations. However, we are also thinking of providing support services of our own since we have also entered the consumer electronics space. But any decision on the same will take at least two quarters.
How have you grown over the last one year?
Last year in September, we launched the IT peripherals vertical. Since then, there hasn’t been a month when we have done less business than in the previous month. In the DVD writer space, we have been growing month-on-month at 20 percent and we have already achieved more than 15 percent market share in this segment—close to our target of 20 percent. We have moved to the number three spot in USB drives, and maintained that position over the last two quarters. In memory cards, we are now ranked number four.
We have been able to spread fairly well across the country, covering 56 metros and non-metros, including tier-2 and tier-3 cities such as Silchar, Gaya, Bhagalpur and Sambalpur. The idea has been to strengthen ourselves in the metros first, then move to these cities.
Going forward, what would be your focus?
Our focus now is to consolidate, get the right mix of partners, and get the correct sales team in place. When we started off we had four people in our team; today we have expanded it to 20.
Besides this, we have also planned certain restructuring in the organization. As part of this, we will split the southern market into South One and South Two. South One will include Karnataka and Kerala, South Two will comprise AP and TN.
Later on, we might consider bringing in another distributor for the peripherals and accessories business that we plan to get into. However, it is too early to discuss anything on that front. Our endeavor is to be among the top three players in the segments we operate in. |