Role Model
Turning adversity into opportunity
Hemant Shah’s success story is a marvelous example of the triumph of hard work over adversity. He started off at the age of 15 by reselling toner cartridges door-to-door. Today, Shah is the Managing Director of Care Office Equipment, a Rs 104 crore company
By Tabrez Khan
Winston Churchill once said, “A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty.” Hemant Shah embodies one of those optimists that Churchill referred to. Shah, Managing Director of the Ahmedabad-based Care Office Equipment, Gujarat’s largest sub-distributor, has had a tumultuous but extremely successful journey so far.
Shah lost his father at the young age of 15 and was forced to drop out of school to work to feed the family. He started by reselling toner cartridges, delivering them door-to-door on his bicycle.
After six years, in 1991, Shah set up his own company in partnership with a friend. Called Canytron, the company focused on providing office automation solutions to corporates.
Although Canytron met with success, clocking an annual turnover of Rs 1 crore by 1996, Shah wasn’t happy with the progress. Quick to observe changing market dynamics and realize new opportunities, Shah felt that office automation alone would not provide future growth. He realized that IT products, apart from fax machines and copiers, were the future of office automation solutions.
Care launched
His partner failed to see the opportunity and refused to diversify into the IT segment. “That’s when I launched Care in partnership with Kamlesh Shah. The year was 1998. We initially sold Panasonic fax machines but soon partnered with HP to sell their color printers to the commercial segment—and met with resounding success,” recalls Shah.
The next turning point for Care came in 2000 when it ventured into retail by opening a showroom selling the full range of HP products. Located on Ahmedabad’s upscale CG Road, the 600 square feet store became a huge draw for consumers, corporates and channels.
Many resellers came to the store to buy in volumes of 5-10 units. Seeing this, Care decided to diversify into sub-distribution in 2002 and became an HP premier partner focusing on the entire product range.
Shah reckons that the most crucial turning point for Care came in 2003 when the company decided to lay more focus on the sub-distribution of consumer PCs. Over the next five years the company emerged as the largest sub-distributor of consumer PCs in Gujarat with monthly sales of 3,250 PCs, including 2,250 laptops and 1,000 desktops out of the estimated 7,500 consumer PCs Gujarat sells.
“One of the key reasons for our success in the consumer PC segment was our decision in early 2007 to lower our exposure to HP’s business and focus on brands such as Acer and Dell. This was due to the fact that margins on HP were getting squeezed, and this didn’t augur well for our bottomline-centric business,” explains Shah.
What followed was a partnership with Acer in 2007 and Dell in 2008, both of which today contribute almost 80 percent to the company’s annual PC sales. “These two brands have provided us a CAGR of 70 percent in the last two fiscals. HP, which earlier accounted for 80 percent of our business, today contributes less than 20 percent,” Shah says.
And now?
An indication of how Dell and Acer have boosted Care’s fortunes is visible from its growth figures over the last two years. The company, which had a turnover of Rs 33 crore in FY2006-07, grew three-fold by FY2008-09 when it posted a topline of Rs 104 crore. While sub-distribution contributed Rs 62 crore, Rs 31 crore came from the retail business and Rs 11 crore came from corporate reselling.
“We started selling Dell in Q12008, and in the first year itself it contributed 40 percent to our topline and 60 percent to our unit PC sales. We sold 9,000 Dell notebooks and 2,000 desktops in the first nine months,” informs Shah.
Today, Care has four retail outlets—a sprawling 14,000 square feet multi-brand outlet and two smaller stores in Ahmedabad, plus one outlet in Vadodara.
So what does Care owe its success to? “Unlike other sub-distributors we are not dependent on vendors for our channel marketing. While our peers rely on vendors to float channel schemes, we run our own, and these are often better than those of vendors. We clear all back-end rebate claims within 10 days. Additionally, we have toll-free tele-support available across Gujarat to provide our resellers with technical help,” Shah says listing out the company’s differentiators.
He mentions one very successful channel scheme which Care recently ran, and which allowed top-performing partners to win an Alto car every month. “It was given to resellers who not only met their monthly target but also bought the right product mix and were timely with payments. So far the company has awarded Alto cars to seven dealers under the scheme,” informs Shah.
Another factor which has contributed to the company’s success is the ERP system it has deployed. Designed by a CA firm, the ERP has a strong built-in credit management system which has helped to ensure timely payment collection and avert defaults. The system has a document flow built-in which ensures that every concerned employee gets an auto-generated daily update about credit outstanding for quick action.
Looking ahead
Despite the slowdown, Care is targeting a turnover of Rs 160 crore in the current fiscal, a growth of over 50 percent. Shah says that such an ambitious target is within reach because in the first half of the fiscal the company has recorded Rs 71 crore in revenue.
“While there has been an acute slowdown in IT spending by corporates, it hasn’t impacted consumer buying at all. We continue to see robust demand coming from consumers. We expect almost cent percent growth in our retail business, from Rs 31 crore during the last fiscal to Rs 60 crore this year. Our distribution business is likely to grow at 20 percent. The other major contribution is expected to come from our consumables business,” analyzes Shah.
Last year Care signed up with a third-party consumables manufacturing vendor, Future Graphics, and expects this business to garner Rs 10 crore during the current fiscal.
For the next five years Care has set a target of 50 percent CAGR on the back of its retail expansion. “Retail really excites us, and our plan is to have 50 of our own stores across Gujarat and other western states under the brand name of Care Solutions Unlimited,” Shah adds.
Care is also looking at newer product categories. Currently, almost 70 percent of its turnover comes from consumer PCs, a business which has been growing at 60 percent year-on-year for the last four years.
Going forward, one of the key strategies is to introduce consumer durables along with other IT products in the business mix. “The divide between consumer durables and IT products is vanishing because everything is becoming digital. Today, we have LCD TVs with built-in USBs. Increasingly, everything has an IT component to it, so it makes sense to sell them all under one roof,” explains Shah.
A second category Care is focusing on is home security products. Last year it signed up with Australia-based Swan Systems, one of the largest providers of home safety and security solutions. “Another area of focus is going to be barcode scanners and printers, for which we have signed up with Argox, Zebra and Symbol,” Shah informs.
Close and personal
Shah’s guiding force in life has been his maternal uncle, Vinod Doshi. In keeping with his down-to-earth nature, Shah chooses not to cite lofty names from the business world as role models, but instead a close relative whom he has observed in real life and imbibed business and personal values from.
Shah’s business philosophy is to live and let live. He seems to have walked the talk on that. Many of the 180 employees at Care have been around for eight years. “Out of the eight directors we currently have in the company, six have risen from entry-level sales persons and junior clerks,” reveals Shah.
On the personal front too, Shah has simple tastes and derives pleasure from the small things of life. He loves music. He’s a fond listener of Mohammed Rafi’s songs, and has a sizeable collection of his music. Once a serious cricketer—having played in under-14 tournaments internationally—Shah prefers to merely watch the game on TV now.
So what would he like to be remembered as? “I don’t covet a big name for myself. I just want to be remembered as a good, down-to-earth and fair person,” the man concludes. |