Role Model
Carving a Niche
 Rajiv Mehta, CEO, Innovative Enterprises, is an entrepreneur who swears by specialization. He believes IT solutions providers can provide real value only if they delve deep into a particular domain
By Tabrez Khan
“Our thoughts create our reality. Where we put our focus is the direction we tend to go,” said Peter McWilliams, an author known for his self-help books. Rajiv Mehta’s focus took him where not many IT solutions providers would dare to go.
Mehta, CEO and founder of Innovative Enterprises has built and grown his business focusing solely on imaging and printing solutions, when conventional business logic suggested that he maintain a broader products portfolio.
Mehta started his IT career in 1994 by launching Innovative Enterprises along with a small team comprising three employees. The turnover in the first year of operation was a modest Rs nine lakh.
Innovative initially sold typewriter components, but soon shifted to selling inkjet printers as typewriters became obsolete. By 2001, the company had diversified into selling all types of IT products. As the competition in the hardware segment intensified and margins began to dwindle, Mehta felt that being a jack of all trades will not get him anywhere.
Trigger for change
“Profitability was key to my business strategy. Being an IT supermarket meant that we had to focus on volumes, and margins took a back seat. Also, it made our company just like any other company that sold all IT products. I felt the need to create a brand identity that would make us distinct and reflect our skill-sets and quality of service. That’s when we decided to specialize in one area,” opines Mehta.
That area of specialization was imaging and printing. Why not server and storage? “We had sold typewriters and printers earlier and hence already had the skill-set. Also some of our large customers were printer customers, hence it was logical,” he states.
What also prompted Innovative to specialize in imaging and printing was the strong rapport it shared with the HP IPG team. Little wonder then that Innovative has been rated as HP’s leading IPG partner in the country for nine consecutive years. HP’s product portfolio contributes to about 40 percent to its current turnover. Innovative currently deals with HP, Canon, Samsung, Kodak and Epson.
Key differentiator
What sets Mehta apart from other partners is his ability to constantly be ahead on the technology adoption curve. A characteristic evident from the company’s foray into managed print services (MPS) in 2006 when the concept was in a nascent stage, at least among channels. “We saw that organizations were increasingly interested in focusing on their core competence rather than on IT infrastructure and would like to outsource IT-related services. They were keen to convert IT CAPEX to OPEX and did not see value in looking for hardware, supplies, and services from time to time. They realized that contract printing delivered better ROI. That encouraged us to launch MPS,” says Mehta.
Innovative today manages some of the largest MPS accounts in the country. At Reliance, it manages a contract worth one million prints per month, while at a Tata group company it manages 4,00,000 prints a month. At another large corporate, Innovative is doing half a million prints. MPS accounted for 25 percent of Innovative’s Rs 25 crore turnover in 2009, and the company has invested a great deal in setting up a remote management center. “The volume of contract is an indictment of our belief that having a niche helps you create brand equity and customer loyalty,” opines Mehta.
In 2007, Mehta added the display business to its portfolio, selling large format displays, video wall, and conference and training room solutions. Video wall is a solution used in the manufacturing sector on the shop floor to manage process controls using touch display. “Our entry into the display solutions segment wasn’t planned. Some of our large customers needed the solution and because they shared a great rapport with us they asked us if we could deploy it for them. That’s how we got into it,” says Mehta. Today, the display business contributes nearly 20 percent to the company’s overall revenues.
The next big wave Mehta has identified is the managed imaging business and he is extremely excited about the vastness of the opportunity. “Indian companies are sitting on piles of important paper documents all stacked in large warehouses. They have no option but to archive them as the regulation requires it. Many companies are increasingly looking at scanning these paper records and archiving them electronically using information lifecycle management tools and this will be the next big opportunity,” he informs.
Innovative is currently working on a couple of pilots. “Currently, we are piloting a few multi-crore projects. As the deals are in an early stage, they could go either ways. However, what is most certain is the size of the opportunity. In fact, we have done the ROI for our customers and the cost savings in terms of warehouse space freed up alone, by digitizing paper documents, is very attractive,” he claims.
What’s in store
Numbers last year haven’t been as per expectation. Innovative grew marginally in FY2008-09 posting a turnover of Rs 25 crore compared to Rs 24 crore topline in the previous fiscal. Even this year, the company doesn’t expect a significant growth. But Mehta is unperturbed. “The overall economic scenario wasn’t favorable and hence we didn’t achieve our topline target. But we did improve our profitability significantly. Our numbers are the best in the industry.”
Innovative doesn’t hesitate in dropping customers if they err on timely payment or bargain too hard. “Many large enterprises are not very prompt with payments and in many such cases we have taken the decision not to work with them no matter how big the size of the contract. For gross margins of 6-7 percent, if one has to spend 3-4 percent on collections, what business sense does it make?” asks Mehta, rhetorically.
The future is innovative
As has been the case with Innovative since inception, the company plans to create a lot of innovation around its service offerings in keeping with customer needs.
While he is a little reluctant to share his future plans, he states, “We have identified several new types of products and services and are talking to vendors with specialized solutions that can be offered to the Indian market. These vendors don’t necessarily have a presence in India.”
Next on the cards is geographical expansion. With MPS business growing at a fast pace and size of deals increasing, Innovative feels the need to increase its coverage to support large customers. “The plan is to open branches and form alliances in other regions to expand our business,” he opines.
Security and surveillance is another area that excites Mehta who believes that the current threat scenario prevailing around the world is prompting not just the governments but even the private sector to invest in physical security.
Innovative has already earmarked large investments in growing its business over the next three years. “We have laid down our plans for next three years. Over this period we plan to double our turnover. We are not in a vertical where we can double our business each year, so if we achieve the above target it will be great,” says Mehta.
Man behind the business
Mehta’s role mode is JRD Tata, “JRD was one business leader who always walked the talk. He never hesitated while speaking about relevant issues. He set new standards of business ethics and integrity for corporate India. The fact that Tata is such a trusted brand today is largely due to the high corporate governance standards set by JRD.”
Just like his role model, Mehta also believes that for a business to succeed it needs to have a strong value system. Mehta attributes Innovative’s success largely to his employees, many of whom have been with Innovative for more than five years. “Managed service is a customer-focused business. You work at customer premise and hence you have to set excellent standards of servicing, which my team has proudly achieved and the success is owing to that and that only,” he adds.
Mehta reckons that his wife has also been a big contributor to his success. “My wife takes care of the consumables business. She is my pillar of strength,” avers Mehta.
So what are his personal interests? “I love high-altitude trekking and I had the good fortune of trekking up to Mount Everest base camp four years ago,” says Mehta. “Reaching the base camp, located 18,000 feet above sea level was a tremendous feeling in itself.”
Not someone to rest on his laurels, Mehta perhaps would be looking for more mountains to climb in his personal and business life in the days to come. |