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Compuage Infocom has recently strengthened its portfolio by adding several leading brands. Atul Mehta, CEO, spoke to Dhaval Valia on the company’s performance highlights in the last fiscal and shared future plans and strategies
Take us through the financial performance of Compuage Infocom in FY2010-11.
We grew by approximately 30 percent in the last fiscal, recording a turnover of Rs 1,414 crore compared to the topline of Rs 1,100 crore in FY2009-10. We witnessed growth across all the verticals we cater to—software, PC components, PCs, peripherals, lifestyle, power protection and networking.
Some of the growth came from the addition of new product lines and part came from geographical expansion which contributed to our existing verticals doing well. We now have 52 branch locations and seven locations where we have strong sales representation. Our active billing coverage has increased to 500 cities. Our growth in the past couple of years has been satisfactory and well above industry growth rates.
Last fiscal you added new product lines. Which of these contributed to the growth of Compuage?
Last year we added many prestigious brands to our portfolio. We expanded our relationship with the HP Imaging and Printing Group (IPG) from a regional distribution to a national role. We distribute the entire HP IPG printer and supplies portfolio countrywide.
We also witnessed remarkable growth from Cisco’s S series products. As a result, in January 2011, Cisco signed us for their Fast Track range as well.
We signed up with Microsoft Hardware, with CA Technologies for their range of backup and recovery software solutions for the SMB segment, and with NEC for their flat-panel display.
We have also been appointed exclusive distributor by Olympus for its camera range for the north and east.
In March 2011 we signed up with Samsung as its regional distributor for Delhi for its entire smartphone range, including tablets.
All these tie-ups happened during the last fiscal, helping us to strengthen our offerings in the market and providing growth.
Then very recently we signed up with HP as the distributor for their consumer business portfolio for the Gujarat region.
What are your growth projections for the current fiscal?
We expect to grow much faster than the industry, and are aiming to cross the Rs 2,000 crore mark. This means that within two years we will have almost doubled our topline.
For us, the current fiscal is for consolidating our IT brands and growing those businesses at higher than industry growth rates, and moving into new non-IT product categories and growing at an exponential pace.
For instance, the Samsung smartphone business has great potential to grow exponentially for us in the current fiscal. In the first quarter itself we have started billing 140 telecom retailers in the Delhi region, and are now engaging with many of the IT retailers.
Also, by our performance, we intend to convince Samsung to give us a larger geographical mandate. We are confident of covering a couple of more regions for Samsung within the next six months or so.
Samsung smartphones have been winning significant mind and market share, and this augurs well for our growth plans in the telecom space.
What are the reasons for moving into digicams and smartphones? Will you be selling through your traditional IT channel base or will you tap the traditional camera and mobile phone channels?
Including smartphones in our portfolio has been on our agenda for a pretty long time. With the convergence of smartphones, tablets and PCs, we see this area as the biggest growth engine for the next several years.
We have already made significant investments in this business, and the evidence of this is that we have hired a team of 15 made up of distribution and sales professionals from the mobile industry.
In the case of Olympus too we saw great growth potential and an opportunity to connect with a large channel consisting of traditional camera retailers.
Going forward, eventually, there will be massive convergence of all channels and we as distributors need to be ready for that scenario.
What are the top three priorities for Compuage during the current fiscal?
The first and foremost is to drive efficiency in our business processes and resources—that’s the only way to build a sustainable organization. We have made some progress in this over the past 2-3 years, but I believe it’s not enough and there needs to be a lot more focus on this aspect. We have therefore hired an external consultant to advise on how we can be more efficient in our logistics, credit distribution and collection, optimization of internal resources, etc.
The second focus is to engage with the alternate channels—camera, telecom and lifestyle—and build a strong partner base. Also, to make our existing IT channel sell digital lifestyle products and help them augment their businesses.
Finally, since future growth will come from small towns, geographical penetration will be another core focus. We plan to expand our presence to 70 locations, and while this may not include opening branches in each of the new locations we will have strong sales teams in these regions.
What’s your growth forecast for the IT industry in the current fiscal? Do you expect factors such as high inflation, rising interest rates and increasing cost of living to slow down demand?
I expect the IT industry to grow between 15-20 percent, which is a healthy growth rate.
Rising inflation and the other factors you mentioned will have some impact on demand, but that will not be of much consequence; it might impact growth by 1-2 percent.
India’s GDP will continue to grow at 7-8 percent, and this is enough to drive IT growth. Also, everyone, including the government and private sector, has realized that to sustain high GDP growth information technology will have to play a big role. |