The man who saw tomorrow Rahul Meher,
MD, Leon Computers, walked away from the PC business way back in 2007 because he saw no future in it. He continues to be ahead of the times
Rahul Meher, Managing Director, Leon Computers, always wanted to pursue his own business. His father was the CEO of Aarey Dairy, Mumbai, but the son ventured into the IT business in 1996 and started Leon Computers as a system builder.
Today, the Pune-based company is a name to reckon with for its managed services and software solutions, especially in the manufacturing sector.
After completing his BE (Electronics) from Pune University in 1994, Meher worked for two years in product development for a consumer electronics company, then as a sales executive for an IT firm where he picked up the nuances of business.
Meher started Leon in 1996 with an initial investment of ` 3.5 lakh which was borrowed from his family. He operated from his outhouse in Pune. “We started as a systems builder assembling PCs for the SOHOs and SMBs which could not afford branded PCs in those days.”
In 1997 Meher made changes in his strategy to get into the enterprise segment. He stopped assembling PCs and tied up with Compaq which gave Leon access to SMB and enterprise customers. “We acquired more than 15 SMB customers. Our first large deal was to supply 250 PCs to Alfa Laval which gave us a big boost. Around the same time we also invested in a 2,000 sq ft office in Pune.”
2003 was a turning point for Leon following the HPCompaq merger. “With Compaq we could sell only PCs. By contrast, the HP portfolio was huge, and it gave us the opportunity to pitch more products and solutions to large customers. We became solutions-centric and began
“We exited the PC market in 2007 at a time when PC sales contributed 70 percent to our ` 16 crore topline. Our topline shrunk very significantly, but I wasn’t bothered”
bagging large deals from large customers who were earlier out of our reach,” recalls Meher.
He takes great pride in the fact that Leon was among the first few partners in 2007 who decided to venture out of the PC market. “Today we see a lot of partners getting out of the PC business saying there are no margins. We made that decision in 2007 at a time when PC sales contributed nearly 70 percent of our ` 16 crore revenue. We saw our topline shrink very significantly, but I wasn’t bothered. It was important to invest in future business models rather than get stuck with box selling only because it gave you topline.”
Following its exit from the PC business Leon began focusing on new technologies—virtualization, storage, network, security and software. It also ventured into managed services. “To become solutions centric we tied up with Microsoft, EMC, Check Point and VMware,” informs Meher. “We expanded into managed services, and developed storage, backup and security competencies. We also started increasing our focus on the automobile industry. We won a couple of large storage, virtualization, backup and archival deals from leading automobile companies. This gave us the confidence that we were on the right track.”
The company also invested ` 16 lakh in setting up a PoC lab for virtualization, storage, archival and backup. To be more relevant to its customers Leon felt it was important to build software development and customization skills, and therefore in 2010 the company started a software solutions division. “The first customized software we developed was for an auto company to manage its shop floor activities, and we integrated it with the MRP/ERP,” says Meher. “This was deployed on custom-made handheld devices. The product was such a hit that we bagged eight projects around it worth ` 30 lakh-`40 lakh each in the same year.”
The last two years have seen Leon consolidate and strengthen its solutions and services business. “We used the slowdown to consolidate our internal organization,
build new skillsets, and optimize our service delivery. We stayed away from projects where we suspected payment to be an issue,” says Meher.
The company saw flat growth in FY2011-12 and FY2012-13. “Our topline remained stagnant at ` 17 crore, but we saw slight improvement in our margins due to our focus on services and advanced solutions,” Meher informs.
The managed services business has been the biggest focus area. While it contributed only 20 percent to the topline it contributed 40 percent to the bottomline. “In the past 18 months we have seen our managed services business almost double from ` 2.5 crore to close to ` 5 crore,” Meher says. “We have started new services such as client and server backup in addition to endpoint management.”
In the past 12 months Leon has increased the number of managed endpoints from 15,000 to 25,000. Informs Meher, “Last year we bagged a 3-year services contract worth ` 4.5 crore for managing 8,000 clients and their backup, applications and voice networks. It’s a very comprehensive contract, almost like a complete outsourcing contract.”
Software has been another performer for Leon, contributing nearly 25 percent of the revenue. “The software we developed in 2010 has seen several advancements and has today become a full-fledged shop floor management solution that allows the customer to connect with its OEMs, to another shop floor, or to the company’s warehouse. It manages the flow of automobile parts as per requirements. Our customers have saved ` 7 crore-`8 crore annually with our software,” Meher says.
Systems integration continues to contribute 50 percent to its overall revenue.
In the last 12-18 months Leon has won some complex systems integration projects. One such project, worth ` 4 crore, from a manufacturing company, was to migrate its DR site from Sun to an IBM platform.
Leon also concluded a virtualization project for a US-based company to consolidate 150 servers to six
“In the past 18 months we have seen our managed services business almost double from ` 2.5 crore to nearly ` 5 crore. We have started new services such as client and server backup”
servers and migrate them from one data center to another.
Leon aims to garner revenue of ` 20 crore in FY2013-14 and expects to grow at a CAGR of 25 percent over the next three years riding on the growth of its managed services and software solutions, and by adding new services such as cloud, cyber security and analytics.
The company already has a couple of software development projects in the pipeline to develop software for manufacturing automation projects. “We are constantly working on improving our software platform and including more features for process automation. We are tweaking our shopfloor management software for new verticals such as textiles, chemicals and pharmaceuticals,” adds Meher.
Leon is bullish about BI solutions and has put in place a team of four to plan its market strategy. Besides, Meher is betting on cloud computing. “In 2014 we expect to monetize the investments we have made in acquiring skillsets and educating our customers in cloud computing. We are presently working with IBM and Microsoft for cloud computing, and plan to add more vendors to the list.”
Leon has plans to build expertise in cyber security services. “We would also like to focus on big data,” Meher reveals. “We are working on a strategy to provide value added services in the next two years.”
On a personal note
Meher likes to involve himself in social work and finds time for the education of socially deprived children. He is currently associated with Rotary International and is working on a project to provide literacy to deprived children across 15 countries. He is also developing educational software for these children in different languages.
He is also an eager reader, and spends a good deal of his time reading. “I love to read spiritual and leadership books. At present I am reading Imagining India by Nandan Nilekani.”
Meher loves driving and spends time going on long drives with his family. “Driving is one of my passions, so I take 2-3 days off my busy schedule to drive to nearby places.”
He is also a great fan of Lata Mangeshkar, Kishore Kumar and Manna Dey, and loves to hear their melodious numbers whenever he is not working.