Chart­ing a new course

In­dore-based Com­puter Gallery is bet­ting big on dis­tri­bu­tion of tele­com, con­sumer durable and home se­cu­rity prod­ucts

CRN - - COVER STORY - — Amit Singh

The In­dore-based, ` 120 crore Com­puter Gallery ini­ti­ated trans­for­ma­tion in the or­ga­ni­za­tion in mid-2012 when it saw its mar­gins in core IT dis­tri­bu­tion de­clin­ing to 2-3 per­cent or even lower. The com­pany re­al­ized that with the ac­tual re­al­iza­tion on IT dis­tri­bu­tion of­ten turn­ing neg­a­tive due to pay­ment de­lays, di­ver­si­fi­ca­tion of its port­fo­lio was the only op­tion left.

“Over the last few years, the IT busi­ness has be­come sea­sonal with peaks dur­ing fes­ti­vals and deep troughs af­ter that. While gen­er­ally we main­tain in­ven­to­ries of four weeks, in the lean pe­ri­ods it shoots up to 9-10 weeks with credit ex­tend­ing to 60-70 days. That sucks up all the mar­gins with fi­nance costs of 1.5 per­cent per month,” laments Sud­hir Arora, MD, Com­puter Gallery.

The com­pany en­tered into the dis­tri­bu­tion of home se­cu­rity so­lu­tions from Go­drej in June 2012. It tar­geted se­cu­rity deal­ers as well as its ex­ist­ing base of IT deal­ers. It added 60 part­ners for se­cu­rity in 2012. “Se­cu­rity dis­tri­bu­tion of­fers dou­ble ben­e­fit of higher mar­gins of 5-8 per­cent and credit terms of only 15 days,” ex­plains Arora. In Fe­bru­ary 2014, the com­pany ven­tured into mo­bile and tablet dis­tri­bu­tion by part­ner­ing with Sam­sung. Treat­ing it as a sep­a­rate P&L ac­count, Arora formed a team of 12 per­son­nel to drive the mo­bile busi­ness.

He notes that the mo­bile ver­ti­cal has the ben­e­fit of clearly demarcated ter­ri­to­ries com­pared to IT where there is a lot of over­lap­ping which leads to over-dis­tri­bu­tion. “With demarcated ter­ri­to­ries, we can pre­dict the busi­ness and mar­gins that we will make in a month. More­over, the credit term is only 10 days with in­ven­to­ries of two weeks; this makes it eas­ier to ro­tate the cap­i­tal.”

Next fis­cal, the com­pany will ven­ture into the con­sumer elec­tron­ics space. “Within next three years, we want to hit a turnover of ` 250 crore with tele­com con­tribut­ing 50 per­cent, home se­cu­rity con­tribut­ing 10 per­cent and home durables con­tribut­ing 15 per­cent. IT busi­ness will only be 25 per­cent to the topline,” con­cludes Arora.

Within next three years, we are tar­get­ing a topline of ` 250 crore with tele­com con­tribut­ing 50 per­cent, 20 per­cent from con­sumer durable and home se­cu­rity and IT con­tribut­ing only 25 per­cent

SUD­HIR ARORA

MD, Com­puter Gallery

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