CHANNEL SNAPSHOTS: Raipur

Chetan Vithalani              

COMPANY: Merlin Multitech

FOUNDED: 2001

BUSINESS AREA: Sub-distributor and systems integrator

OFFICES: 1

STRENGTHS: Merlin has a wide portfolio of products and brands, which
makes it an ideal supplier to most resellers in the region. It has also managed
to grow its revenues by over 50% annually, due to its sound business practices.

WEAKNESSES: The company has limited its business at just state level
transactions. Also, it does not carry HP's printer range, which is a much
sought-after product in the region.

PLANS: The company is now rolling out its own brand of PCs, laptops and
UPS. It will sell these th

TURNOVER (2003-04): Rs 5.70 crore

EXPECTED TURNOVER (2004-05): Rs 7 crore

Sunil Agrawal             

COMPANY: Balaji Computers

FOUNDED: 1999

BUSINESS AREA: Sub-disty and service provider

OFFICES: 1

STRENGTHS: Of the 12 people employed in the company, five are service
engineers. This underlines Balaji's focus on services as a profitable business
stream. It only deals in branded goods, rather than any white-box or assembled
ones.

WEAKNESSES: Balaji deals only in tax-paid goods, which is why its business
has been restricted within the boundaries of Chattisgarh only.

PLANS: Recently the company was appointed as regional distributor for HP
and Samsung and it plans to focus more on these brands, as it has better recall
and offer good margins.

TURNOVER (2003-04): Rs 3 crore

EXPECTED TURNOVER (2004-05): Rs 8 crore

Manoj Lalani               

COMPANY: Lalani Computech

FOUNDED: 2001

BUSINESS AREA: Retailer, systems integrator and service provider

OFFICES: 1

STRENGTHS: The company is an offshoot of Kolkata-based Lalani Infotech
and therefore has a good recall in the eastern market. This gives it a good
bargaining power with its principals.

WEAKNESSES: The company has not expanded into more cities, though it has
the capability to do so. Also, its adaptability to other vendor brands is pretty
slow, since it has been a HP premium partner since its inception.

TURNOVER (2003-04): Rs 4 crore

EXPECTED TURNOVER (2004-05): Rs 6 crore

Sanjeev Nayak                

COMPANY: Oricom Systems

FOUNDED: 1986

BUSINESS AREA: Solution providing, reselling and services

OFFICES: 2

STRENGTHS: Oricom is one of the few SIs in the state for high-end
networking. Services is its forte, as it started business as a service provider
before moving into the solutions space. It is now looking for a partner to
expand throughout the state.

WEAKNESSES: Oricom has focused its attention entirely to Bhubaneshwar. Now
it is seeking dealers with whom it can partner on a state-wide basis. This
should help it target businesses in other cities as well.

TURNOVER (2003-04): Rs 3.5 crore

EXPECTED TURNOVER (2004-05): Rs 4 crore

Debasis Patra             

COMPANY: PC World

FOUNDED: 1997

BUSINESS AREA: Retailer

OFFICES: 2

STRENGTHS: Though a hard core retail outlet, 20% of PC World's revenue
comes from service, which has got good recall in the market. It provides service
only to its customers, with whom it has existing relations, rather than walk-in
customers. This is to minimize the risk of payment defaults.

WEAKNESSES: Though, the company has very strict credit policies, it suffered
from a couple of payment defaults. It has therefore changed its payment
structure to 50% cash on delivery and 50% within 21 days.

TURNOVER (2003-04): Rs 3 crore

EXPECTED TURNOVER (2004-05): Rs 4.5 crore

Prasanta Mohapatra               

COMPANY: Kartavya Consultants

FOUNDED: 2002

BUSINESS AREA: Reseller and service provider

OFFICES: 3

STRENGTHS: Kartavya executes only bulk orders, which has kept its bottomline
healthy. Also it does direct billing to most of the principals, which gives it a
better pricing for purchases, the benefit of which is then passed down to its
customers. It also has a printer service center which caters to all brands and
models and is a good revenue stream for the company.

WEAKNESSES: It needs to expand its portfolio especially in the services
business. Also fund management is a major challenge for this proprietorship
outfit.

TURNOVER (2003-04): Rs 1.4 crore

EXPECTED TURNOVER (2004-05): Rs 3 crore

Fraught With In-fighting

Chattisgarh is sitting on a gold mine, veritably, with several large
industries in the state who are a very good customer segment. But in Raipur, the
channel business is marred by in-fighting, even within the trade association.

The newly formed state of Chattisgarh is home to some of the best mineral
resources in the country. The state government proclaims it as an ideal
destination for companies that want to set up their base in eastern or central
India.

The state has large power surplus, which is attracting power-intensive
industries. Its central location helps easy power transmission to any part of
the country. The State is supplying power to Delhi ,Gujarat and Karnataka, among
others.

There are several important industrial units in Chhattisgarh including the
Bhillai Steel Plant, Hindustan Steel Works, Bhillai Refractories, Bharat
Aluminium Company, South Eastern Coal Fields, Electricity Generation Plants of
National Thermal Power Corporation and MPEB, Cement Factories, Paper mills etc.
Many South African and Australian companies have shown interest in mining in
this area and a number of new projects are coming up in the mining sector.
Mukund Ltd, J K Industries and Hindalco have shown interest in setting up steel
plants in the Raipur districts. Six new sponge iron units are under construction
in the Chhattisgarh Region.

In short, this should be utopia when it comes to the channel business, right?
After all, the setting up of these companies can only translate in more IT
deployment and need for supply and maintenance, right? Yes. But the channel in
the state has not been able to gear up to this opportunity. And the reason for
this is the in-fighting and under-cutting amongst partners.

And the local association, Chattisgarh Computer Media Dealers Association, is
not doing much to put an end to this. In fact, some partners claim that there is
much in-fighting within the upper echelons of the association itself.

Chattisgarh records sales around 16,000 PCs annually. This could easily be
ramped up to 25,000 units, according to the channel, if the trade becomes more
organized and structured in its functioning.

Another reason why the Chetan Vithalani of Merlin Multitech, "Partners
here do not follow sound business practices and over 80% of them are running
their business on credit. If even one partner defaults in payment, the entire
industry is affected."

Industries are the biggest customer segments, especially for service. Most of
the buying decisions of these companies are taken from their head offices,
though supply is routed through the local channel manages to avoid tax hassles.

In the past one year, almost all the leading 10 distributors of the DQCI
Silver Club have opened offices in Raipur. Even vendors have followed their
instance. This has eradicated the monopoly that the erstwhile two distys had in
the region.

But this occurrence has also brought in its own set of problems. With the
easy availability of supplies, several new companies have joined the channel
business, which has led to over-stocking and even material shortages. There have
also been instances of fly-by-night operators defaulting payments.

But at the same time, there are some partners who have used their ingenuity
to battle this defaulting problem. One company has started taking a blank cheque
from its buyers and gets the customer to sign an undertaking to honor the
payment. If the payment is not made within the said period, the company goes to
the customer's bank with the blank cheque and the undertaking note and then
realizes its payment.

IT Association of Orissa

FOUNDED: 1998

MEMBERS:98

OBJECTIVE:ITAO was started when the IT
industry in the state was in its nascent state. The objective was to have a
platform for all the companies, which were involved in this business to voice
their opinions and have their grievances resolved.

The
IT Association of Orissa (ITAO) is working with the state government to have a
ratification criteria to simplify the tendering processes. Step one is to ban
the Earnest Money Deposit (EMD) clause. Such a step will ensure that other
non-qualifying partners do not quote for the tender and not lose their funds by
paying the EMD.

Step two is to decide the qualifications of suppliers and categorizing them
separately. The association is asking the government to distinguish suppliers,
based on certain parameters, into different classes. For instance, for
high-value tenders, the supplier should furnish three years balance sheet and
should have an audited turnover of over Rs 5 crore.

One reason why ITAO is trying to highlight the fine print in the tender
process is because payment cycles in government buying are very long. And
smaller partners can't afford to block their funds due to this.

Yet another step that ITAO is working on is to bring a regulated code of
conduct for the tender business. 90% of the payment should be made on delivery
and the remainder after the deployment. Also, the terms of delivery should be
made clear. Often, government agencies refuse to acknowledge to pay when
delivery is made and pay only after the entire system is networked and running.
This could take eight to 10 months. ITAO has already made a proposal on this
subject to Ashok Tripathi, Chief Executive, Orissa Computer Application Center,
which is a nodal agency for all computerization in the state.

In a bid to boost business, ITAO has planned its annual exhibition to be held
in February to coincide with the National eGovernance Conference, which is being
organized by the state government. The latter event will attract companies from
all over the country and ITAO hopes that this will give its members a wider
exposure and chance to sign partner alliances.

Traditionally, the National eGovernance Conference was held in Bangalore and
this is the first time Bhubaneswar will host it. Partners are excited about this
development.

ITAO had organized a used-PC sale this year, which got good response from the
end-users. It now plans to make this an annual event, so that partners can sell
slow-moving products at discounted rates and recover their investment in it.

The association had also held panel discussions for business awareness and
financial subjects. It invited representatives from vendor companies to be on
the panel, so that partners could get all their queries answered publicly.

ITAO has also approached leading distys and vendors to become life members of
the association. This should bring transparency in the trade and any issues can
be instantaneously resolved with ITAO's intervention.

EXECUTIVE COUNCIL

PRESIDENT: Prasanta Mohapatra

SECRETARY: Soubhagya Routray

TREASURER: Debasis Patra