United They Stand

NR Sethuraman

May 14, 2008

Partners in Tamil Nadu have decided to merge their collective strength to
jointly distribute exclusive products and set-up service centers for major
vendors, under the aegis of COM-COM. If this venture takes off it will be the
first of its kind and will soon start a trend for their peers.

Around 400 dealers across Tamil Nadu have shown interest in investing in the
public limited company, and hence will be holding the stakes of the company.
Besides being stakeholders, these dealers are also channels of the company. The
company sources didn't reveal the amount of investment, as it has not been
decided yet due to various reasons. However, the initial investment is expected
to be around one lakh per dealer. The company titled COM-COM Public Ltd will
start its operations by distributing exclusive products and the operations would
be on a pan-India basis. Works for registering the company are in process. PN
Prasad, CEO, Microplus Computers would be driving the company. The new formed
company doesn't have any relation with Confed-ITA, the common body working for
the welfare of IT associations across Tamil Nadu though Prasad being the VP of
this apex body and many other executive members of Confed being stake holders in
this company. The Confed will not have any take on the proposed COM-COM Public
Ltd, company sources clarified. Prasad said, “The whole idea of the company is
to take various IT products and services everywhere with huge visibility, as the
dealers have the vast presence in every nook and corner of the country and need
not depend on anyone for the service and other supports.”

Operations

The company has proposed to distribute the products of ELCOT, which recently
showed interest in taking channels along with its endeavor of increasing the PC
penetration process by supplying one lakh desktops and laptops to educational
institution and student community. Prasad said, “We look for taking it forward
legally and working with ELCOT and other vendors to take IT to new heights. We
have the capacity to take forward the project easily with our strong and vast
presence and can extend service support to the consumers in a more enhanced
manner.” Subsequent to the distribution activities, COM-COM Public Ltd has
proposed to set-up multi location service centers for major vendors and centers
for training the dealers in cities and upcountry locations. The company has also
planned to undertake AMCs of multi-location companies such as banks, Prasad
informed. As a policy, the company will not deal with multi distribution
products and would only undertake exclusive and good products. He also said that
initially COM-COM would not enter the retail format. The company has also
proposed to go for an IPO after few months post launch and the executive members
of the company would be elected after that.

Channel partners are very excited about the IPO but there is another group,
which is a bit skeptical about it and keeping an eye on COM-COM operations.

A year back, something similar thing happened with PC brand called 'Millennium',
which was formed by a set of Intel dealers in Mumbai.

The old story

This new brand called Millennium was formed in 2000 by a set of Intel
dealers in Mumbai. The team just created a brand and not a company and it was
their pet project. The project was backed by major vendors like Microsoft,
Intel, Samsung and came to an end within four-five years of its launch due to
various reasons. 'Millennium' and present 'COM-COM Public Ltd Company'
is the couple of registered instances of dealers getting together and rolling
out a brand or a company. DQ Channels spoke to the dealers who were a part of
the Millennium PC project to get their views on why their project came to an end
and how do they see the current venture proposed by the TN dealers. According to
Dharmesh Anjaria, CEO, Dynacons Computers and Solutions, the concept of
Millennium PC was unique one at that time and it took off well in the market
too. “Our project was critically acclaimed and was backed by major vendors
like Microsoft, Intel and Samsung. The PC did better than expected and the
response was phenomenal,” claimed Anjaria. As the branded PC came to existent
their dream brand couldn't sustain in the market. “Branded PCs started
flooding the market and everyone started to focus on their different things and
the focus on our brand PC got neglected. Had it been a company rather than just
a brand, it could have been more successful,” Anjaria informed. Jagdeep
Thukral, CEO, Thukral Computers echoed the similar sentiments. “We were able
to have a good run after the launch of our brand. Both the brand support and
money support came for us from the vendors and even we invested a lot of money
in our product. Since the partners in the project were focused and tied up with
different things, we couldn't concentrate much on this and slowly it was
called off,” Thukral said.

Mission COM-COM

And how do the Millennium team sees the proposed COM-COM venture? This
project seems to have impressed the Millennium dealers a lot. According to
Anjaria of Dynacons, the concept of COM-COM is good and quite innovative. He
felt that the dealers involved in this project should be committed for a long
period. “There should be a meticulous planning done. Initially everyone has a
lot of enthusiasm but with time it subsides. People got to keep the momentum. We
too are ready to support the company,” he averred. He also felt that
distribution works on low margins and the dealers need to have a clear long-term
strategy to survive. “The concept is fantastic and dynamic but in order to
make it a success, the company need to have good backup too. There must be
various options on the future perspective. HR is a major crunch at this point of
time for this industry and it need to be taken care of,” Anjaria opined.
Chetan Shah, CEO, Xpress Computers too voiced the similar opinion. “There
should be a dedicated management and professional people to take care of the
administration. There is no doubt that the stakeholders will get enough profit
in this venture. But adding more professionalism would always add more value to
these kind of ventures,” said Shah. He also felt that the objectives of the
company need to be clearly charted out in the beginning. “This is a good
concept. If everything is taken care right from the beginning, the company will
have a good run,” Shah noted. Even Thukral said, “When there are 400
members, anything is possible and they should maintain this unity for the
success of the company.” Tamil Nadu dealers have already tasted the success.
The formation of Confed-ITA itself is a case in point with, which they are
enhancing the trade in the state. Even this proposed COM-Com venture must
replicate the same.