Making Retail Work

With 10 stores in Mumbai, Compunics has become a house-hold name in IT

retail. And the credit goes to Gaurang Damania’s business acumen.

Says Gaurang, "Our franchisees benefit from our buying power, even

though they have the option of buying directly from distributors." The

bulk-buying by Compunics entails savings of almost two percent to every

franchisee which is good going in a market where retailers operate on four to

five percent margins.

It is this buying power of Compunics that has attracted franchisees to

Gaurang’s fold. The other reason is that Compunics, as a company has become

well-known in the home segment.

Gaurang Damania: Ensuring strong retail presence through his foresight

PROFILE

Name

Compunics Information Systems

Start-up year

1990

Address

23, B, Sir PM Shah Road, Fort, Mumbai - 400 001.

Tel

022-2851122, 2880400

Fax

022-2820601

E-mail

gaurang@compunics.com

Web site

www.compunics.com

Products and services

Retailing and AMC contracts

These retail outlets also enjoy the benefits of joint promotions since

vendors have come to realize the pull that Compunics has been able to create

over a period of time.

RETAILING TAKES ROOT



When Gaurang got into retail, market conditions were not very encouraging.

This was at a time when there were many failures in retail. So, what gave

Gaurang the confidence to go ahead? "I foresaw that with the Internet boom,

the home segment would be a big market. And if we played our cards right, we

could create a brand pull for Compunics," says he.

Gaurang also made the right move by starting a multi-brand retail outlet. The

main competition came only from Compaq retail outlets which did not offer

customers a wide choice.

CHILDHOOD FASCINATION



Gaurang was fascinated by computers from his very childhood. When he was doing
his management studies at 23, he was assembling PCs for friends and relatives

also! This was way back in 1988. "Back then, a simple assembled computer

would cost Rs 51,000!" he recalls. His interest was shared by his closest

buddy, Anish Shah, and the duo decided to get into business together in 1990 by

founding Compunics Information Systems.

The entrepreneurial blood ran in Gaurang’s family. His father manufactured

mechanical products and his brother distributed technical books. So when the

time came for Gaurang to decide between a job and a business, he chose the

latter.

WHAT MAKES THEM TICK



The slump in the market has affected Compunics which is reflected in its

revenue figures. The company closed 2001-02 with Rs 6 crore, while the revenue

for 2000-01 was a whopping Rs 10 crore. Gaurang attributes the decline in

revenues to the recession in the economy and the cancellation of their tie-up

with Orange. Compunics was the authorized partner for telecom giant, Orange.

Given this scenario, what makes Compunics tick? "Our commitment to our

franchisees," says Gaurang. "At the moment there are less than seven

serious multi-brand retail outlets in Mumbai. Most of the others are Compaq

branded shops."

Compunics is recognized for its commitment to its customers as well with high

standards of service. Says Manish Gokhani of Cyberciti, "Compunics has been

around for a long time because the promoters are very astute businessmen. They

are focussed on the home segment, and have managed to add on to their product

portfolio at the right time."

Mehul Jani, a walk-in customer, has been visiting Compunics for the past one

year and is impressed by the quality of customer service provided. Says he,

"The first time I came here, I spent two hours deciding on which joystick I

should purchase. But not once, did the salesperson show irritation."

His friend, Shamim Shaikh adds, "I come here mostly to buy CDs and some

small items which cost less than Rs 1,000. But still I am given top-notch

treatment by the staff here."

STARTING SMALL



When they started Compunics, Gaurang and Anish invested Rs 20,000 each.

"We started out as systems integrators, because there was no such thing as

an assembled computer back then. In fact, we can rightly call ourselves the

first-generation SIs," Gaurang beams.

When Intel came into the country in 1993, Gaurang was ahead in the line to

become the first authorized GID partner. "Intel had a big hand in making us

popular with its GID program," Gaurang admits.

ENTRY INTO CORPORATE SEGMENT



Once Compunics was enrolled as a GID, Gaurang and Anish decided to target

corporates by expanding their product portfolio. They pursued Godrej and Boyce,

which was the leading distributor for Panasonic and HP laserjets then. In 1993

they became stockists for these products.

By 1994, Compunics had made inroads into the corporate segment with the help

of its product portfolio, especially HP printers. It had over 70 people on its

staff and big names on its client list.

But with growth, problems too started to crop up. As competition in the

corporate segment increased, margins started dropping. Says Gaurang, "We

used to enjoy margins of 11 percent, but had to sell to corporates at a margin

of just four percent to retain their accounts." Additionally, bad debts too

started to increase. And the duo then decided that it was time to de-focus on

the corporate segment.

"We realized that we were going wrong somewhere and in a single day we

downsized to 35 people. We also felt that it was time to focus our attention on

the emerging home segment, where there were fewer payment hassles," he

reminisces.

NEWER BUSINESS BECKONS



Although Compunics stocked most leading IT brands, the real business for PCs

started pouring in when HP introduced Pavilions in competition to Compaq’s

Presarios. Compunics also sold assembled PCs.

Business was steadily increasing as the company added new brands and product

lines. In 2000, it entered the telecommunications business by tying up with

Orange as its franchisee outlet. Orange brought in 30 percent additional

business.

Realizing the need for servicing machines, Compu-nics floated another company

in 1997 called Compunics Compserve for maintenance services. With 20 employees,

this company started taking third-party AMC contracts and posted a turnover



of Rs 25 lakh last fiscal.

Compunics wanted to expand its franchisee retail business outside Mumbai. But

then market slowed down. Quips Gaurang, "We have applied brakes on our

expansion plans at the moment, but have kept our options open for the

future."

Gaurang has high hopes in retailing. "The big business is yet to take

place in the home segment. I see retailing really taking off in the next couple

of years," he opines. And when this happens, he will be there with more

stores, marching right ahead of others.

VINITA BHATIA in Mumbai