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<P>"Our business is to break bulk."–Atul H Mehta, CMD, Compuage Electronics

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DQC Bureau
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Atul Mehta founded his organization in 1987 as a world-class IT products and services company, with strong Indian values and beliefs. Today, Compuage is a privileged member of CI’s Big Five Club of distributors notching up a total turnover of Rs 139.7 crores in 1998-99. With his keen business acumen, Atul has built up a stronghold in the distribution of computer peripherals. Some of the brands include

APC, Creative, BTC, Microtek, Samsung and Yamaha. Atul likes to work closely with his channel partners and that is why Compuage has a loyal following in the marketplace today. But growth-wise, Compuage has fallen behind compared to last year when it had achieved 100 percent growth. 





 



After achieving a 100 percent growth in 1997-98, doesn’t a growth of 62 percent look on the lower side this year?



I wouldn’t say that the growth has come down. If you see the growth from 1987, we have been growing at the rate of 60 percent. In fact, the year 1997-98 was an exceptional year. Otherwise, our compounded annual growth has remained at 60 percent consistently.



So, are you happy with the growth that you have achieved in 1998-99?



Very frankly, I can’t complain. You always want to achieve more. I am quite content with the growth that we had. All of us know that the economy was in a bad shape; the corporate sector was not supportive as per our expectations. Also the after-effects of the arrival of global players like Tech Pacific and ERIL were settling down. All this had an effect on the overall market scenario.



What are some of the new products you introduced last year?



We introduced Microtek scanners, Samsung hard disc drives and laser printers, and Yamaha CD-recorders. Besides these tie-ups, we expanded our operations geographically. We are a multi-location company already. We added Calcutta and Cochin as new locations during last year.



How big is your business network today?



Overall we cater to some 1,000 resellers across the country. Of this, we interact very closely with around 350. Maybe, every third day or fourth day, a consignment leaves for these customers. With the others we deal at least once or twice a month. We are quite well spread across the country. Of course, we started off from the west, then we went to the south, then to the north and finally to the east.



Typically, any company would do that because business revenue also comes from these directions in that order. In our case, west and south contribute some 75-80 percent of our revenue, north brings in 15-20 percent and east generates two to percent percent.



What special measures have you taken to develop your channel?



We try and work very very closely with our channel partners. This is one of the important aspects of our business practice. Secondly, in this business it is always easier said than done to forecast and plan the inventory. It is very difficult for channels to have an accurate forecast. We really put in a lot of emphasis on providing goods ex-stock at all points of time. This means a lot of planning is required from our end to ensure that the inventory is available across the country when channel partners require it. Also, we put in effort to provide good logistics at a low cost.



Why do you say forecasting is difficult for channels?



Well, business has become so competitive, that a channel partner is not sure how much business he is going to get in a particular month. Therefore it becomes very difficult for him to forecast. No channel partner comes with any forecast to any of the distributors today. We go and ask our channel partners for a forecast to plan our stocks better. But we hardly get any forecast. Of course, we have been resellers ourselves. So we know how difficult it is to forecast. So we don’t push our channel partners to forecast.



What is your current strategy for the channels?



Our strategy is based on our strength, which is working closely with the channel chain. We try to understand the needs of our channel partners, whatever may be those needs, and try to fulfil them to the best possible manner. In distribution logistic management becomes very critical. This is an area we give more importance. We ensure that our channels get goods ex-stock and the goods are transported at least possible freight cost. We are very economical vis-à-vis the competition. And lastly, we try and provide good after-sales services on products that we sell.



Service has become very important. It is very difficult for resellers today to get good after-sale support. We are trying to emphasize on service.



What role is technology playing in your distribution network?



Technology is one area where we have a lot to be done. Unlike our competitors, we do not have an ERP package or an on-line system operating at this point of time. It is a very costly system to implement. So we are deliberately slow on this. Of course, it is a matter of time before we organize our operations based on this technology.



What credit terms do you offer to your partners?



We are currently operating at about 15 days credit. We have moved from seven days credit to 15 days credit in the last one-and-a-half-year. And now there is increased pressure on us to increase it to 21 days or 30 days. Our competition has started extending the credit period from 15 to 30 days. So it is a matter of time that we will also be forced to offer three weeks credit.



What hurdles do you face

while doing business?

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I won’t call them hurdles because that is the business we are in. Our business is to break bulk. What is the value-addition that we are doing? We do value-addition by breaking bulk. We offer credit to our channel partners, which our principals may not be in a position to offer to each one of them. Then we offer them after-sales service. These are the three value-additions we do. We can’t call them hurdles. Of course, one area of concern is the increased exposure due to increased credit. All companies may not be financially sound to have that kind of exposure.



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Do you have systems in place to assess the financial credibility of the partners who want to do business with you?



Oh yes, definitely. When a new partner wants to do business with us, we try to understand what the company is doing, get details on the company background, take out the references and crosscheck and then start a line of credit. Only after close monitoring, do we look at increased credit facility.



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What challenges do you face today?



The biggest challenge is to supply products and services to channel partners at least possible cost. When margins are shrinking, the challenge is to reduce cost and be competitive.



Sylvester Lobo

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