'We are isolating partners who can migrate to the higher level as distributors.'

An engineering graduate in electronics, Sandeep Gupta has spent 13 years in

IT and telecom sectors. He started his career in 1988, as a sales engineer for

Escorts Motors. He joined Network Limited in 1994, where he got into indirect

channel sales for Canon inkjet printers. Three years later he joined Tech

Pacific as a business manager and got into IT distribution. He joined NCR

Systemedia as country manager in 2000. Since then he has been putting efforts to

get Indian buyers to understand the utility and viability of re-manufactured

cartridges.

What is re-manufacturing of toner cartridges?



Re-manufacturing of toner cartridges is an eco-friendly process wherein used

cartridges are re-engineered by replacing all old worn out parts, to finally get

a finished product. This finished product meets the original OEM’s product

specs. The product finally comes at a lower cost to the end-user, hence it is

clearly a win-win proposition.

Who are your competitors in the Indian market?



We are facing stiff competition from OEMs like HP. HP’s entry-level toner

costs Rs 3000 and in addition to this HP gives freebies worth Rs 100. In

addition to this, OEMs also extend schemes like scratch cards, discount coupons,

etc. Effectively they are trying to bring the prices of products down. They are

also targeting the same set of corporates that we are catering to and are giving

sops to them and lure them

How big is the toner cartridges market in India?



For laser cartridges I would put the figure at Rs 200 crore while for

inkjets, it would be Rs 300 crore. The refill, counterfeit, parallel imports

together make for another Rs 500 crore. So cumulatively, the entire toner

cartridges market is around Rs 1000 crore.

What inroads have you made since introducing your product in mid-2001?



We have not made any major inroads in the Indian market because we have not

cut the cost of our products. But today, people understand the difference

between compatibles and OEM cartridges, especially in the corporate segment.

SOHO buyers are still lured into going for refills as they are cheaper. This

is because the perceived value of the OEM cartridge is lower, given all the

freebies thrown in.

However we have noticed that the price points have come southwards and the

channel has been enthused by our entry in the market. Partners who were stocking

HP cartridges earlier don’t do it now, because they do not see the returns

coming in.

At what pace has your business grown in the past eight months?



The good thing is that smaller people have started associating with us. When

we started out less than a year ago, we had only big corporates like Citibank.

Now we have dealers who buy 10 to 15 products from us to sell it to their

customers. We have seen our volumes grow to 5,000 units a month. We have three

to four percent market share in the country, but we are growing at a steady

pace.

What is your channel network in India?



We have almost 80 active channel partners in the country. We do not want to

increase this number as then the focus will be lost. Till now we were dealing

directly with these dealers. But now we plan to appoint regional distributors

who will then manage the existing dealers directly.

We are isolating partners who can migrate to a higher level as distributors,

since distribution is not our forte. We will service top-line distributors, who

will manage their own channel network.

What is your service network in India?



We have realized that there is a need to have representation to support

customers. We are now working on setting up an independent service network in

the country. Earlier customers perceived compatibles as refills and there was an

element of suspicion involved in the buying process. When they learn that we

provide service for our products, this distrust will be eradicated.

This service initiative will again be taken by the channel. We will train our

partners technically to handle all service issues. In addition, we will pay our

service partners for every product they service. So this can become a good

revenue-stream for them. We have already appointed four service partners in the

metros and want to increase this number to cover all the B-class cities.

There is a perception that re-manufactured cartridges are the same as

refilled ones. How will you change this mindset?



The only way to get rid of this mindset is through education, which will take
time. There are more re-fillers in the country than re-manufacturers. Customers

in general are aware of only original and refilled cartridges. They do not know

that there are products available which are OEM-compatible, will not damage the

printer and work out cheaper than original cartridges.

This is precisely why we have started seeding activities in B and C-class

cities, where the presence of re-fillers is more. We want customers to realize

that with compatibles the TCO of the printer comes down without sacrificing the

quality of the printed matter. Already people in the metros are aware of NCR

compatibles. Now we will leverage our channel to help us carve a niche in the

SOHO and SME segment in the second-tier cities.

In technical terms, even re-fillers are remanufacturers. But what

differentiates us from them is degree at which the re-manufacturing is done, the

kind of plant we have, our quality tags and the volume we churn out. We also

give certification that if the customer’s printer is damaged due to the usage

of our cartridges, then we will repair or replace it. However, till date we have

not come across a single case like this.

What is the price differential between an original and a re-manufactured

toner cartridge?



The price differential is 25 to 30 percent for the lower-end cartridges. For

the older generation printer cartridges, the differential is four to five

percent. This is because most OEM vendors are pushing the new generation

printers and it is difficult to get the shells of the earlier models’

cartridges.

NCR sells only laser toner cartridges in India currently. Are there plans

to bring in inkjet cartridges too?



Right now, bringing in inkjet cartridges is not commercially viable because

we source our products from our Thailand plant and they re-manufacture only

laser cartridges. Also HP, our principal competitor, has priced the inkjet

cartridge aggressively and also subsidizes it for the Indian market.

For example, a 29A inkjet cartridge in the US costs $ 24 and it is available

in India at roughly the same price. If we were to bring in the product from our

US plant, then with the duties added, margins for channel, marketing expenses,

the price of that cartridge would be substantially more than that of the

original HP cartridge.

VINITA BHATIA In Mumbai