Channel companies do disappearing act in Chennai

Chennai: Small channel companies have started to vanish from Ritchie Street, the prominent IT market in Chennai. According to market sources, Dec 2008 has seen the closure of nearly five shops in Ritchie Street alone. The amount that these companies owe to the dealers, distributors and vendors in the market is said to be between Rs 50 lakh to 60 lakh. There are five names which are being talked about the most but none of the players in the market are willing to officially comment on the matter.

“According to our knowledge around five channel partners have closed their shops in Ritchie Street and the amount that they owe in the market would be nearly Rs 60 lakh. We don't know whether it is the downturn or bad luck that is driving these channel partners out of business from the IT market in Chennai,” shared an accessories vendor on the condition of anonymity.

Dealers say that in the case of at least one company, that owes around Rs 10 to 12 lakh to dealers and sub-distributors in Ritchie Street, the disappearance looks like it was well planned.

“Every detail, starting from the residential address seems to be a fake one. When we checked his residential address it was found to be a car shed in Vyasarpadi, Chennai. Even for his office, no proper verification was done by the building owner. There is a big question over how he got a TIN number for trading purposes, and finally we dealers didn't verify him and passed on materials on credit, which backfired on us,” said an affected dealer on the condition of anonymity.

The TIN number has been found original, which clearly indicates that the company was a registered one. Agreeing that that they have been affected a major office automation distributor claimed that he was completely unaware of the absconder at all as the account was handled by his staff members. “It looks like anyone can start business and cheat dealers in Ritchie Street, as there is no unity or guidance in the market, where nearly thousands of crores of transactions happen every year,” claimed another channel partner in Ritchie Street.

Growing list

But the list does not end here. Ritchie Street is rife with speculation that there are at least five big players who will soon join the list of defaulters in the market. “We have been observing the business counters of these five companies and they have an outstanding in the market to the tune of Rs 5 to 6 crore to dealers, distributors and vendor. However, they are in no position to pay up and it is expected that they might wrap up their businesses any time,” informed a source from a vendor.

However, when The DQ Week contacted prominent distributors in the market, they rubbished the claims. “We haven't even heard the names of those companies that are said to have vanished. These are all speculations and I would suggest people not to believe in those claims,” said a leading distributor.

Association unaware

The IT Trade Association (ITTA) on the other hand isn't aware of the happenings in the market. “We don't have any knowledge about the speculations going on in the market. But I would surely hold the vendors, distributors responsible, if the small channel partners are vanishing from the market. They just push the products without knowing the capacity of the partner. On the other hand



dealing with products like


mice, keyboards, pen drives and other small accessories alone wouldn't make the partner survive at this point of time. Distributors and vendors should ensure that partners at least have around


Rs 20 to 30 lakh worth stocks in their shops before giving any credits to them else these things would happen regularly,” the spokesperson claimed.

The source also said that he he has distanced himself from the activities of the association as there has been no co-operation from the members. “Firstly there has been no co-operation from the members and secondly due to the activities of few people, the rest of the dealers are also loosing interest in the association. One thing I would like to tell dealers about these scams happening in the market is that they should be doubly careful before dealing with anonymous people in the market and giving credit to them.”