“Globally, digital imaging is a $101 billion opportunity, 65 percent of which belongs to cartridges alone”

In a largely fragmented and unorganized market, which is looked down upon
by printer vendors, Cartridge World is trying to carve a niche for itself as a
compatibles company. It is partnering with local entrepreneurs, who have the
ability to effectively educate their locality, through its franchising model.
This is in a bid to tap the Rs 2,500 crore market in India

Brief us about Cartridge World. Why has the company entered India so late
when smaller refillers now monopolize the refilling business, especially since
it is based in Australia, which is considered as part of APAC?

Cartridge World was founded in South Australia in 1997. Today, it has over
1,500 stores and retail revenues of more than $350 million worldwide. It works
on the unique concept of 'refilling' printer cartridges with guaran­teed 'as
good as new' performance, savings and a process encouraging reuse, thereby
saving the environment also.

A Cartridge World store is a one-stop shop for all printers and printer
related needs, providing refilling inkjet cartridges of all brands, refilling
and refurbishing of laser cartridges of all brands, supply of OEM cartridges,
printers and other printer consumables and supply of high-quality specialty
paper.

How big is the opportunity for organized players in a largely fragmented
market? Has the pre-defined notion that refilling affects the quality and life
of printers changed?

Today, refilling is a bad word, due to the way India has been refilling over
the years. There are very few or no specialized refilling stores. Refilling in
most cases is not done scientifically; a cartridge is treated like a container
and ink- like colored water. The result thus is a bad product. The fact is that
the cartridge is the most sensitive part of the printing process and the quality
of printing depends primarily on the quality of cartridge, not the printer.

Naveen Rakhecha CEO-South Asia, Cartridge World

The key to success with this segment is differentiating properly and customer
educa­tion. The organized segment of the aftermarket industry needs to put in
extra effort to interact and educate this segment effectively about the benefits
of scientific refilling.

We aim to successfully overcome these obstacles by partnering with local
entre­preneurs, who have the ability to effectively educate their locality,
through our franchising model. We believe 'quality speaks for itself' and thus
along with ensuring efficient distribution, we are focusing on ensuring that we
deliver our promise of OEM quality-affordable price every time without fail.

How huge is the refilling industry and at what pace is it growing?

Globally, digital imaging is a $101 billion opportunity, 65 percent of which
belongs to cartridges alone. In India, industry estimates reflect that printer
consumables are a Rs 2,500 crore opportunity growing at over 30 percent YoY.

We launched our first store in India in Nov '06. Our retail presence as of
today is of 12 operational stores across seven cities-four in Mumbai, two in
Kolkata, two in Delhi, one each in Bangalore, Varanasi, Nagpur and Jaipur.

Many more stores are in the pipeline. We have signed up 30 franchisees across
12 cities in India and are targeting to open 50 stores by appointing
fran­chisees across the Indian sub-continent by the end of financial year
2007-08.

What is your channel structure?

The Cartridge World franchise system has three layers-Cartridge World,
master franchi­sees and individual franchisee. The master franchisees are
responsible for the establish­ment and operation of fran­chised stores across
their respective regions.

Elaborate on your marketing and sales strategy in India.

Our strategy is to educate, communicate and demonstrate. We educate customers
and communicate the benefits of refilling. And continuously demonstrate quality
service.

We use a mix of above the line and below the line marketing activities to
create awareness and post-launch increase footfalls and sales of our stores.
Being a neighborhood retail store, we focus on a lot of local activities like
roadshows, door to door marketing, participating in local events and
exhibitions, advertisements through newspapers, etc.

Elaborate on Wolseley acquiring control of Cartridge World.

We view this acquisition as a unique platform to leverage our core
competencies and operating experience. Cartridge World management buy-out will
accelerate our growth and expansion and will help accomplish our vision to be
the number one franchise of choice in the South Asia region.

With the economic growth India is currently experien­cing, combined with a
growing middle class, we believe we are on the cusp of a strong growth cycle and
are excited to be partnering with Wolseley.

How has the tie-up with State Bank of India (SBI) helped you scale
operations in India? Do you have plans to tie-up with any other Indian bank?

At the moment, we have 12 operational stores across seven cites of India and
have received overwhelming response. Our target is to have over 250 Cartridge
World stores across the country by 2010. While our focus is to introduce the
unique concept of 'refill and save' to the Indian consumers, we also want to
give the franchisees easy funding options to facilitate the store opening across
regions. As of date,10 franchisees have availed this scheme. With the SBI
tie-up, franchisees can approach the bank for loans at convenient terms that can
further speed up the process of making Cartridge World's world-class technology
and quality of products and services available to consumers.

We and our franchisees are quite satisfied with the services of SBI till date
and have hence not felt the need to explore any further as of now.

Charu Khera

charuk@cybermedia.co.in