Tech Pacific tightens credit terms

In a surprise move, Mumbai-based distribution major, Tech Pacific announced a

reduction in credit limits for all partners and also reduced the credit period

to 12 days from earlier 30 days. This was communicated to the channel in the

last week of January and made immediately applicable.

Initially, the channel was shocked by the news and irked by the way in which

the decision was being implemented since it wanted more time. But as the credit

terms sank in, channel started responding positively.

Says Anil Sachdeva, Director, Kadam Marketing and President, DCTA,

"Immediate implementation means that some partners have already procured

goods beyond their new limits." His contention being that with the new due

date becoming applicable prior to their dates of payment receipts, will put the

market under undue pressure.

Anil Taneja, Director, Softech Computers, "The only aspect that we

dislike here is that this decision should have been communicated to us at least

30 days in advance." Senior TechPac officials have been doing rounds of the

market and explaining to partners the reasons behind the decision. Says GS Paul,

Regional Manager, Tech Pacific, "In the market situation like today, longer

credit periods are not required." He further adds, "We are serious in

our efforts and will go ahead as decided and have communicated the same to our

channel partners."

Voicing concern over the financial health of the resellers dealing with Tech

Pacific dealers, he says, "We are concerned that the resellers buying on

credit from our partners may default.".

In effect, Tech Pacific has taken the decision to curb the cascading effects

that defaults have on the market as a whole. Says Bharat Bhushan, Director RR

Systems, "This step is an effort to bring back profitability to the

market."

Lower credit periods will ensure that manipulation of price points does not

happen. Confirming this says Paul, "Our basic objective is to curb credit

manipulation that leads to price manipulation."

The channel has absorbed the message in a healthy manner. Remarks Taneja,

"The reaction to this now is positive and it is good to have

happened."

MOHIT CHHABRA



NEW DELHI