We never do sales through tele-marketing, but go out and meet people.

From automobiles to IT, it has been a successful run for PK Krishnaprasad,

Chief Executive, SES Technologies. After spending 11 long years with the parent

company, Sai Services, which is known for its business in automobiles,

Krishnaprasad moved to SES three years ago. He used his experience in finance

and marketing to put the company on the fast track of  growth. A Rs 55

crore company three years ago, it today has notched up a turnover of Rs 250

crore. Krishnaprasad shares with DQCI what SES is doing to maintain the growth

momentum.

SES was the only distributor in the DQCI Silver Club to record a

three-digit growth during last fiscal. What growth do you expect this year?

We are planning for a growth of 35-40 percent. The market slowdown is putting

pressure on everybody. We do not know ultimately what growth we will achieve. We

don't want to be over-enthusiastic or over-optimistic. But certainly, the growth

will be much lower compared to last year.

What are some of the innovative measures that you have done to beat the

market slowdown?

We never do sales through tele-marketing, but go out and meet

people. We have all technically qualified people in our marketing team. In fact

99 percent of our executives are technically qualified. We somehow convince

customers to buy our products.

However, right now the market sentiment is down and no one

can say how it will behave in the short term. Vendors, of course, are

optimistic. Ask Intel, for instance, who say they would grow 20 to to 30 percent

in the current year.

One can't deny that growth is not there. But the economy is

in such a mess and because of the war people are really worried.

Sales in homes and institutions are happening. But corporate

buying has slowed down. Earlier, for corporates, there was the attraction of

depreciation which is no more there. Since profitability of corporates is under

pressure, they are deferring their purchases.

Everybody has become conscious about saving costs. When

things go very smoothly, everyone is in high spirits and people tend to ignore

negative signals and overstock goods. Overstocking spoils the market.

Do you think overstocking at the channel end gives a

feeling to vendors that sales are happening just fine?

There is more to it than just overstocking. There are several

things happening in the local IT industry which in the past has been growing at

the rate of 30-40 percent. This is a very healthy growth which no other industry

is experiencing. Many of the industries are not in a position to expect even a

two-digit growth. But this high growth in IT industry has brought about wrong

expectations from market players who want to grow by 100 percent overnight.

With these expectations, people tend to over-stock and

over-load themselves with material. People do not look at the limitations of

their working capital and stretch themselves beyond their capacity. If somebody

has a capacity of Rs 1 crore and goes for a Rs 4 crore transaction and defaults

on payment, the market gets killed.

Overtrading and big and aggressive schemes have done a lot of

damage to market players. As a result, distributors have actually lost control

over the channel.

What role does greed play in channel business?

It is a fact that everyone is greedy to make more money. But

when people allow their greed to control their business transactions, it shows

their immaturity. There is nothing wrong if small players of today have

ambitions to become big tomorrow with aggressive strategies. But they can't

allow greed to overcome them because greed beyond limit, kills business.

People with greed are not in a position to sustain their

business because they do not have other important elements with them that are

critical for the success of their business. For instance, every partner has to

think in terms of working capital, manpower and reach.

On the other hand, over-ambition tends to ruin business,

since these people fail to adhere to principles. These people should first think

about working capital and other matters that can contribute to successful

business.

How good or bad is the payment situation today?

SES has minimum outstandings because we take proper

precautions to safeguard our interests. One does not find too many defaulters

among known people because they have a image to protect.

In an effort to protect one's credibility, some people sell

on discount showing their willingness to suffer losses but not wanting to lose

face in terms of defaulting on payments. But with discounting other problems

come up.

For instance, sometimes the prices at the channel end are

less than what the distributor is selling. So margins take a terrible beating

and business suffers.

There is a growth correction that is happening in the

industry right now. Whoever grew more than 100 percent in recent times, they are

looking at one-tenth of this growth. Whoever grew substantially is coming down

proportionately as well.

Meanwhile, regular business keeps happening because consumers

from new segments keep buying products. What happens is that if demand is slack

in one segment, it picks up in another. For instance, demand is very sluggish in

the manufacturing segment right now. But buying is happening in the financial

segment where lot of new insurance companies have come up and they need IT

infrastructure.

From the channel perspective, what do you think are the

strengths of SES?

We have created a niche for ourselves among our partners.

When we started business, partners started comparing us with major distributors

and they liked our response when it came to support matters.

We started doing business with Intel products which were

highly competitive. They were a sort of monopoly products with no major

competition around. No major value addition was required with these products.

What counted was the relationship with partners. We gave a lot of importance in

building up these relationships.

Today, people are with us for the last three years and have

been continuously doing business with us. We look for consistent business from

our partners. We don't believe in dumping products on our partners. We stock

goods based on the information that we receive from our partners.

During the last three years, we have established a channel

network of 2,000 partners. This has been made possible because we look at adding

value to our business. Also, we are in a position to respond quickly to the

market needs of partners compared to other distributors.

SYLVESTER LOBO in Mumbai