For Ingram Micro, 2005-06 was spent integrating the facilities, warehouses and other support infrastructure. But the bigger challenge faced post merger was that of credit enablement. There were also a few overlaps as both Ingram Micro and Tech Pacific had similar portfolios, but the key difference was that Ingram was stronger in the component business and grew the company close to 20% in FY 2005-06 post merger. On the vendors front, HP continued to be the largest followed by Lenovo, Microsoft, and Cisco. In terms of revenues the combined shares more or less were maintained, though it did see a marginal dip in the HP peripherals segment. The total number of sub-distributors and resellers stood close to 12,000 out of which 4,000 were the regular partners who enjoy credit facility with Ingram. The overall growth in the market sponged of the marginal dips in the share for Ingram. The PC consumer market was a growth area for almost all vendors. Though there was a slight growth in the software business the HP- IPG business saw a decline where as the other peripherals market grew marginally.

Close on its heel, Redington recorded over 50% growth to end at Rs 4,068 crore; this came mainly from systems, peripherals and networking. Last year Chryscapital, a private equity company took 11% stake in Redington valued at $15 mn. It also enhanced its product portfolio by adding Symantec, McAfee, Novell, Sybase, BEA, Fujitsu, Tyco, Linksys, and Legato. It also invested heavily in doubling its capacity for warehousing. Apart form its traditional offerings it also moved its services to other verticals like consumer electronics and home appliances. 

Though not yet in the league of Ingram Micro or Redington, one company that stole the show in 2005-06 was eSys. Started in 2000 in Singapore as Technology Distribution company, it ended FY06 at Rs 1567 crore with 112 offices in 33 countries. It followed an innovative approach for its PC business by setting up plants next to its regional logistics hubs for technology components distribution business. This brought in synergies and helped bring cost of manufacturing PC considerably down.

Amongst other players in the Top 10 club, Mumbai boasted of four entrants viz., SES Technologies, Neoteric, Rashi, and Savex, while the Delhi-based Iris computers gave stiff competition to SES by remaining right at its heels. Other than being acquired by Sahara Computers, the other highlight for SES Technologies was its reduction of Intel dependence. This was achieved by means of partnerships with a host of niche high-value principals like Foxconn and Asrock for motherboard, Allied Telesyn and Molex for networking and QNAP, Intransa and Tandberg for storage. The Iris competition came from its systems business-Lenovo and HP contributed nearly 80% of the company's business. Both SES and Iris also banked on services-while SES expanded its service arm Optima to 18 locations, Iris bagged large services projects from NTPC and educational institutions.

The rivalry between Neoteric and Rashi from Mumbai have always been intense and an interesting sidelight for the industry. It continued this year, with Rashi's impressive 82% growth bringing it very close to Neoteric. Neoteric added new principles like BenQ, Lacie, Wacom, and Maxtor, while Rashi got NVIDIA, Netgear, XFX, and Altec Lansing into its kitty. The 20% Savex growth was conservative as compared to some others in the Top 10-even this growth owed much to its partnership with HP for Presario desktops and notebooks. For the rank newcomer in the Top 10 club, Supertron of Kolkata, the twin highlights of the year were the acquisition of the once-popular Vintron brand of PCs and the exclusive distribution rights for the Xenitis brand of PC components. It also successfully represented principles like Pinacle's Dazzle, Acer, Canon, Intel, Kobian, LG, Microsoft and Seagate. It was also chosen the national distributor of Acer's TFT and CRT monitors and DLP projectors, as well as Twin Mos Technologies for their memory modules.

Problems Faced
Though the Indian distribution market was on an aggressive growth path, all the players across the spectrum were not been able to match the dynamic growth. The spread of partners was not in pace with the growing business opportunities. The growth continued to be concentrated with the larger players, especially since the tier 2 or the tier 3 were not enduring the travails of the business with the same seriousness. As the entry barriers at the tier 2 level were not very stringent the churn out was very high causing high volatility in the market. The industry was keen to take necessary measures to weed out these fly-by-night operators. The travails of many players in Nehru Place following the shenanigans of Sanjay Gupta of Gravis Computers served as a rude reminder.

Other than these non-serious players, the current ecosystem was tuned to align and support only a certain category of players and as a result a select set of players grew at the market pace with sustained support. Also another trend was where vendors were asking distributors to consolidate and channelize business through a restricted set of partners in a given market. Though this ensured focus/ownership by the channel partners in growing a vendor's business, on the other hand it helped in further cartelization of the channel market amongst a set of larger players. 

The market needed to identify long term serious players to get a balanced mix and not let the scale tip to just these limited number of players. For example to credit crisis exposure in Middle–east channel was a painful experience for the industry there and had dented the confidence of the channel fraternity. India too should be in cognizance of the happenings around it and learn from experiences outside.

Minu Sirsalewala
minuvs@cybermedia.co.in

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