15 – Waiting In The Wings

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DIRECTOR: R SRINIVASAN

Consistency’ is the word for Redington, which has  recorded revenues of
Rs 287.31 crore, and thereby moved up two positions, to # 15, this year. The company
registered a growth of 68 percent over the previous year’s revenue of Rs 171.07
crore. Redington India, a part of the transnational Redington Group, has its eyes set on
becoming a long-term distribution major in the country through innovation and
value-addition. Better still, it is vying to become a global distribution company through
a significant tie-up that is expected to come up this year.

Redington markets products of HP, Epson, Compaq, Intel,
Samsung, and Microsoft, and has stepped into servicing in the last year. HP and Epson
printers have been the two major revenue earners for the company,
redingt0.jpg (12083 bytes)with the duo alone contributing Rs
124.55 crore. Another significant share of the revenues was from the Compaq range of
products. On the monitor side, Samsung fetched in another Rs 22.50 crore to the company.
Redington also had a steady flow of revenues from Microsoft.

In keeping with the market trend, Redington saw major
earnings from the western region, over 40 percent of its total revenues. The southern
region followed suit (30.8 percent), with the northern and eastern regions pooling in the
remaining 28.8 percent.

S T R A T
E G Y

  • To be a leader in the distribution business with the
    complete and diversified range of product lines–hardware, peripherals, software, and
    consumables–and move up the value-chain with innovation and service.

T A C T I C S

  • To deal in high-volume, high-value products.
  • Insistence on taking cash upfront.
  • Try to segregate each product line into a different
    business division as part of concentrated efforts.
  • Bank on opening of Indian market for MNC products.

O B J E C T I V E S

  • To maintain consistent performance every quarter, and
    sustain a 60-percent growth on year-on-year revenues.
  • To add on software and packaged software business in a
    bigger way.

P E R F O R M A N C E  H I G H L I G
H T S

  • Recorded a growth of 68 percent over the previous
    year’s revenues.
  • Western region contributed to 40 percent of total
    revenues, followed by south
  • Peripherals (Epson and HP printers) contributed to 44
    percent of the total revenues.

PRODUCTS AND SERVICES:
Systems, Peripherals, Packaged Software, Accessories
* AGENCY OPERATIONS: HP, Compaq,
Epson, Samsung, Intel, Microsoft
* START-UP YEAR: 1993 * EMPLOYEES: 225 * ADDRESS: SPL Guindy House, 95 Mount Road, Guindy, Chennai 600032 * TEL: 2353313-18 * FAX: 2352790

Redington had a consistent performance in all the
four quarters in the year. The first quarter recorded a total of Rs 54.78 crore, from
where on the business picked up momentum. The second and third quarters registered revenue
figures of Rs 79.34 crore and Rs 72.62 crore respectively. The maximum revenues came in
from the last quarter—Rs 80.57 crore—and this boost resulted from the price
slash in Epson printers and from the Compaq Multimedia mela for the Presario range
of systems.

In the last one year Redington added to its portfolio
newer products and product categories. One such significant tie-up for the company was
with Seagate Technologies for distribution of the entire range of storage products.
However, this is being handled by Redington Singapore. Toward the last quarter, the
company tied-up with Canon for distribution of inkjet and laser printers.

One area of disquiet for Redington is its continued
muted presence in the north. The sales from north and east combined have remained static
at 29 percent of the total revenues. With rival Godrej turning in a stellar performance in
the western region and having a natural advantage there, Redington might have focused more
on north. One reason why it didn’t could be that Redington’s policy of
‘cash-upfront’ may not be acceptable to the resellers in this part of the
country. A major share of Redington’s growth can be attributed to this strict
‘no-credit’ policy of the company. However, with the northern market playing
truant, Redington is delaying its entry into this high-growth part of the country.

It had better hurry. With the channels maturing up in
most parts of the country, currently, there is indeed a vacuum in the north in terms of
the fact that both GPTL and Redington are not very strong here. The present market is
played out between a large number of resellers, a few of which are aspiring to graduate to
a higher tier
of distribution channel. It is believed that in the current year, the market will see a
movement of one or two of large players who will make an attempt to establish a strong
foothold in the north. If that happens, then Redington might find itself shut
out of one of the larger markets of the country.

An area that the company intends to penetrate is the redingt1.jpg (21780 bytes)home/home office segment, through the
Direct-To-Home (DTH) communications system. But with the Government deciding to postpone
all DTH licenses, Redington’s Home strategy has been unable to take off. However,
given the marketing savvy of the company, it has not been waiting for the Government to
change its mind or the DTH market to take off. What has been put on the backburner is its
plans to distribute decoding boxes and 12" satellite dishes.

An impending threat to Redington could be from the large
white goods distributors, which have of late shown much interest in the burgeoning IT
retail and distribution market. While Redington has flourished in an environment devoid of
any real competition—barring companies like Godrej Pacific—the appearance of
companies such as BPL and Videocon (apart from the probability of Baron Akai’s entry)
onto the scene should be cause for concern. These companies—with an established chain
of channels and a high-decibel presence in consumer electronics—have a higher
mindshare, especially in the home market, which is one of the hottest growth areas in the
country today.

This could be Redington’s biggest chink: It is
virtually unknown to the end-user. Although, the company did have plans of unveiling an
‘Intel Inside, Redington Outside’ campaign to peddle the Redington brand name to
a wider audience, the program did not take off last year (and the company is tightlipped
whether it will commence this year). If Redington has to take on the likes of Godrej
(which is already a major player), BPL etc. and retain its eminent position in the
distribution game, its reach will have to trickle from the channels down to the end-users.
Nevertheless, with a history of turning in performances beyond the ordinary, Redington may
once again stun the market with another great story.

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