15 - Waiting In The Wings

height="260" alt="https://img-cdn.thepublive.com/filters:format(webp)/dq/media/post_attachments/b81371348d644d7b359a3ff78565330e5c159eb0a2591b0d64bd50d351ae84d3.jpg (12366 bytes)" border="0" hspace="2" vspace="2"

align="right"> align="center">DIRECTOR: R SRINIVASAN

C size="2">onsistency’ 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. COLOR="#000000">‘

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, src="redingt0.jpg" width="263" height="219" alt="redingt0.jpg (12083 bytes)" border="0"

hspace="2" vspace="2" align="right">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.

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 src="redingt1.jpg" width="400" height="166" alt="redingt1.jpg (21780 bytes)" border="0"

hspace="2" vspace="2" align="right">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.