7 – Proof Of Concept

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MD: RAMESH D GROVER

At Rs 442 crore and 77 percent growth, Godrej  Pacific
Technology Ltd (GPTL) has proved that it is  the mightiest force in IT distribution.
With almost all commodity products ranging from PCs, peripherals, software, and components
from all the leading vendors forming its product portfolio, GPTL has been following the
best global practices in the distribution business. The company has probably the lowest
cost structure in IT distribution in the country.

Everything the company did was right. The year before
last was the ‘year of adaptation’, as CEO Shailendra Gupta preferred to call it.
And adapt it did. Its investments in technology and the reengineering of its distribution
process paid off. The company’s growth has come through increase in marketshare on
its existing businesses and addition of new product lines. The company has acquired
leading marketshares–it is either # 1 or # 2 in all its product lines.

godrej2.jpg (10678 bytes)The company started off as a printer distribution set-up. When the intent and the
model for distribution business was clear, it tied up with Tech Pacific, an Australian
distribution company, which brought in the discipline required to make it big in the
distribution business. In just around three years, GPTL has added on significant product
lines and has demonstrated growth in almost all of them. PC peripherals, including
printers, now account for under 50 per cent of the total business. PC servers, desktops,
and notebooks from HP, IBM, Compaq, and Digital worth Rs 60.4 crore were sold last
year–a 174 percent increase in its channel sales of PCs compared to last year.

S T R A T E G Y

  • To increase distribution efficiency by adopting best practices in
    distribution, managing channels through channel-friendly policies, and foresight in
    selecting products that will quickly ramp up.

T A C T I C S

  • Using smart information systems to identify market movements first and
    take preemptive/corrective action.
  • Managing inventories and costs using this
    information.
  • Continually looking at gaps in product portfolio and filling them up.

O B J E C T I V E S

  • Further streamline channel interaction to reduce the cost of
    distribution.
  • Identify opportunities for value addition.
  • Expand into the area of storage products and
    components.
  • Maintain existing growth rate.

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

  • Grew at 77 percent to touch Rs 442 crore.
  • PCs grew by 174 percent.
  • Peripherals grew by 94 percent.
  • Networking grew by 146 percent.
  • CPUs and multimedia kits grew by 92 percent.
  • Packaged software grew by 50 per cent.

PRODUCTS AND SERVICES: Systems, Peripherals,
Networking, Packaged Software, Maintenance 
* AGENCY OPERATIONS: HP, IBM, Digital, Compaq, Epson,
Panasonic, Brother, Samsung, Microsoft * START-UP
YEAR:
1986 * EMPLOYEES: 300 * ADDRESS: Gate No. 1A, Godrej Soaps Complex, Pirojshanagar,
Eastern Express Highway, Vikhroli (E), Mumbai 400079 *
TEL: 5182431/41 * FAX: 5170415 * WEB SITE: www.godrejpacific.com

Similarly, software licenses from Microsoft were
worth Rs 32.07 crore and CPUs and multimedia kits brought in Rs 64.5 crore. Networking
products worth nearly Rs 18 crore were sold through its channels. All these were
comparatively new product lines that were added in the past two years. It is believed in
the industry that the ultimate test of any product for its commodity value and market
acceptability is to put it through GPTL’s channel.

To its vendors, the company brings tremendous value.
Realizing this, most key IT MNCs operating in India have chosen GPTL to distribute their
products. The company provides them access to extensive channels, geographical
penetration, and addressability to various customer segments. The company is appreciated
by the vendors for its base of high-caliber manpower with comprehensive understanding of
the distribution dynamics. The company’s strong financial capability also makes it an
ideal partner for potential MNC vendors.

GPTL has been able to focus on five distinct channels
and increase the capacity and output of each. These are systems integrators, value-added
resellers, box movers, software dealers and resellers, and OEMs. The distribution
operation is supported by state-of-the-art information systems comprising up-to-the-minute
online status of product movement from any part of the country. This is enabled by using a
VSAT network to connect all its warehouses and an integrated distribution management
solution.

A highly channel-oriented company, GPTL has worked hard
to ensure pro-channel policies in all areas of decision-making. As a first step toward
enabling a shift in mindset in order to apply customer care benchmarks to the channels as
well, the company has started calling its dealers–internally as well as
externally–as “customers.”

There has been high focus on key deliverables to
channels. High availability of products, almost always ex-stock, fast delivery, and prompt
supply of spares throughout the country are major benefits that GPTL’s dealers enjoy,
besides favorable credit policies, hassle-free transactions, efficient information
support, and reliable warranty support.

As IT products and services become more and more
commoditized and volumes ramp up, it will be interesting to see how GPTL remodels its
distribution strategy. Predictably, one way would be to use substantially the channels
that its other white goods JV, Godrej-GE, has created, and create cost and logistics
synergies with the alternative channel. In which case it will have to strive consciously
for congruence between its current practices, which are more suited for a
channel-to-business-user paradigm. In case it decides to go its own way and expand upon
its current strengths, the main challenge would be to manage a very large and diversified
distribution set-up, the likes of which the Indian IT has seldom seen.

godrej3.jpg (22931 bytes)By focusing on the channel, GPTL has proved one major point to the Indian IT
businesses–that it is possible to add value without actually ‘making’
something. To that end, GPTL’s early advantage will enable it to stay in the lead as
far as the distribution business goes.

In the coming year, GPTL will emphasize on further
streamlining channel interaction, reducing the cost of distribution, and identifying
opportunities for value addition. The company is also seeking portfolio expansion to fill
gaps, particularly in the area of storage products and components. 

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