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It’s doing a pivot from a distributor to an aggregator and specialist, from devices and phones to enterprise-level tech. We might soon associate Redington Limited more with Cloud than with Apple.
Redington Limited is an integrated technology solutions provider and a Fortune 500 company- formed about 30 years back. Its life, so far, has been marked as a product distribution firm. But we can see that it’s embracing its mid-life point with a new turn altogether. It is trying on all fronts – from what it sells, how it sells, who it partners with to what it invests in – as it morphs, deliberately, into diversified technology solutions.
If the Apple store in India had been opened a decade back, the story would be turbulent for this Apple-dominant distributor of devices and phones. But the company (a listed Apple products distributor in India for over a decade) is now more enterprise cloud, digital and solar- inking quite a diversified basket of fruits. As estimated in media reports, Apple hardly contributes 30 percent to the company’s annual revenue while HP, Dell, and Lenovo, contribute 12 percent, eight percent, and seven percent respectively, to Redington’s revenue. If we consider its overall portfolio too, the share of smartphones is at 25-27 percent, of endpoint devices is 30 percent, but the enterprise portfolio is equally strong at 30-31 percent.
Redington Ltd financial results for the quarter ended March 31, 2023 (Q4 FY’23) and full financial year FY’23 show that – at `21,895 Crores overall global revenues for Q4 have been the highest ever for any quarter growing by a strong 26 percent YoY and at `590 Crores.
There are efforts being made to make the company known as more of a technology solutions provider now. The company is betting big on Cloud, solar, hybrid work and learn environments, SMB (small and medium businesses), and enterprise technology (infrastructure for servers, storage, networking, and security).
Its footprint covers 38 markets through 60 subsidiary offices, over 300 brand associations, and 43,000 channel partners. It has been commanding end-to-end distribution for all categories of IT/ITeS, Telecom, Lifestyle, and Solar products in India, Singapore, South Asia, the Middle East, Africa, and Turkey. But if we have a look at some recent pages of its playbook, there are clear signs of a transition towards more challenging, but more rewarding, IT business areas.
The change is showing encouraging payoffs – going by some initial metrics. Redington Ltd financial results for the quarter ended March 31, 2023 (Q4 FY’23) and full financial year FY’23 show that – at `21,895 Crores overall global revenues for Q4 have been the highest ever for any quarter growing by a strong 26 percent YoY and at `590 Crores, it has also registered highest-ever Q4 operating profit with a 15 percent YoY and revenue of `79,519 Crores for the full year FY23 (a jump of 27 percent)
What works in its favour:
• Solid execution across businesses and geographies
• A proximate experience of last-mile needs and on-ground issues for several years as a distributor
• Consistent investments in improving technology capabilities
• Focus on building deeper partner relationships
• A horizontally strong set of offerings
• A more comprehensive, and innovative, business model than before
• Efforts on cloud, infrastructure for servers, storage, networking, and security
Key partnerships that are pushing its strategy forward:
• With Navitas Solar, Credence Solar, Emmvee Solar, and U GRO Capital – to distribute energy-efficient solutions across the country
• With Corent Technology, a provider of a multi-cloud application migration and optimization platform – to strengthen its posture in offering enterprises and large SMBs a comprehensive solution for multi-cloud transformation projects
• With Wipro 3D – for the distribution of the newly-launched polymer 3D printer across the country
• With Polycab India Limited (Polycab), the largest manufacturer of Wires and Cables in India – a foray in end-to-end passive networking solutions
• With Enertech, a solar inverter manufacturing company – to cater to the demand for solar hybrid inverters in India
• With Google Cloud India (in September 2022) – for procurement and delivery of relevant cloud services and solutions to enterprises, SMBs, and the public sector
• With AWS (in June 2022) – for SMEs and Tier2 and Tier 3 cities
Cloud – the Next Branch of Ripe Promise
What’s particularly interesting to note is that the company is weaving all its holes well in the Cloud basket. Its partnership with Google Cloud is aimed towards Google Workspace and Google Cloud with SMBs, education and public sector, mid-market, and enterprise segments. There are also plans for hosting distribution and adoption of Google Chrome Enterprise. There is a strong demand, as the company expects, for Google Cloud-based services in India, a public cloud services market slated to reach US$13.5 billion (by 2026).
The company is putting money and intent where the dream is. It also set up a dedicated Cloud Centre of Excellence to strengthen skills & capabilities for delivering cloud solutions. It entered into a multi-year Strategic Collaboration Agreement (SCA) with Amazon Internet Services Private Limited (AISPL). This will be a good chance for AWS too to deepen cloud capabilities to drive growth in existing markets, and expand into Tier 2 and Tier 3 cities while Redington will use the Cloud Centre of Excellence (CCoE) to execute its cloud-first strategy and develop customized cloud solutions. It will also sharpen some distributor capabilities like Innovation Centre, Intelligence Hub, and SMB Migration Factory. The new image would be that of an integrated sales, consulting, and support approach – with improved security, scalability, and cloud management capabilities – as claimed.
Rajiv Srivastava, Managing Director, Redington Ltd
“Our growth in FY23 has been driven by reinventing ourselves across many dimensions. We made significant investments in improving our digital capabilities, building platforms, and creating processes to enable faster time to market and providing choices to customers to engage with us in ways they prefer. While technology distribution has been our core value proposition, we are focused on building competencies and capabilities to provide managed services for private and public Cloud, Security, and audits. The technology industry globally has been going through a phase of reduced demand and our initiatives ensure we provide more value to serve our customers better thereby gaining share and accelerate our growth momentum.”
As per media reports, Redington is also creating a factory of ‘proof of concept’ and ‘center of excellence’ where partners can test, and pilot their applications and technologies before rolling them out at full stakes.
Its Cloud focus is evident with specific offerings and models like – S.M.A.R.T. Cloud Adoption Framework (that maps the end customer cloud adoption journey across Subscription, Implementation, Specific Solutions, and Managed Service), a tailor-made onboarding irrespective of customer size, investments in all relevant areas (sales, alliances, technical pre-sales, solutions, and delivery). The idea is, perhaps, to present the appeal of an All-In-One service. It has also put in efforts to craft very specific and focused programs for ISVs, Startups, and Greenfield customers – straddling Cloud Ops, implementation, and migration as well as Cloud accreditations on Storage, EC2 (SDP), Migration (MCR) & Partner Led Enterprise Support (PLES).
The company is consistent on developing technical competencies on the entire Cloud spectrum (Google, IBM Cloud, OCI, Salesforce, Fresh works, Gitlab, etc.) – all enabled by Redington Cloud.
Its enterprise portfolio has partnerships with Cisco, Dell, HP, PaloAlto, Fortinet, and many more. It also has a specific partner platform—Cloud Quarks, for the insightful marketplace and a self-service portal—with migration support and tools.
Not Missing the Forest for the Tree
In its erstwhile business strongholds, the company faced pressure on inventory and liquidation of stock – and, thus, a reduction in margin. Built-up inventories from big IT Hardware players like Dell, Lenovo, and HP with a hard-to-digest dip in the off-take of IT equipment – all that was a sour spot this year. But inventory could liquidate with the withdrawal of work from the home model in offices and the opening of schools in the coming quarter. The company expects the second and third quarters of financial year 2023-24 to show a volume uptick in IT hardware. Margins could also improve to 2.6 to 2.9 percent. This would be important as in Singapore, India, and South Asia (SISA) business margins stayed stubborn YoY at 2.5 percent and for the Rest of the world, they slid down to 2.9 percent versus 3.4 percent year on year.
But if Redington is able to milk its Cloud, solar, IT infra, and enterprise-tech moves in good time– such problems would stop being thorns worth worrying about. Redington’s formula of addressing Technology Friction – the gap between the speed of innovation and rate of adoption of technology – could just work well in its ascent towards a juicier and perennial fruit.
By Pratima H