Growth Interrupted

For the first time in its history, Redingtons growth slipped into single
digit in FY 09. Like most hardware vendors and distis, OND was the most
challenging quarter, though by JFM Redington had managed to somehow pull its act
together. The biggest spoilers were peripherals and systems. While Redingtons
peripheral slice shrunk by 6%, systems went down by 2%, more because Dells
escalation (mainly in notebooks) ate into the market share of most of the
leading vendors.

Nevertheless, Redington still managed to sustain its profitability and even
managed to keep its account receivables in tight control, added nine new vendors
and focused on large projects that assured good value. It also desisted from any
major expansion last year and that helped secure its cash reserves. Its non-IT
business also doubled to contribute 6% at the end of the fiscal. The Easy Access
NBFC channel financing initiative (100 partners registered) benefited too. By
helping partners in need of working capital during downturn, it built a core of
committed partners, who ultimately sustained the Redington bottomline.

Some niche principals got added to the kitty too, including Philips LCD
monitors, Belkin accessories, Eaton Powerware UPSes and BlackBerry smartphones.
In addition, NetApp appointed Redington as its national VAD while Sun expanded
its relationship with Redington India for the Sun Open Access Channel program.

RANK 10		Redington India
		CyberMedia Research                                                                         DQ Estimates
EH Kasturi Rangan, president, digital products division	PS Neogi, president, IT division
SV Krishnan, CFO Ramesh Natarajan, head, sales Clynton Almeida, CIO		FACTSHEET
		l Start-up Year: 1993 l Products & Services: Distributor of PCs, servers, peripherals, consumables, networking equipment and components l Employees: 1,700 l Address: SPL Guindy House, 95, Mount Road, Chennai 600032 l Tel: 04442243535 l Fax: 04422352790 l Website: www.redingtonindia.com
		Highlights
		Warehouse efficiency goes up with ADCs Big hit in peripherals, followed by systems Software grows by 2% Became RMA partner for Sonicwall
s Strengths
Diversified portfolio makes for seamless management of high-value, low-volume product and vice versa Calculated re-investment strategy ensured there is no capital erosion State-of-the art distribution infrastructure Strong team to address SI/OEM segments exclusively
t Weaknesses
Very cautious on expansion and takes considerable lead time for launching new initiatives Significant reliance on large projects

It was a challenging year for all distributors, with most of the tier-2 ones
struggling to stay afloat. For the likes of Redington and Ingram Micro though it
was not just a question of survival, the impact was severe enough to raise
concerns otherwise. The difference was while Ingrams non-IT business took the
maximum hit, for Redington it was exactly the opposite.

For companies like Redington, its operational efficiencies have been a
hallmark all these years. Last year Redington put in place its Automated
Distribution Center (ADC) in Chennai that significantly improved its warehouse
space management capabilities. In the ongoing year, Redington plans to set up
ADCs in other metros and has budgeted Rs 150 crore for this initiative. DQ