New Fiscal, New Hope

Have we finally touched the bottom? Yes, we certainly have,

if we go by the bullishness exhibited by the most prominent and leading channel

partners in Delhi. All 30 of these channels players expect the market to take

off now. In fact, April, traditionally leanest month, is turning out to be

extremely good–much better than March.

Financial 2001-02 was a year fraught with low toplines and

shrinking bottomlines. IT pundits had predicted some sharp growth before the

recession was prominent. As the recession gained ground, the market sentiments

went toppling down and so did those growth figures.

The DQW News Bureau did a market survey to find out whether

the market sentiment matched the financial figures or not. Well! The figures

were much more upbeat than the low sentiments prevailing in the market. There

has been a negligible growth instead of a drop in the toplines of the major

channel partners in the capital, which were surveyed.

The channel segment grew by a meager 4% in 2001-02, compared to the previous year’s growth of 42%. However, the new fiscal–2002-03–has brought new optimism. Projections are that this segment will grow at a heady 33%. These figures are based on a survey conducted amongst the top 30 channel partners in the capital.

The IT-enabled services segment showed the maximum spending

in the industry, corporate segment was dormant, and government sector gave the

bread and butter to the channel partners. The defense sector also did a lot of

IT buying this year. In addition, the SOHO and the home segment recorded

substantial growth during the last fiscal.

It has been a mixed year; some of the conventional box

pushers saw huge growth (Aryan Technologies and Comnet Vision had a growth of

25%) and some regressed heavily (Pulse Systems had a negative growth of 25% and

RR Systems had a negative growth of 20%). Solution providers also saw a mixed

pattern. While Infotech Network Systems grew by a whopping 100%, Tulip Software

also showed great growth clocking 80%. Samtech InfoNet went down by 40% and

Netlink Business Systems also had a negative growth of 10%. Some of the players

have been able to maintain the previous year’s performance, such as Bhartiya

Electronics, Leading Edge, Micro Max Technologies and Vidur & Co.

The channel industry saw various ups and downs in the last

fiscal. With most of the players consolidating the business, toplines are

shrinking and bottomlines are enjoying the focus. Most of the channel partners

are trying to concentrate on consolidating their business practices. They are

trying to reduce their bad debts and risk factors as much as possible. The main

reason for thin bottomlines has been the bad debts according to these channel

partners. Most of the channel partners said that the Indian IT industry requires

a paradigm shift to bring the inertia for growth. What kind of paradigm shift is

still a dogma?

Ankur Gupta, director, Pulse Systems, said, "Just

because we wanted numbers to be with us, we have huge bad debts on us. This year

saw so many defaulters and fly-by-night operators. We will be much more cautious

this year onwards." Keshav Madhav, CEO, Vidur & Co, opined similar

sentiments, "We plan to concentrate on our bottomline this year rather than

the topline. We will be realigning our business practices this year

onwards."

Some channel partners said that this year has been a shakeout

phase, which has left mostly serious players in the market while non-serious

players have shut down their shutters and thus they see a fair growth in the

coming year. Somesh Narang, Director, Elcom Trading, said, "I see a good

growth this year, as seasoned players are in the market who do not believe in

payment defaults and bad trade practices. Meanwhile, the end consumer is also

becoming educated, which should boost the end-consumer sales."

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AK Pandey, director, Miraj Infotech, commented, "Growth

has been there, if you see the retail segment it has grown substantially but the

bottomlines have fallen short due to the bad trade practices and the numbers

game."

The year saw one more peculiar trend–principals went

head-on to win not only the bigger orders but smaller orders too. Mused Anil

Gupta, CEO, Artek Enterprises, "With such fierce competition, we never

expected vendors and principals fighting for small orders, now they are also

there in the market, trying to gain as much business as possible. They can work

on much more lower margins than us, which leaves us with small business to grab

on."

Most of the channel partners have found April bullish as

compared to the March. Overall, they are expecting a growth close to 33% in

fiscal 2002-03. The figures show a high growth rate and good bottomlines for the

coming year. Most of the channel partners are consolidating their business

practices and focusing on more new business practices rather than the

conventional business practices. This year should bring some good news after the

lean period that the IT industry has seen in the past year.

Shweta Khanna



Cyber News Service, New Delhi