Phoenix of the East

How does it feel like when you are on a continuously flying high for a

considerable length of time, and then suddenly you crash down to ground zero

because of a host factors not exactly in your control? There would be a group of

people who would sulk, ruminate over what went wrong, and consign all his

misfortunes to the quirks of destiny. And there is another group who would take

all on the chin and stride forward again, back on track in the path of recovery.

Santanu Ghosh, chairman, Xenitis Group, belongs to the second variety. After his

fairy tale entry into PC manufacturing and an episode of rise and more rise for

three years, 2006-07 saw a major slump following a fractious break-off in

Xenitis. However, by the end of the year Ghosh has risen again like the Phoenix

from the ashes and looks set to take on the world again.

Postmortem Time



So what really went wrong for Xenitis? After all it had made a grandstand

entry by storming into the Indian PC market with its sub-10k brand of Aamar PC/Aamchi

PC. And though availability was a contentious issue, this Kolkata-based company

that started from scratch virtually forced the big daddies of the Indian PC

market to re-look at their market strategies. Add to it, the impressive

manufacturing facilities in Chinsurah, West Bengal set up in a joint venture

with a Chinese company launched with much fanfare and getting into high

production mode in little time.

After experiencing fairy tale growth for three consecutive years, the internal turmoil within the Xenitis growth applied brake to its growth momentum last year

In 2004, Shantanu Ghosh and Tathagata Dutta, the two founders of the company,

decided to change gears and look at a brand new strategy and positioning of

their PCs and the company. The outcome was the launch of the Amar PC in May

2005. Since its launch in Kolkata as Amar PC, Xenitis had gone national with

Aamchi PC in the West, Apna PC in the North and Namma PC in the South. With

success, the ambition to grow became more emphatic; the result was Xenitis

venturing into new territories of TV news channel (Kolkata TV), and even

two-wheeler and four-wheeler production.

But it was from late 2005-06 and early 2006-07 that things started going

wrong: most probably, an effect of putting too many things in one basket.

Finally on October 23, Ghosh and Dutta parted ways-the parent Xenitis Group

headed by Ghosh now looks into the IT products business and is venturing into

the auto sector. He says, " I have learnt my lesson, and though we had a bad Q1

due to internal turmoil, we managed three consecutive good quarters." Though

results are below expectations, Xenitis closed 2006-07 at Rs 620 crore, up by

21% from last year. Ghosh, though expects, the IT business to generate Rs 850

crore in revenue this year.






New Look



There has definitely been a perceptible shift in focus of Xenitis business.

The retail business (via Aamar PC), though still remaining, is now restricted

more in the East. Instead, the company is focusing more on components

manufacturing and acting as OEMs for all major PC vendors. It is also partnering

with twenty-five players including the likes of Novatech, Supercomp, Supreme,

Soho, Intercon.

"We are following the Chinese volume manufacturing model, whereby we plan to

produce three lakh components per month," says Ghosh. The 20,000 sq m plant set

up jointly with Unitek Computers of China, in Sugandha, Chinsurah now

manufactures PC casings, and peripherals like mouse, keyboard, CD and DVD

drives. There are also plans afoot to start manufacturing both CRT and TFT

monitors as well as motherboards and memory cards. Even more ambitious is the

plan to start mobile handset manufacturing by September of this year.

Like any successful Indian venture, Xenitis too attracted its own share of

aspersions and mistrusts from the market. Particularly, doing the rounds during

the initial heady days was one story that Xenitis might go the way of some other

IT outfits like Caltiger or Super Computers, the ill-timed venture of former

Karnataka chief minister, Bangarappa. The Caltiger story has eerie

similarities-both, Xenitis and Caltiger, zoomed into the market with amazing

levels of competitive pricing and showed high initial revenues.

However, for Caltiger, once the initial euphoria died down, it was realized

that this model was not sustainable, and it gradually died a natural death. Many

of the dealers in Ganesh Avenue, Kolkata's counterpart to Nehru Place and

Lamington Road, too predicted a similar future for Xenitis and when it was going

through turbulent times, many of them were going around with the 'told you so'

kind of smug looks. But can Ghosh finally manage to engineer the complete

turnaround? That's not just the most important question for Xenitis, but maybe

for every entrepreneurial venture from the East.

Rajneesh De



rajneeshd@cybermedia.co.in