Rank 7: Tech Pacific India: Riding Out the Storm

This was the slowdown year, and it shattered the growth aspirations of

India’s largest IT distribution company. With revenues of Rs 1,675.8 crore,

Tech Pacific (India) fell short of its topline by Rs 51 crore–a drop of nearly

3%. But Tech Pacific’s performance was a near-mirror image of the rest of the

hardware market, shrinking both in terms of units and value. The company,

however, did beat back the trend in the overall packaged software segment–while

the domestic industry fell by 2%, Tech Pacific notched up a neat 34% growth.

This helped it close the topline gap brought about by the fall in other market

segments like systems, peripherals, networking and components.

Performance Highlights Packaged software grew by 34%, accounting for over 18% of overall revenues Microsoft products alone grew by 25%, accounting for over 12.5 % of annual revenue Strengths Despite the slowdown, lower demand and price cuts, Tech Pacific managed to limit the fall in overall revenues to 3% Continuous ramp-up of the division has helped profitability Weaknesses Over-dependence on tier-1 MNC brands Unable to match mindshare with marketshare Tech Pacific (India) Ltd. l Startup: 1996 l Products & services: Distributors for HP, IBM, Compaq, Acer, Epson, Canon, APC, Intel, Iomega, 3Com, Cisco, Samsung, Microsoft, Macromedia Adobe, Symantec, NAI, Palm, Sun, Oracle, Autodesk, Accton and Avaya l Branches: 28 l Dealers: 6,000 l Address: Gate 1A, Godrej Industries Premises, Eastern Express Highway, Vikhroli (E), Mumbai 400079 l Tel: 5960101 l fax: 5960102 l Website: techpaconline.com

The signs of slowing demand were visible early in the year, with growth

restricted to a few segments. By June 2001, Tech Pacific opened eight new

branches in ‘D’ class cities. The move met with reasonable success, though

its impact was far greater on the bottomline. MNC brands lost tremendous share

in systems, and since Tech Pacific dealt only in MNC brands, this had a major

impact on overall performance–which slipped 3%. The impact was less in the

components and packaged software space. Samsung was a high-growth brand in

components, and strong anti-piracy campaigns led to growth in packaged software,

but peripherals were flat. It was profitability that bore the brunt of the

slowdown, especially as price-cuts had to be made beyond budgeted levels. The

division grew strongly, though, fanned by strong demand for IBM and Compaq Alpha

servers, as also the software portfolio comprising IBM, Oracle, Autodesk,

Microsoft .NET and Symantec.

In response, Tech Pacific walked a new route to take ownership for certain

brands–creating demand, driving marketing programs and fulfilling demand. It

signed up with 3Com, Autodesk, APC and Palm as their exclusive distributor. On

PCs, it shed its dependence on MNC brands and launched its own white boxes. And

in a departure from tradition, it worked with national OEMs. Tighter credit

norms and an improved logistics and supply chain saw greater customer

satisfaction levels, leading to the company projected a modest 15% growth in

fiscal 2002-03.