TVSE Reorients Channel Strategy

The Rs 228 crore Chennai-based peripheral manufac-turing major, TVS
Electronics Ltd (TVSE) is getting aggressive on the channel front to increase
its business and reach a revenue target of Rs 500 crore by 2006. The company has
worked out a five-pronged strategy of increasing the channel partners, reaching
out to more cities and towns, strengthening the service infrastructure,
expanding the product portfolio, and creating more brand awareness and
visibility in the market to achieve the projected numbers.

According to TVSE head for channel marketing and distribution, S Magesh,
"The year 2004 will be a turning point for us as we will be moving on to
the next stage of development and growth in the company. TVSE will grow as a
stronger company with national reach and acceptance by building relationships
with channel partners and customers." Over the last one year, the company
has increased its channel contribution to total revenues from 50% to 75%,
through aggressive programs.

The company is realigning its channel structure to provide equal opportunity
to the resellers and create a level-playing field for channel partners. TVSE,
which was mainly operating through its regional distributors, is now focusing on
national distributors for better reach and availability across the country. In
October, it appointed Redington as its third national distributor, which is in
addition to Ingram Micro–appointed in 2000–and Tech Pacific–appointed in
2002. "Now, we want to move all our regional distributors under them. We
have already done that in eight markets and soon all regional distributors will
be renamed as re-distribution partners (RDPs), who will buy products only from
national distributors," pointed out Magesh.

At present, the company has around 130 RDPs across the country and plans to
scale up this number to 250 within the next one year. Similarly, TVSE will
increase its reach from 360 cities/towns to 500 cities/towns in the same period,
mainly in B- and C-class markets.

This expanded reach is all the more important for its DMPs. Remarked Magesh,
"Dot matrix printers are projected in a big way in upcountry markets and
our reach there will help us to increase our market share to 50% by 2004."
Currently, TVSE enjoys 44% market share in this segment, as per the IDC report
for AMJ 2003.

While realigning the channel partners, TVSE wants to form special groups for
specific product segments to avoid clash of interest and unethical competition
among the resellers. "We will have dedicated RDPs for specific product
lines with clear focus on the products. Even with distributors, we are planning
to practice the same, which will give clear focus and more revenues to the
company. However, there will be some RDPs–around 25% of the total–who will
be allowed to sell all products," pointed out Magesh.

TVSE plans to market UPS systems only through Ingram Micro, while Redington
and Tech Pacific will work on geographical basis for consumables. Redington will
primarily address south and east, while Tech Pacific will take care of the
northern and western regions.

Out of the major metros, TVSE has traditionally been weak in Mumbai, a fact
admitted by Magesh. But now it has embarked on a major initiative to address the
situation by launching Mission Mumbai. "With Mission Mumbai, we have
increased our business in the city–we are doubling business every month–and
soon, Mumbai will be the number one revenue generating center for us," he
quipped.

Similarly, the company is strengthening its network in Delhi and nearby
markets. Overall, region wise, TVSE got 45% of its business last year from the
southern region.

TVSE is also betting big on its new consumables for the DMP segment.
"Consumables will be the third-largest revenue generating business for the
company and we have launched our Web initiative here," he added. TVSE is
also adding more excitement to the channel community by announcing various
schemes and point programs, apart from end-user promotions.

Asim Raina and S Gopikrishna in Chennai
CyberMedia News Service