There are lot of challenges in distribution business currently but one of the major issues they are facing is finance. Sometimes due to lack of support from bank, they failed to grab any large order. But in recent time, Iris Computers, the leading distribution has come up with Joint Venture Agreements for partners to help them bid for large tenders. This initiative will really fuel the growth of both partners. Sanjiv Krishen, Chairman, Iris Computer Ltd, talks with DT and share more on current scenario for channel business in India.
DT: How has been the year 2018 so far for you?
Mr. Sanjiv: The year 2018 has been very vibrant for us as we are recording a growth of 25% compared to last year. Large orders are coming to us from the Education space and from new Government initiatives. We have set up Tab Labs in Narayana schools and colleges, supplied over 5000 computers to Kendriya Vidyalaya and tablets to Govt school teachers to name a few. Commercial organisations are refreshing their technologies. Pepsi for example is providing mobility solutions to its sales force through Iris. They have ordered thousands of Samsung smart phones through us.
DT: Please brief about your channel ecosystem in India. How are you currently working with your partners to strengthen your market position?
Mr. Sanjiv: We are working with our partners to enable them to pick up large orders. We are structuring credit limits for them through Iris and through financial institutions like Incred, Adani, Tata Capital. We are facilitating the execution of big orders for them by opening Escrow accounts with us so that larger credit becomes available to them through us.
We plan our inventory very carefully so that we carry enough stock enabling us to make immediate deliveries for items which have a long delivery period. We not only carry computers in our warehouses all over the country but also imported items like Large Format Displays. We have received several orders from customers for signage solutions from LG consisting of Large Displays from 40” to 85” and their latest video walls which we have been able to supply from our stock within 2 days. This helps to strengthen our market position and help our partners to promptly execute large orders.
DT: What is your overall roadmap to escalate your growth further in CY 2019? On what products you will be focusing in 2019?
Mr. Sanjiv: We will work with our channel partners more deeply to escalate our joint growth during 2019. We will bring them newer products in IT and Services. In addition to the regular IT products we will offer new products, for example Robotics, High capability Language translating machines which can be used in hotels and conferences where many foreigners come. We will enable our partners to bid for large tenders by offering Joint Venture Agreements with them so that they qualify for the prerequisites and meet the minimum criteria required whenever they have adequate skills but are not large enough to meet the minimum turnover requirement. We will focus on products that give a higher margin for us and our partners but are not as capital intensive. We will extend higher credit facilities as order sizes become bigger.
DT: What will be the major challenges for Distribution houses in 2019?
Mr. Sanjiv: The major challenges faced by Distribution Houses in 2019 will be the increasing credit exposures we face collectively and the reducing margins in our business. Inadequate capitalising by our channel partners will hamper growth and increase our risk. Distributors can finance channel partners up to a limit but beyond that we will need financial securities which many new partners cannot provide. The margins are shrinking and with 2 to 3 % margin, there is no margin for writing off any amounts. Lastly, the high rate of interest in India is a major challenge. Any delays in receiving our payments or overstocking impacts our profitability extremely adversely.