Recessionary Blues

Ingram Micro

Ingram Micro,so far the largest distribution house in India registered a marginal fall of six percent in its growth figure securing total revenue of Rs 8,824 crore,
de-growing by Rs 572 crore compared to last FY. Although, much of the decline is expected to be the result of global slowdown, which has cut into the revenues of big national distributors. The fall of Sony Ericsson in its business is one of the prime factors for the negative growth of the company.

IT business too was flat-consumer product categories in the systems segment were badly hit by the slowdown; commercial business slowed down Q2 onwards and the PC business bore the brunt of the corporates and the much-touted government sector going into relative inactivity. Ingram also gave up some share of the Intel and Seagate business, as they were not turning out to be profitable enough. And last but not the least, there was considerable pressure on the working capital as most vendors who had extended credit periods because of the slowdown withdrew it by Q3.

Although the telecom business contributes roughly to about 14 percent of the company's turnover, the decision of Sony Ericsson moving over to high-end products has cost Ingram Micro dearly. The share of commercial product-line remained consistent at 67 percent of Ingram's total business volume with HP, Cisco, Lenovo, Acer and Microsoft featuring as the primary vendors for the company. Although the distributor's former moves of slag in business with Microsoft has cost Ingram much with the software major appointing Rashi, Compuage and Neoteric as its distributors for the OLP business, yet the vendor remains a top priority for Ingram.

Despite the odds both at the overall market scenario as well as the vendor relations (with HP reframing its distribution model), Ingram Micro was prompt enough to sign up with Samsung for its printer range and supplies and EMC for its storage line of products. Also, the distributor focused on tie-ups with niche and small scale vendors like Zebra Electronics, Data Capture, Access and Milestone, which clearly indicates its focus on topline category. Also, the consumer line of products across the systems, peripherals and components segment came in as a breather for the company.

Even with a negative growth rate, Ingram Micro remains on top retaining its position as the top distributor of India overpowering its nearest competitor in distribution by 1.26 times. Also, in terms of its channel base, the company features on top with 12,000 channel partners with half of its base 'active' every quarter. However, the channel base has been on a stagnated note compared to the last fiscal.

Highlights

• Started the distribution of Samsung printers and supplies
• Focus on expanding the topline with a nominal reduction in growth
• Decline in telecom business