Technology: Inside India's Most Wired Company (Pg 1)

TECHNOLOGY
Inside India's Most Wired Company

Twenty employees, over Rs 1,300 crore in sales, and a happening information backend; that's SEIIT.

By Aushutosh Sinha

Each employee of SEIIT generated Rs 50 crore in revenues last year, and will generate Rs 66 crore in revenues this year.
(From left to right) Shashin Devsare, Category Product Manager (Mobile Phones), Sonal Anand, CPM (Colour Monitors), Rajiv Sethi, Manager (Marketing), Aseem Kumar, CPM (ODD), Anish Srikrishna, Manager (National Marketing), Moninder Jain, CPM (Office Automation) pose with some of the products they sell.

An outlet of Haldiram's, the Indian McDonald's that never was, stands down the road from the unpretentious first-floor office of Samsung Electronics India Information and Telecommunication (SEIIT) in Delhi's crowded Lajpat Nagar borough. The store caters to 1,500 customers on an average on week-days, over 2000 on weekends, and produces 1,000 samosas and a similar number of aloo-tikkis (potato dumplings) a day. The hustle and bustle of the outlet contrasts sharply with the silence at SEIIT's office, strangely reminiscent of that of a lesser department of the government at half past two on a summer afternoon.

Yet, SEIIT can claim to be as productive as Haldiram's in its own right: it is the market leader in most segments in which it operates, with shares ranging from 13 per cent (laser printers) to 90 per cent (LCD monitors). And that's not including the Samsung components used in the products of branded pc-makers like hp and Compaq India, which import these directly from SEIIT's global parent. SEIIT merely facilitate the logistics part of these transactions.

A combination of an inventory management system that would make a fast-food outlet (like Haldiram's) turn green with envy, business processes that are, to use a piece of jargon that has crept into the business lexicon, e-enabled, and aggressive sales tactics saw SEIIT do Rs 741 crore in sales last year (calender year 2000); this year's target is a whopping Rs 1,325 crore. Read that wired bit again: the company had all of 15 employees when it did Rs 741 crore in sales. It will have 20 when it does Rs 1,325 crore.

A basic mathematical operation throws up a staggering statistic: each employee of SEIIT generated Rs 50 crore in revenues last year, and will do Rs 66 crore this year. Vivek Prakash, the energetic 32-year-old who serves as SEIIT's general manager is candidly immodest about this: ''It is a sense of ownership that drives SEIIT managers. This is what has contributed to rapid growth of the company. Hyperbole aside, highly wired processes and a workforce: revenues ratio of 1:50 should qualify SEIIT as, arguably, the most wired company in the country.

Capturing The Market, Softly

SEIIT isn't Samsung Electronics; to make that less abstruse the company that is the subject of this composition isn't the Samsung that makes televisions, or washing machines. It is a 100 per cent subsidiary of the Korean parent-the consumer durables company is a 76:24 joint venture with Videocon-that sells monitors, hard disk drives, optical disk drives, laser printers, and cellular phones. And sell it does, 300,000 units of all these every month, to over 12,000 resellers across 70 cities.

Big deal? Actually, yes. Intel's offerings account for between 20 and 25 per cent of a pc's cost; Samsung's, for 70 per cent. And, according to figures made available by the company and by IDC India, Samsung boasts a marketshare between 13 per cent (printers) and 56 per cent (colour monitors) in these categories. ''As one company offering all these products, Samsung is indeed the largest (pc components supplier) in India,'' agrees Aditya Pant, head of research, IDC India.

Prakash, who seems never short of anecdotes, or the energy to narrate them, has one that is characteristic of the stranglehold SEIIT has over the market. The company doesn't deal in mouses, but in 2000, it decided to import a few container loads of a particular brand, Vesta, and distribute it through its channel. The mouse was bundled with the CD-ROM drives sold by the company and, the brand became a leader in the category with an estimated marketshare of over 60 per cent. That story may border on the apocryphal but fact is, SEIIT does play a dominant role in the pc-components distribution chain in India.

This business is controlled by large distributors like Ingram Micro, Tech Pacific, Redington, Savex, and Salora who buy components from companies like Samsung, and vend it to resellers. Since Samsung offers a wide variety of pc-components-keyboards, speakers, CD-ROMs, hard-disk drives, floppy disk drives, colour monitors-distributors can't really afford to ignore it. And with programmes like Samsung Authorised Systems Integrator (SASI)-something similar to Intel's by-now legendary initiative to allow accredited assembles, called Genuine Intel Dealers, use the Intel Inside logo-Samsung has been able to increase demand for its offering at the reseller-level.

But this part of the story that deals with how Samsung controls what consulting firms would term the point of leverage in an industry is, to resort to a cliché, only the tip of the iceberg. What lies beneath is a tale that would warm the heart of even the tech-illiterate: of how SEIIT, by using technology to manage information flows, has built a business around low organisation costs, low inventory, and aggressive sales efforts.

1 2

Issue Contents Write to us Subscription Syndication