Financial Daily from THE HINDU group of publications
Wednesday, Mar 24, 2004
Stay smart, survive
Raja Simhan T.E.
OPENING India's doors to international trade and a gradual reduction in Customs duty have led to a free flow of electronic goods into the country in the last few years. When you speak of Chennai, one place that exemplifies this flow is Ritchie Street, the city's `electronics capital'.
Here, even a small shop bursts at the seams with a good stock of electronic goods and computer-related products, including floppy diskettes, compact discs, DVDs and mini CDs.
While that's good news for the consumer as such who enjoys a wide choice, the products on offer are mainly from international manufacturers such as Sony and Samsung. Korean and Chinese products are also slowly catching up in the market, says the owner of a shop on Ritchie Street.
Where are Indian companies? One player taking on foreign brands is Amkette. Ironically, not many know that Amkette is an Indian brand and the first domestic manufacturer of floppy diskettes way back in 1984.
Allied Electronics & Magnetics Ltd, makers of the Amkette brand of products, has been fighting tough competition from international players over the last decade. Its turnover for the last calendar year was Rs 65 crore and it is targeting an overall sales growth of 40 per cent in the current year to about Rs 100 crore, says the Chief Executive, Rajiv K. Bapna.
The company has largely been known as a floppy diskette manufacturer. Fifteen years ago, it started as a single-product company by manufacturing eight-inch floppies under the brand name Amkette. As technology grew, the company introduced 5.25 inch and 3.5 inch floppy diskettes. Amkette became a national brand and the name became generic to floppies under a protected regime.
However, things have changed in the last decade. Post-liberalisation, Allied Electronics faces fierce competition from around 10 international players, and, to some extent, from the unorganised sector.
Today, the company has over 150 products under different categories. These include media (floppy diskettes and compact discs), imaging (imaging supplies such ascartridge for inkjet and laser printers), peripherals (keyboard and mouse), storage and organisation (under the Amigo brand) and computer care products (these help in saving data programs from corruption).
International players too are present in each of these categories, says Bapna. They have flooded the Indian market with PCs and peripherals. The Indian market for consumer peripherals is about Rs 700 crore, he says. In such a scenario, how does Allied Electronics fight competition? It has adopted a `niche-oriented' approach whereby it focuses on identifying consumers' problems and solving them. For instance, taking into account the high humidity in Mumbai and Chennai, the company launched floppies with RFDs (resists fungi and dust) and gave an additional coating to the products. This has been well received in the market, Bapna says, but he declines to give production details.
Another such move to fight competition is e-cartridges, an alternative to expensive cartridges. Today, consumers are buying computers with printers. While the cost of printers has come down in the last few years, they still pay a hefty price for printer consumables. For instance, the cost of a laser printer is about Rs 3,000 while the cartridges cost half the price.
Allied Electronics has introduced e-cartridges, which the company says are priced 30 per cent less than expensive cartridges and yield up to 30 per cent more pages. The e-cartridges can be used in any of the branded printers. There is a `double saving of 60 per cent' giving the consumers `true value for money,' says Bapna.
Amkette e-cartridges have been test-marketed in 11 cities across India and the response has been good, he says. The company spent about Rs 8 crore on developing e-cartridges. The development team was asked to develop a product that is engineered to perform, provides excellent printouts, is economical and offers e-online support, says Bapna.
Allied Electronics is an IT company which uses the FMCG (fast moving consumer goods) model to sell its products. It is present in over 100 cities and has a network of over 500 distributors and 5,000 retailers across the country.
Picture by Bijoy Ghosh
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