COMPUAGE INFOCOM Chairmans Speech

CHAIRMAN’S OVERVIEW


PASSION AND PREPAREDNESS MAKES ALL THE DIFFERENCE


THE PRINCIPAL MESSAGE THAT I WISH TO SEND OUT TO OUR STAKEHOLDERS IS THAT INDIA’S IT SECTOR IS AT AN INFLECTION POINT AND COMPUAGE IS COMPETENTLY PREPARED TO MAKE THE MOST OF THE PLETHORA OF OPPORTUNITIES EMERGING ACROSS THE SECTORAL LANDSCAPE.


I am optimistic about the Company''''s prospects because of a number of reasons. One, disposable incomes and aspirations are rising progressively. Two, a personal computer has evolved from a luxury to a necessity for the country''''s aspiring millions. Three, personal computers are being increasingly used by the country''''s agricultural sector, which represents the decisive democratization of the product category. Four, personal computer prices have declined to a level where they are now equivalent to a family''''s monthly income.


These ''''slow burn'''' factors have existed for a number of years and are likely to endure in the years ahead. This is precisely why I''''m confident that the country''''s IT sector should continue to report steady growth.


However, the biggest game-changer is the impending broadband revolution (2017 onwards). The advent of Reliance Jio is expected to emerge as a landmark event in India''''s IT revolution story.


Reliance Jio is not going to be just another broadband offering. Instead, it will transform sectoral dynamics, encourage information democratization, make the aam aadmi digital native, render geographic barriers irrelevant and bring the rural marginalized into the mainstream.


The emerging pan-India transformation will represent no less massive a revolution - in fact, bigger - than the mobile telephony revolution of the last two decades where India jumped an entire technology generation, increased teledensity from a mere 10.37 to 145.46 (2014), moderated tariffs down to the world''''s lowest and emerged as the world''''s second-largest mobile handset market.


A similar revolution is afoot in the country''''s IT hardware sector too. We see a scenario where the age-old mantra of ''''roti, kapda aur makaan'''' will extend to ''''roti, kapda, makaan, mobile aur PC''''. This is likely to generate an unprecedented demand for personal computers, IT peripherals and


accessories. The importance of the fact that the country enjoys extensive headroom for growth cannot be overemphasized. Case in point: PC penetration in India stands at 9% compared to 50% in China and 60% in the US, indicating a sustainable growth opportunity. In such a backdrop, India represents one of the most attractive IT hardware opportunities in the world. We believe that MNC brands will find India an ideal destination when it comes to introducing newer products. Consequently, they will need to engage with specialized and dependable distribution intermediaries like Compuage. The result: we will be able to carve out a larger share of the market faster.


Passion and preparedness


At Compuage, we possess two of the most decisive credentials that are necessary to capitalise on this unprecedented opportunity. One, we possess the passion that has allowed us to outperform the sector, time and again. Two, we have proactively invested in our people, processes, products and partnerships to enhance our sense of preparedness.


AT COMPUAGE, WE DO NOT JUST CLAIM THAT WE ARE AMONG THE FIVE LARGEST IT PRODUCT DISTRIBUTION COMPANIES IN INDIA; WE ARE AMONG THE MOST PASSIONATE AS WELL.



THIS PASSION WAS FAITHFULLY REFLECTED IN OUR FY2015-16 PERFORMANCE: DURING A YEAR WHEN THE BROAD IT HARDWARE SECTOR GREW BY 7%, WE GREW OUR REVENUES BY 30.48%


At Compuage, we do not just claim that we are among the five largest IT product distribution companies in India; we are among the most passionate as well.


Why do we say that? Because, we stretch ourselves continually; because we run our Company virtually like a bank; because we come up with pioneering practices that become sectoral benchmarks; because we ensure that our people productivity remains among the highest in the industry.


This passion was faithfully reflected in our FY2015-16 performance. During the year, when the broad IT hardware sector grew by 7%, we grew our revenues by 30.48%. In a sluggish economy, Compuage''''s profitable growth was reflected in a 23.16% growth in PAT. We turned our inventory around faster, we recovered outstanding debts promptly, we lessened bad debts on our books and we reported Rs. 9,493 lac worth of cash on our books.


At Compuage, we have invested proactively in our business so that when the sectoral surge transpires we will be at the right place, at the right time armed with the right products.


As a means to this end, we have laid out plans to grow our presence from 450 cities to 700 in 2016-17; increase the proportion of our resellers in India''''s Tier-II, III and IV cities from 55% to 75%; make our presence felt in every Indian town with a population of at least 200,000.


Over the last couple of years, we have plugged gaps in our operating model and intend to continue doing so with the objective to cement out reputation as a one-stop shop. We recruited more professionals (accountants, sales and service teams) to address our growing number of clients. We garnered superior margins by moderating our working capital usage and interest outflow. We invested in top-of-the-line automation to double our scale without incurring any additional investments. We segregated product delivery and reseller engagement touch points to strengthen our understanding of ground realities.


Conclusion


It is this combination of passion and preparedness that provides us with the confidence that we will be able to replicate the growth that we reported in the 27 years of our existence in only three years.


We believe that this will reinforce our position as one of the fastest-growing and one of the most exciting IT product intermediaries in India.


With warm regards,


Atul Mehta


Chairman & Managing Director

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