Channel reels under duty cut

Hyderabad is seeing an 80 per cent drop in the sales. This
has been the immediate impact of mini budget and the following waiv-ing of
excise duty on hardware components earlier this month.

According to KVR Menon, President, Twin-Cities Compu-ter
Dealers’ Association (TC-CDA) in Hyderabad market alone the collective stock
is nothing less than Rs 15 crore if you take just five to eight big dealers.

The retailers, particularly those, who hold stocks over Rs 1
crore are reeling under the impact. Ready to liquidate fast and at the best
possible price there are no takers.

"Even the corporates have postponed their
purchase," said T Kishan of Kishan Trading Company and the walk-in
customers after having a good look at everything want to know when can they pick
up the purchase on the new price, he added, emphasizing that more the time taken
to liqui-date the stocks higher will be the losses.

In the ordinary circumstan-ces, channel partners plan their
stocks keeping the February budget in mind but this is different and beyond
anybody’s calculations.

While channel partners sad-dled with stocks are crying hoarse
distributors are not lagging far behind–even when everybody has welcomed the
drastic reduction in the custom and excise duty. There is no denying the move
will expand the market but only in the long run. The immediate future rem-ains
unsorted. The question plaguing the channel partners is : ‘With wafer thin
margins of one-two per cent, how can one expect the dealers to absorb the loss?’

Soon after the mini budget was announced, TCCDA called an
emergency meeting to take stock of the situation and the result is the deadlock
between dealers and distributors.

Distributors have refused to absorb any loss from the stocks
already sold unless their principals pitch in. "Our plight is much worse.
Who is respon-sible for the stocks lying in our warehouses?" questioned a
vexed Venkata Subramanyam, Branch Manager, Redington (India) Ltd.

The representations of chan-nel partners to distributors have
evoked little response.

"They are trying to wash off their hands from the stocks
lying with dealers," said Menon who has advised the dealers who are facing
unmanageable losses, to stop payments to the distributors for the stock bought
20 days before the gov-ernment announcements.

The vendors have been slow to react and though some have
announced a certain per-centage cut from some items there has been no sign of
anything being actually pas-sed down to the market yet.

The further waiving of excise duty from hardware components
took the impor-ters also in the net of woes. Now that just about anybody can
import who will come to us and the loss on the stock on which tax has been paid
will just have to absorbed, they voiced stating that not only immediate future
is difficult to negotiate and even in the future the business model needs a
change.



Nandita Singh

Hyderabad (CyberMedia News Service)