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Channel reels under duty cut

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DQW Bureau
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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,

particu-larly 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.

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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 saddled 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 remains 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.

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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 channel partners to distri-butors 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 government announcements.

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The vendors have been slow to react and though some have announced a certain

percen-tage cut from some items there has been no sign of anything being

actually passed down to the market yet.

The further waiving of excise duty from hardware compo-nents took the

importers 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)

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