Gradually but steadily the market seems to be running short of cash.
Distributors are complaining of increase in payment cycles and further down the
trade, it is the same situation everywhere. Now, that is quite surprising as
busiÂness is booming and virÂtually everybody is reporting a huge boom in
sales. Then what could be the reason for the tight money situation? The answer
is real estate.
Yes, property is the prime culprit behind the current tight situation.
Anybody and everybody-whosoever had cash in hand-has invested money in
buying property. Although this trend started more than a year back, it gained
momentum around six months back as the real estate market started heating up.
Interestingly, channel partners are not just buying property for speculation
purposes. A number of them have jumped into this business as serious builders.
For instance, Bangalore's Sri Durga Computech has already built a commercial
property and is now building a mall. Its Director Sanath Babu is absolutely
gung-ho about this venture. In fact, over the last one year, he has reduced his
exposure to IT business considerably.
At the same time, there are a number of partners who are looking at building
up their swank offices in a prime location. Among these are SPs like Ravi Verdes
of Frontier Business Systems and Satyen Vyas of Vitage Group. Both of them are
looking forward to setting up their HQs in a prime location in Bangalore. Then
there are partners like Milon Chakraborty of Kolkata's Syntech Group who has
already built his Syntech Towers in Salt Lake area. In this endeavor, Milon had
the support of Pecon's Mahesh Shah, Eastern IT's JK Baid and Supertron's
VK Bhandari, all of whom took positions in this tower.
However, real estate is not the end all of partners diversification. There
are partners who have invested in other areas also. Prominent among these are
Baid in Kolkata who has set up a jute factory and Sunil Narang of Delhi's
Elcom who established a franchisee of Apollo Hospital in partnership with
Softech's Ashok Taneja. Then you have Sunil Gupta of Challanger who has been
dabbling in herbal beauty business for a while now.
Perhaps the most innovative one has to be Nitesh Bhandari of Chennai's
Texonic. He is seriously looking at the windmill as a viable business to invest
in. For the past couple of months he has been talking to foreign partners for a
possible joint venture. Ranjan Chopra of Delhi's Team Computers is another one
who is doing some out of box thinking. He is in the process of setting up a jazz
So, what is driving all these partners to non-IT business? It is plain and
simple economics. Margins in IT business are virtually non-existent whereas
other areas are much more promising in terms of return on investment. No wonder,
they are thinking about making more money from non-IT business.