Zenith exits disti biz, again

A year after venturing into the distribution business Zenith has now quietly
exited it citing reasons such as payment defaults and delay in payments. In
2007, the vendor had announced its plans to foray into distribution business and
had tied up with Taiwan-based Elite Group Components Systems for reselling their
motherboards. This was followed by a partnership with memory vendor A-Data and
LITEON for its ODD range of products.

This is the second time Zenith has resolved to discontinue its focus on the
distribution business. The vendor had started as a distribution company (Zenith
Technologies) in early 1980s but decided to discontinue the business in the late
80s and focus exclusively on its own brand of PCs. However, Zenith did not make
an official announcement regarding the closure of its distribution arm and
quietly moved out of it.

When questioned regarding the reasons for the closure of the business, Raj
Saraf, MD and Chairman, Zenith Computers clarified, “We were encountering
various problems related to payment defaults and delay in payments and were
finding it difficult to continue with the distribution business. We suffered
losses to the tune of Rs 5-7 lakh. Hence, around a year back we resolved to shut
the distribution arm of our business and focus only on our own brand of PCs.”

Zenith was selling the products through its existing set of channel partners
instead of creating a new channel model.

On the other hand, with end consumers looking at LFRs to meet their PC
requirements, Zenith has also decided to reduce the number of Zenith PC Worlds
across the country. The vendor will be closing around 75 Zenith PC Worlds.

“With malls being set up across the country and LFRs getting aggressive, the
end consumers indulge in buying heavily from counters at the malls. So we have
resolved to close 75 Zenith PC Worlds across the country. Presently, Zenith has
as many as 400 Zenith PC World stores in India,” shared Saraf.

Zenith will also be expanding its reach by appointing another 15-20 regional
distributors across the mini metro cities by the end of 2009. The vendor is also
gearing up for government business in order to beat the recession.

“We currently have 35 regional distributors across the country and are now
planning to take the count to 50-60 by the end of 2009. We will be appointing
partners in the mini metro locations as it offers potential for growth and
expansion,”added Saraf.