Power Solutions dupes Lucknow and MP channel

LUCKNOW, INDIA: A recent fraud incident in Lucknow has left the channel partners in a state of shock. Lucknow-based Power Solutions has allegedly taken close to 15 partners in the region for a ride. In addition, trade in parts of Madhya Pradesh, including cities such as Indore, Gwalior and Bhopal have also been affected since Power Solutions also resold goods at lesser prices in these cities.

Lucknow Computer Vyapar Mandal (LCVM), the local association, is looking into the issue and planning to take legal action in the matter. Meanwhile, Rahul Pandey, Proprietor, Power Solutions and Vivek Tiwary, Manager, Power Solutions, who till sometime back were absconding, are supposed to be back in town now, though they remained unreachable.

When The DQ Week got in touch with the association, a dealer and representative of the association mentioned, “The dealer had been operating in the region for the past one year and used to buy several products including products of companies like HP, Dell, Intel, LG and other such brands from sub-distributors in the region at the existing dealer prices and sell it at a lower price in Lucknow and in other parts of Madhya Pradesh. However, it was only in December 2008 that the cheques started bouncing. Initially Pandey used to pay cash while buying goods but later when he built a rapport in the market he started taking stock on credit. Later the cheques he had issued to the sub-distributors in the region started bouncing. During the period when he was absconding, he used to give calls to some of the dealers and assured them that he would return them their amounts. Some of the dealers tried to approach his family members. Now, with the association taking note of the situation, the issue is likely to get resolved.”

Refusing to divulge any information on the matter, Sanjay Gulati, President, LCVM reiterated, “We are talking to the Proprietor of Power Solutions directly and trying to extract the amount from him. We cannot comment on the issue since we are still investigating and calculating how much money has to be claimed from him. A seven member team is currently collating information about the amount that has to be extracted from him. A huge sum of money of a number of dealers is at stake and to my knowledge no one has filed a case against him since that also means they (affected parties) might not get their share of claims.”

When contacted, Manoj Mishra, Proprietor, Computer House who is yet to recover his money from Power Solutions stated, “Initially Power Solutions was doing a significant amount of business with us. But at a later stage when their cheques started bouncing, we realized that the proprietor was indulging in unethical business. I have to claim more than Rs18 lakh from the company and consequently have already filed a forgery case against him at the Gomti Nagar Station in Lucknow. Currently my partner is looking into the matter.”

Mishra further informed that based on the claims of partners, the police had traced Pandey via his mobile number following which he was in police custody for one day. “The police also raided his house in addition to sending him to jail but later he managed a release by securing bail orders. Following his release he is very much present in Lucknow and is now giving us false assurances that he will repay all his dues. We are now looking at taking him to court by leveling relevant charges against him. In addition, a significant amount of the money from distributors is also pending with this person.”

However, when contacted for a copy of the FIR, Mishra, in a mail to The DQ Week, refused to share the details stating that the FIR stands withdrawn based on some commitments.

Yet another dealer who’s to recover his sum from the alleged defaulter mentioned, “Power Solutions had purchased stock to the tune of Rs 10 lakh from me, which included LG products, HP laptops and Intel CPUs. However, with the association taking serious note of the incident, there is every chance that this case will get sorted out.”

Apparently, Power Solutions owes a significant amount of money to SES Technologies also. When contacted a representative of SES Technologies refused to comment on the issue and mentioned, “This is a high profile matter and investigations are on to ensure that the defaulting party settles all the claims. In another 15 days the issue will have been closed and it’s only then that we will be able to comment any further.”

The issue has again brought into limelight the problem of undercutting. Power Solutions used to buy the products at the prevailing market prices and then resell it at two percent less than the amount on which he had bought the goods. Pandey never used to issue credit notes and was selling a lot of stock by undercutting the prices. This has affected the Lucknow and MP market and businesses for many of the dealers in the region has been severely affected.

Bhupendra Gaur of Bhopal-based Latest Infotech mentioned, “We were aware that some dealer from Lucknow was selling products in Bhopal at far lesser prices than the prevailing market rates. This was affecting our business as well since we deal with Lenovo laptops and the dealer in Bhopal who was purchasing from the Lucknow party was selling the same Lenovo products at much lesser prices. I did raise the concern and tried to protest but my efforts went in vain and this has severely affected the Bhopal market. Apparently, Power Solutions was pushing these products through a local dealer in Bhopal.”

When contacted, dealers in Gwalior region cited similar instances and indicated that trade in the region had been hit owing to Power Solution’s unethical practices. Abhay Garg, President, Gwalior Computer Trade Association added, “We got information from some of our members that a certain dealer from Lucknow has been supplying IT products including laptops, peripherals and CPU, at low prices. This business was being carried out by a local party in Gwalior who was again reselling it in Indore, Jabalpur and Gwalior.”

Refusing to disclose the Gwalior dealer’s identity, Garg mentioned, “This dealer in Gwalior has been reselling in parts of Madhya Pradesh without issuing any bills in exchange for material.”

Rohit Kohli of Kanpur-based Comexcell Technologies stated, “We have been hearing reports about Lucknow-based Power Solutions running away with a huge sum of money of local dealers. However, they do not owe us any amount. The proprietor of Power Solutions had tried to approach us around a year back but then due to the strict policy that we have adhere to, we did not deal with him.”

A representative of Ingram Micro in Lucknow, on condition of anonymity noted, “We have been hearing reports of Power Solutions indulging in fraudulent practices and duping local dealers of large amount. We have never done any credit billing with this company, although he did approach us for products including hard disk drive and CPUs, and wanted to avail the same on credit.”

According to sources within the association, some of the people who have been duped by Power Solutions include Rakshit Computer & Communication Systems, whose outstanding is at Rs 11 lakh, Computer House that has been duped of Rs 25 to 30 lakh and even the Kolkata-based disti—Supertron, has around Rs 5-6 lakh pending.

Declining that Supertron has any amount to be recovered from Power Solutions, Vibhor Agarwal, Director—Sales and Marketing, Supertron mentioned, “We were aware of the activities of this company and had information from the market that Power Solutions was indulging in fraudulent practices. However, my branch officer in Lucknow informed us that we had dealt with the company in the past but it was no more an active account for us. We do not have any amount stuck up with the company.”

Market sources clearly state that though it is difficult to asses the exact amount by which the channel has been duped, this scam could be anywhere to the tune of Rs 2-3 crore.