Ban on HP products in Pune continues

PUNE: The ban on HP products by the Pune channel for last one-month has snowballed into a major issue with both the sides refusing to budge an inch. Pune roughly accounts for Rs 1.75 crore of business per month in HP peripherals alone. Even as talks continue between the representatives of the Computer & Media Dealers’ Association (CMDA), Pune and the HP India authorities, there seems to be no reprieve for the moment.

The whole imbroglio began almost a year ago when the CMDA approached the principal companies demanding fair business practices that included octroi freight delivery. Almost all the vendors followed suit. Samsung was the first company to provide products, which are octroi paid. The other companies to follow the Samsung route soon after were Epson, LG, Wipro and TVSE.

"HP was the only company that did not respond. The matter has been pending with HP for a long time now and therefore dealers in Pune have stopped trading with HP," said Suresh Joshi, secretary, CMDA. "Even Umax and Canon have been very positive on this issue and have promised to implement the demand for octroi paid products. We fail to understand why HP has adopted this stance. We are not demanding this immediately. We are willing to give them time," he added. The Pune channel has banned HP products since August 8.

Although HP India is currently in the midst of talks with dealers’, distributors and CMDA, the issue remains to be sorted out. Clarified Rajkumar Rishi, commercial sales manager — IPG (Imaging and Printing Group), HP, "HP does not bring products in Pune directly, but through its second tier distributors. Our company follows a basic business model where billing is done at five to six locations across the country. In western region, the billing location is Mumbai. Here the distributors collect goods from these billing locations and pass them onto the Tier 2 channels." HP India trades through Redington, Tech Pacific and Ingram Micro in Pune."

"The issue is fundamental. Since we do not bill directly in Pune and our business model does not allow for it, we have no way. We cannot pay," maintained Rishi. "The Pune market is indeed quite significant for HP and we intend to keep it that way. But currently there is no plan to bill our products directly in Pune," he said.

The CMDA however, reacted to this statement by pointing out that the best solution for HP would be to reimburse octroi to distributors in some manner. Said Shamsunder Bhandari, president, CMDA, Pune, "Why is HP making such a big issue over this? They can come out and tell us that they require time. We understand that there could be logistical issues involved here but there has to be some kind of commitment".

Joshi pointed out that octroi in Mumbai was 5.5%, the highest when compared to other states. In Pune, the octroi comes upto 3%. If reimbursed, the distributors would be only too happy. What is the real issue? "We do not understand. There are 10 other vendors who are equally big. They are willing to go in for octroi paid products. This will make life easier for everybody- the distributors too. We are even willing to distribute the 3 % octroi between the channel, company and distributors at 1% each. If HP can take a 5.5 % hit in Mumbai, why can’t they take a 3 % hit in Pune," he asked.

Rishi said that they were holding talks with the distributors and CMDA and were quite hopeful of resolving the issue, even as Joshi said that the association does not intend to make this into a major controversy or make it a political issue, support for CMDA has started pouring in.

"Rishi spoke to the association for over half an hour over the telephone on Friday evening with little success," Joshi revealed. CMDA has been in touch with associations in Nashik, Aurangabad, Kolhapur and Nagpur and these associations had expressed their support for the demands raised by CMDA. CMDA, Gujarat has also expressed support, Joshi added.

With the ongoing fracas, other vendors such as Epson, Canon and Samsung have reported in increase in sales. Joshi said that the figures were however not available at the moment. "Let us resolve this issue. Don’t make this tough for both sides to go back," he warned.