eSys to buy Nebula

CHENNAI: Nebula Technologies, which was once a key account for Intel, has lost its sheen over a period of time. Today, the distribution company is on the verge of closing, as it could not find any takers even while it announced to sell of its business. Sometime back, there was a media report saying Nebula is in negotiation with a Taiwan-based IT distribution company, World Peace International (WPI) for selling of its business to the latter for $ four million. However, there was no further development on that and the company could not find any other bidder for its business.

Meanwhile, market is abuzz with rumors that Delhi-Based eSys Distribution Ltd, a fast growing distribution company is already making the due-diligence to acquire Nebula Technologies. According to a source, Nebula has agreed to give away 18 branch offices for a value of Rs 40 lakh, which is very less than what it negotiated earlier. In fact, WPI and eSys were the only two prospective companies who negotiated with Nebula, in the last six months. But, now, the value has drastically come down as Nebula lost its association with Intel, which eSys was seeking. "The equation really changed when Nebula lost Intel, and the same was gained by eSys just recently. Now, eSys has an upper hand in the deal," said the source.

However, Nebula CEO MH Subramanian refused to comment anything on the development inspite of making repeated calls to him. "I cannot talk anything on this now. But, there is some development which will be announced later," he said.

According to market information, Nebula has suspended its operations in five of the 20 branch offices for quite sometime now and eSys will be taking all the facilities, totally 18 centers, for their distribution expansion plans. Bangalore and Delhi are the two locations left by eSys as it already has a presence there.

The company is on the verge of closing down as it has no business and according to market reports, presently there is no sales team in Nebula and it has only a few support staff in whole of the organization. "They had more than 100 employees across the country when they were doing well. Today, they have only 40 plus staff," said a close associate of the company.

Nebula Technologies, which was started in 1996 as a key distributor for Intel, had registered good growth in the first few years. In fact, even before this crisis Intel accounted for more than 80 percent of the turnover for Nebula. Meanwhile, it had started to diversify its business when Intel put a hold on the credit it enjoyed. This pressure from Intel had seen the company adding up new product line of various brands. "The company had added and deleted many brands over a period of time and it was not steady with any particular brand other than Intel," said a source close to the company.

Some of the brands, which it was dealing just before this crisis, were Krone, Powerware, Chenbro, Pepper (XO Infotech), Enterasys and Sharp. Nebula was majorly betting on its own PC brand--QMax. It had both corporate and home PCs under the brand. "The company was never going strong with one particular brand. In fact, it wanted to do same kind of business what it had with Intel and adding products without focus will not help in business. Moreover, the new products required push-strategy and were not selling on the brand premium," according to a market analyst

The company, which clocked a turnover of Rs 160 crore in the financial year 2001-02, was able to close the books with only Rs 105 crore in the last fiscal (2002-03).

However, Nebula enjoyed a good relationship with customers, being a more flexible company. It also had a very good sales team who really wanted to put Nebula back on the track. But, things did not go on the expected line and the crisis deepened day by day.

Nebula was promoted by two NRIs--MS Balasubramaniam and R Subramaniam. KV Krishnan is the other major stakeholder in the company

(CNS)