March madness cripples local IT market

Is it the Tehelka aftermath or the controversy over fallout of the insider
trading in BSE, that is responsible for the current slump that the local IT
market, is currently witnessing? But the channel segment chooses to differ and
says the slowdown started much earlier and was a carry-over from the last
quarter when markets failed pick up after a very pathetic
October-November-December season.

Though the sales were expected to catch up after the Holi festivity, it never
happened. The budget also had nothing substantial for the hardware sector.
Dealers are also unanimous in stating that market performance was the worst this
March.

"There was absolutely no recovery in the market after Holi. Things were
expected to be better after the budget, even this did not happen. In fact, sales
have gone down to such an extent that distributors have lowered targets and are
selling at much lower prices. Sales have fallen by almost 30 - 40 percent when
compared to the last quarter. Though the overall picture is gloomy there is
still hope," said SD Computers Ltd., (managing director) Harsh Vij.

Another major reason for the downturn in the Indian economy that is largely
dependent on the US economy, which is presently facing a downtrend. The slump in
IT sector can also be cited to the decline in government purchase and the lack
of substantial perks for the hardware sector, in the Union Budget.

According to Vintron Informatics Ltd., director (marketing) Manish Agrawal,
the JFM is going lower than expected. "This is the worst moth I have seen.
Sales usually hit the peak by the end of March. However sales, this time around
have been much lower than in the previous months. The slowdown has also affected
both the PC and the peripheral segment," he said.

OA Compserve Pvt Ltd’s head (marketing), GS Kohli says: "The market
situation was pathetic. Nothing has changed even after the budget. The budget
proposals have not led to any substantial decrease in prices. The usual rush
from the government as well as the corporate sector towards the end of March is
also missing. Sales have gone down by 30- 40 percent when compared to the last
quarter. There are not enough funds in the market to furnish the customers'
needs."

Keshav Madhav of Vidur & Co thinks the lack of orders from the government
in March has really dealt a blow to the market. "Usually what happens is
that the quantum of orders placed in March would normally outdo both the
previous months put together. But it has not happened this time, as orders are
not being withheld for fear of bouncing cheques."

But, Challanger Computers CEO Sunil Gupta, chooses to differ. Though he
agrees that the market has been dull over the past few months, according to him,
the sales are slowly picking up. The market sales have been affected only by
about five per cent. Samtech Infonet Ltd., MD Alok Gupta says the market has
been bullish in the telecom as well as the Internet sector. These two sectors
have seen a growth of 200% in the last year due to heavy investments. However,
the general IT markets is facing a slump as hardware manufacturing has seen a
considerable decline this year, he added.