Vintron to push its own brands to ride the boom in PC sales

By Balaka Baruah Aggarwal

NEW DELHI: Vintron has snapped its distribution ties with HP, Viewsonic, and Logitech and is now realigning its strategy to promote its own brands in the hardware market. This is part of its restructuring exercise to re-position itself to address the PC market in India, which is expected to boom in the next two years. According to IDC figures, PC sale is expected to be in the region of 2.5 million by year 2002, up from the current figure of over a million. And Vintron wants to make sure it is a significant player when the boom occurs, according to company officials.






To this end, the company has worked out a number of expansion plans to achieve economies of scale. It has invested an additional Rs 5 crore to manufacture motherboards and modems. With fresh investments, the capacity to manufacture motherboards is expected to increase from 1,00,000 units to 2,50,000 units, that of monitors is to go up from 1,20,000 units to


1,70,000 units and that of PCs to rise from 40,000 to 60,000 units. Apart from this, Vintron also hopes to make 60,000 modems and 90,000 speakers.

It has set up its seventh manufacturing unit in Daman at an estimated cost of Rs 1 crore, which is expected to be operational by January 2000. Currently, the Vintron Group has six manufacturing bases out of which four are in Parwanoo in Himachal Pradesh and one each at Noida and Delhi. In order to fund its expansion, Vintron plans to double its equity base from



Rs 5 crore and raise a working capital of Rs 16 crore. It will issue rights to its existing shareholders at Rs 30 per share and at Rs 38 to private placements. The shares are curently being traded at Rs 45. Between September and now, the stocks have fluctuated between Rs 24 and Rs 56.





Of the company's 50 lakh shares, promoters hold 48 percent, which will come down to 40 percent after the financial restructuring. Vintron's biggest advantage is the fact that it has 13 warehouses throughout the country from where its resellers can sell at lower price points. It has 10 branches, 25 service centers and a channel network of around 1800. With a turnover of Rs 125 crore, Vintron is looking at a growth of 50 percent during the current fiscal. It plans to set up 150 exclusive retailers across the country--100 will be set up in the last quarter of the current fiscal and the rest should be in place by September 2000.

With this network infrastructure in place and with the additional funds on the anvil, Vintron wants to push up its PC sales to 25,000 this year and to 45,000 in 2000-01. In the coming year nearly 40 per cent of the overall revenue is expected to come from PC sales.